The Dallas Morning News

Oncor darkens the solar scene



If this is how the new Oncor Electric Delivery Co. plans to do business, look out, greenies. The state’s largest regulated utility wants to add a monthly minimum charge for homeowners who have solar panels, wind turbines and storage batteries. That covers about 10,000 customers in the Oncor service area, which includes North Texas.

Oncor did not propose a separate fee for big companies with rooftop solar systems, such as Wal-Mart, Ikea and Costco. They’re already paying their fair share, Oncor said.

The new minimum, projected to be about $40 a month, must be approved by the state Public Utility Commission, and that won’t be easy. Last year, El Paso Electric proposed a similar fee that didn’t get through. Nationwide, regulators have rejected comparable requests from many utilities.

In Texas, a typical home solar system costs about $13,000 after federal tax credits. It usually takes 10 to 11 years to recoup the investment through energy savings, and Oncor’s higher fee would

extend that.

It doesn’t affect potential savings on energy generation, which is the competitiv­e side of the Texas electric market. But regulated rates for transmissi­on, distributi­on and the like can account for almost half the monthly electric bill in Texas.

The fee would discourage investment, solar advocates said, and enable Oncor to establish a separate channel for future revenue. While the segment is small, the number of home installati­ons in Texas almost doubled last year and the industry is growing rapidly nationwide.

“Residentia­l solar is getting much more affordable and popular, and utilities see that,” said Kaiba White, who specialize­s in energy policy for Public Citizen in Austin. “They’re trying to stomp it out before it becomes an existentia­l threat.”

At the moment, it’s a tiny target, less than one-third of 1 percent of Oncor’s 3.4 million metered customers. The total is expected to grow by 400 to 500 households a month, Oncor said. While the majority are adding rooftop solar, the minimum fee also applies to wind turbines and storage batteries.

According to Oncor, those customers cost the utility about $1.6 million last year. Transmissi­on charges are based on the volume of electricit­y delivered, and their consumptio­n typically declines 30 percent after adding rooftop solar.

But Oncor still has to provide access to the power grid, especially during the hottest and coldest months. The company said home solar doesn’t reduce peak demand.

“This isn’t about raising revenue. This is about who pays for the grid,” said Don Clevenger, Oncor’s vice president of strategic planning. “This is a more equitable way to spread the costs to everyone.”

Fifteen investor-owned utilities sought tariffs for on-site generation in the last two years, according to the NC Clean Energy Technology Center. Like Oncor, they argued against “cross-subsidies” — others subsidizin­g access to the grid. But costs are shifted regularly in electricit­y. Those with newer homes and appliances pay less, for example.

“We might all pay the same rate for electricit­y whether we’re living on a ranch or in an apartment,” said Sean Gallagher, who oversees state legislativ­e policy for the Solar Energy Industries Associatio­n.

“But you don’t single out customers by putting them in a separate rate class. That’s a bad idea, and it’s a setup for further mischief.”

Rather than drive up utility costs, he said, residentia­l solar can reduce the impact in other parts of the system, from maintenanc­e to emissions. By Oncor’s estimate, the costs of residentia­l solar amounted to less than 50 cents per customer last year.

In 2016, Oncor revenue topped $3.9 billion with $431 million in net income. The company is considered a crown jewel, in part because it earns high regulated returns in a growing state. The new minimum charge was part of a larger rate increase that Oncor requested this month.

Oncor is in transition. After its parent company filed for bankruptcy, it was put up for auction. Last summer, NextEra Energy of Juno Beach, Fla., agreed to pay $18.7 billion, including debt. The PUC in Austin is determinin­g whether that deal is in the public interest.

NextEra, the nation’s largest utility, is a leader in wind power but has been aggressive against rooftop solar. It was the largest contributo­r to a Florida ballot initiative that could have stifled growth in the segment.

The November amendment was sold as a way to protect consumers from subsidizin­g the costs of residentia­l solar. But Elon Musk, best known for Tesla and SolarCity, called the measure a “calculated attempt to deceive” Florida voters. It was defeated despite $20 million from utilities, including $8 million from NextEra’s Florida Power & Light unit.

Last year, NextEra also lost its bid for Hawaiian Electric Co. One reason was that regulators doubted the company’s commitment to the state’s clean energy goals.

Oncor talked with NextEra about its plan to add the minimum fee, Clevenger said, but the decision was its own.

“This has nothing to do with NextEra,” Clevenger said.

The solar industry might not oppose a small flat charge, comparable with the universal fee added to phone lines, said John Berger, CEO of Sunnova Energy Corp. in Houston. But Oncor’s proposal calls for a formula based on the customer’s peak demand, and that could be a meaningful number.

“They want to get paid for a service we’re not using,” Berger said. “They’re doing less for us, so why should we pay more?”

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