FTC Workshop Will Examine Competition and Consumer Protection Issues in the Rooftop Solar Business #00185

Submission Number:
Meredith McClintock
RePower by Solar Universe
Initiative Name:
FTC Workshop Will Examine Competition and Consumer Protection Issues in the Rooftop Solar Business
As the 4th largest provider of solar distributed generation (DG), we sell to customers in 15 states and Puerto Rico. In many, utility-driven rate changes have jeopardized our ability to sell. Real & threatened elimination of net metering rates or new limitations & fees have significantly reduced solar's value proposition & have created enough uncertainty to severely curtail the market. Utilities' monopoly status ensures that there are no market-based solutions to these situations. I. Stable rates are essential A. Unstable incentive structures & rates are the greatest limiting factors to DG growth. Consumers who lack confidence in solar savings estimates won't commit to contracts & DG companies unsure about how long a particular incentive or rate structure will last won't invest to expand their businesses. B. A survey of Northern California solar companies in 2004 identified inconsistent solar incentives & rates as a major threat to their businesses. [1] C. Net metering uncertainty is now the greatest threat to DG growth. the attack by utilities on these rates today has the same chilling effect that erratic rebate programs did over a decade ago. D. Negative effects of recent anti- net metering actions: 1. Hawaii: 35% decline in solar jobs since end of net metering & 3% drop in solar installation permits in January-¬April of this year [2] 2. Imperial Irrigation District, CA: Value of many residential solar systems evaporated in February after net metering was suddenly eliminated [3] 3. Nevada: net metering end has caused withdrawal of major solar companies from NV, litigation by system owners, & a 93% decrease in solar permit applications since the decision [4] E. Impacts: 1. Harms to consumers: rate instability makes a long-term investment in solar a poor decision for homeowners. Consumer protections are needed to prevent solar customers from losing a substantial portion of their investment's value virtually overnight due to a rate change. 2. Unfair business practices against DG firms: rate instability harms the viability of DG. Utility tactics that target solar companies this way are anti¬competitive. Further, rate structures that undermine the value propositions of DG providers are a form of predatory pricing. Conclusion: Significantly higher standards of proof should be required when utilities seek changes in net metering laws. Grandfathering requirements, limits on the speed of rate changes & restrictions on anticompetitive practices by utilities are also needed. II. DG should be valued holistically A. Studies show net benefits from DG to the grid & the environment [5],[6], [7] PUCs should not rely on the conservative estimates of DG benefits provided by utilities B. Some economic benefits: 1. Reduced burden on transmission & distribution (T&D) assets 2. Avoided investment in peak generation capacity 3. Improved grid resiliency in outages 4. About 6% more energy per generated watt is delivered to customers by avoiding T&D loss[8] 5. Studies show DG ratepayers are in fact cross-subsidizing non-DG users III. Utilities & regulators should be required to include DG's environmental benefits in analyses IV. Complex rate presentation is a consumer protection issue A. Many consumers don't know their rate plan or how the rates work B. Rate interpretation is even more confusing with solar (with true-ups, DG surcharges, etc.), driving solar customers away C. Utilities should be required to provide easy to understand rate information so consumers can make more informed decisions V. Consumer protections should apply to all utilities. Publicly owned utilities serve about 25% of US electricity consumers & are not PUC-regulated[9] VI. Assumptions about the natural monopoly status of electric utilities should be reviewed. Changes in energy economics, the rise of DG & new technologies weaken the case that utilities are natural monopolies deserving shelter from competition Full text with footnoted sources is attached