Part 1: A response to “Rooftop Solar Inequity”

Severin Borenstein at the Energy Institure at Haas has plunged into the politics of devising policies for rooftop solar systems. I respond to two of his blog posts in two parts here, with Part 1 today. I’ll start by posting a link to my earlier blog post that addresses many of the assertions here in detail. And I respond to to several other additional issues here.

First, the claims of rooftop solar subsidies has two fallacious premises. First, it double counts the stranded cost charge from poor portfolio procurement and management I reference above and discussed at greater length in my blog post. Take out that cost and the “subsidy” falls substantially. The second is that solar hasn’t displaced load growth. In reality utility loads and peak demand have been flat since 2006 and even declining over the last three years. Even the peak last August was 3,000 MW below the record in 2017 which in turn was only a few hundred MW above the 2006 peak. Rooftop solar has been a significant contributor to this decline. Displaced load means displaced distribution investment and gas fired generation (even though the IOUs have justified several billion in added investment by forecasted “growth” that didn’t materialized.) I have documented those phantom load growth forecasts in testimony at the CPUC since 2009. The cost of service studies supposedly showing these subsidies assume a static world in which nothing has changed with the introduction of rooftop solar. Of course nothing could be further from the truth.

Second TURN and Cal Advocates have all be pushing against decentralization of the grid for decades back to restructuring. Decentralization means that the forums at the CPUC become less important and their influence declines. They have all fought against CCAs for the same reason. They’ve been fighting solar rooftops almost since its inception as well. Yet they have failed to push for the incentives enacted in AB57 for the IOUs to manage their portfolios or to control the exorbitant contract terms and overabundance of early renewable contracts signed by the IOUs that is the primary reason for the exorbitant growth in rates.

Finally, there are many self citations to studies and others with the claim that the authors have no financial interest. E3 has significant financial interests in studies paid for by utilities, including the California IOUs. While they do many good studies, they also have produced studies with certain key shadings of assumptions that support IOUs’ positions. As for studies from the CPUC, commissioners frequently direct the expected outcome of these. The results from the Customer Choice Green Book in 2018 is a case in point. The CPUC knows where it’s political interests are and acts to satisfy those interests. (I have personally witnessed this first hand while being in the room.) Unfortunately many of the academic studies I see on these cost allocation issues don’t accurately reflect the various financial and regulatory arrangements and have misleading or incorrect findings. This happens simply because academics aren’t involved in the “dirty” process of ratemaking and can’t know these things from a distance. (The best academic studies are those done by those who worked in the bowels of those agencies and then went to academics.)

We are at a point where we can start seeing the additional benefits of decentralized energy resources. The most important may be the resilience to be gained by integrating DERs with EVs to ride out local distribution outages (which are 15 times more likely to occur than generation and transmission outages) once the utilities agree to enable this technology that already exists. Another may be the erosion of the political power wielded by large centralized corporate interests. (There was a recent paper showing how increasing market concentration has led to large wealth transfers to corporate shareholders since 1980.) And this debate has highlighted the elephant in the room–how utility shareholders have escaped cost responsibility for decades which has led to our expensive, wasteful system. We need to be asking this fundamental question–where is the shareholders’ skin in this game? “Obligation to serve” isn’t a blank check.

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