‘Trust Us,’ Utilities Argue:
 PV Cost Shifting Is Bad,
 EV Cost Shifts Are Good

The utility industry is open about its opposition to residential PV solar—preaching endlessly that homeowners with PV panels enjoy what amounts to a free ride due to state net metering rules that require utilities to buy the electricity from these distributed resources without being able to charge those customers for their continued use of other grid services.

At the Edison Electric Institute’s annual Wall Street presentation in February, for example, David Owens, the association’s executive vice president, told the analysts that it is “critical and fair that all electricity cus­tomers who use the electric power grid continue to share equitably in the costs of maintaining it and keeping it operating reliably at all times. Rooftop solar customers still rely on the grid and its services around the clock. Even at peak output, rooftop solar systems need the support of the grid to start large motors like air condi­tioners and refrigerators. And, net metering as a policy does not even exist without a grid con­nection. So, at the end of the day, as long as we are connected to the grid, we still use it and we all should continue to pay for it.”

Similarly, San Francisco-based PG&E, which touts itself as having the most residential PV customers of any U.S. utility—with some 100,000 customers having some amount of solar installed—is also quick to criticize the existing California net metering program, saying it has shifted costs unfairly from solar customers to other ratepayers not using PV or another distributed generation resource.

The extent of this cost shifting is much in debate, with utilities on one side and solar industry officials on the other. But the reality is, the debate has nothing to do with cost shifting—it is market share that is the real concern.

As EEI itself pointed out in a 2014 report on the benefits of electric transportation, retail electricity sales dropped 2 percent in the United States from 2007-2013. And the outlook for the future isn’t much brighter, with the Energy Information Administration’s latest annual outlook projecting growth of only roughly 1 percent for the foreseeable future.

What the industry needs, EEI’s report continued, is “a new source of load growth.’’ And as the chart below (which is from an earlier report by EEI’s Institute for Electric Innovation) clearly indicates, EVs could be a boon for the utility industry.


While not expressly noted, when an industry is looking for new growth ideas, protecting its existing sales is going to be high on its “must do” list as well, and cost issues aside there is no doubt that residential PV cuts into utility sales.

Ironically, while EEI and its utility members are worried about the purported cost shifting imposed by residential PV installations, they seem to have no such qualms about the clear cost shifting that would be required by several recent proposals to build out electric vehicle charging networks across the country.

In California, for example, PG&E unveiled a plan in early February under which it would invest more than $550 million to build 25,000 new electric vehicle charging stations across its service territory. The investment is needed, the company said, to help meet California’s aggressive statewide EV rollout goals.

That may be true, but the interesting part of the proposal is that PG&E wants ALL of its ratepayers to foot the bill for the expansion effort. Spreading the cost in this fashion, the company said, would boost a typical residential customer’s bill by just 70 cents a month beginning in 2018 and running through 2022. In other words, PG&E wants all of its customers—even if they have zero interest in ever buying an EV—to pay to install a bunch of new EV charging stations. So who would benefit from this proposal? Clearly the roughly 60,000 current EV owners in PG&E service territory, and certainly PG&E itself since it would be spurring the development of ‘a new source of load growth.’ But what about PG&E’s non-EV owning customers? They would be paying for a program they won’t use and didn’t ask for; but whether/when they would benefit is a matter of debate.

A similar proposal by Kansas City Power & Light to build a 1,000 station Clean Charge Network across its Kansas and Missouri service territories has already sparked pointed opposition from the Citizens’ Utility Ratepayer Board. In a filing with the Kansas Corporation Commission, CURB noted that “providing 1,000 charging stations for electric cars throughout the company’s service territories in Kansas and Missouri is providing convenience to a tiny segment of car buyers who freely chose to buy a vehicle with limited range and therefore limited utility. While utilities do have a general obligation to serve the public interest, the commission would have to find that a project that serves a tiny portion of the public serves a public interest.”

CURB also voiced concern about helping a demographic (EV buyers) that is markedly better off than the rest of the citizenry—exactly the same concern raised by the utility industry in opposition to residential PV and solar net metering. In an interview last year with CNBC, for example, EEI’s Owens said, “[W]e want to make sure customers at the upper-income bracket are not being subsidized by non-rooftop customers.”

Or, as CURB noted: “The tiny community of electric car owners is significantly better off financially than the typical KCPL ratepayer. Federal census data indicates that households (not individuals) in the Greater Kansas City Metro Area (which includes the bulk of KCPL’s Kansas territory) in 2010 had a median household income of around $72,000. By contrast, Forbes reports that nearly 21 percent of the individuals (not households) who buy electric-only vehicles (cars that will be served by the charging stations) have incomes of $175,000 or greater. The commission would have to consider whether it is good public policy to require the typical KCPL household to fund a project that serves a tiny segment of the community that is wealthier than the typical KCPL household.”

Utilities are, admittedly, in a difficult position, but being honest is important. And on the issue of cost shifting, the industry is, at best, being duplicitous.

–Dennis Wamsted


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 PV Cost Shifting Is Bad,
 EV Cost Shifts Are Good

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