Alabama Power fees on solar panels challenged
MONTGOMERY, Ala. — When Jim Bankston installed solar panels on his Tuscaloosa home, he estimated it would trim his electricity bill, and the savings would eventually offset the cost of the hefty investment.
After it was running, he noticed fees on his Alabama Power bill that he didn’t understand and learned there was a $5-per-kilowatt capacity charge on customers who use solar panels to produce a portion of their own electricity.
“I am having to pay them just to use the photons that are hitting my own roof,” Bankston said.
He had estimated the system would eventually pay for itself in 20 years. With the fees included, he said it could be twice that. “I won’t be alive anymore, maybe,” the 45-year-old radiologist says wryly, also noting that it also might be beyond the life span of the panels he installed.
The Alabama Public Service Commission will hold a Nov. 21 hearing on a challenge to the fees charged by Alabama Power. The utility says the fees are needed to provide backup power for customers. But critics say the fees are some of the highest in the nation and make it harder for people to use alternative energy sources.
“It’s discouraging the use of solar,” said Keith Johnston, managing attorney for the Southern Environmental Law Center’s Birmingham office. “We call it a solar tax.”
The fee is based on the size of the solar system, so a five kilowatt system would have a monthly fee of $25.
The average solar panel setup for a home costs about $10,000, according to the environmental law center. The fees add another $9,000 over the 30-year-lifespan of a system, dramatically increasing a homeowner’s cost and reducing any financial benefit they see from solar, the law group said.
Johnston says they haven’t found a large investor-owned utility with fees as high as those being charged in Alabama. “It’s definitely one of the highest.”
The petition asks the commission to bar Alabama Power from collecting the fee. Alabama Power is asking utility regulators to dismiss the complaint. They said the $5 fee is actually not enough and are asking to be allowed to increase the charge to $5.42 per kilowatt.
Alabama Power said there is an important reason for the fees: The company has to maintain power grid infrastructure to provide backup power if the panels don’t provide enough energy.
“There is a cost to having backup power available to customers, including customers with solar systems who remain tied to the grid for backup service,” Alabama Power spokesman Michael Sznajderman said.
He said the capacity reservation charge applies to anyone who has some type of onsite generation and still needs backup from the grid. People who go off grid “avoid any and all costs related to Alabama Power serving them,” he said.
He said the company believes it has a compelling case in the upcoming hearing and is “focused on protecting all our customers and ensuring that those who use certain services pay for those services.”
The issue of fees has arisen in New Mexico, Arizona and other states, causing clashes between renewable energy proponents and utilities. A power company in Iowa unsuccessfully pushed lawmakers to approve a fee that would require a homeowner with an average solar array to pay about $27 a month.
“I think they are really intended to discourage customers from installing solar,” Gwen Farnsworth, a senior energy policy adviser with Western Resource Advocates, a Colorado-based conservation group. Farnsworth said the Alabama charge is “quite high.”
Teresa Thorne, 65, had a four kilowatt system installed on her roof in Blount County, Alabama. She wanted to support solar and maybe in the process save a little money on her power bill.
The $5-per-kilowatt capacity charge amounts to an extra $20 on her power bill. She said while that doesn’t sound like much, it slashes the savings she expected to see after investing thousands of dollars to install the system.
“It cuts my savings in half,” Thorne said.
Thorne said she tells people interested in solar for economic reasons that the fees make it not “economically feasible to do it in my opinion.”
“I would not have done it if I’d known. That’s the bottom line. If I truly understood it was going to cost me half of the savings,” Thorne said.