Rarely has the California Public Utilities Commission (PUC) seen such widespread opposition to one of its proposed actions as when it voted unanimously in mid-November to remove one of the major benefits of placing solar panels on homes and apartment buildings.
That benefit: Any excess power generated beyond what a owner uses could until now be sold back to the state’s grid, meaning that rooftop solar not only took owners off the grid and exempted them from seemingly annual electricity price hikes, but also could be a source of income.
Naturally, the big utilities hated this. For Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, this was not merely an expense, but lost income, plus the loss of large amounts of potential future income.
It was loss of future utility income for new solar owners that decided the issue for the PUC, which has favored the big privately owned companies over their customers in virtually every electric price dispute of the last half-century.
This has been true no matter whether commissioners were appointed by Democratic or Republican governors.
This time, solar income issues coincided with a request from PG&E to dun customers for undergrounding more than 1,200 miles of electric lines to make them less prone to start fires in an era when most large wildfires have been sparked by arcing power lines.
That alone will raise average PG&E rates by as much as $30 per month starting in January. Similarly sky-high increases for other electric companies will soon follow.
But the question of rooftop solar panels was different and the exact costs to consumers remain uncertain, except for the inevitable reality they will rise considerably, atop the costs of undergrounding, which will also be done by the other big utilities.
Meanwhile, the PUC never said it was handing the companies a bonus by ending their payments to solar panel owners.
Rather, they said, not paying the solar owners will reduce rates for other Californians who don’t own panels and now help subsidize people who do. Commissioners also held that solar power will expand faster if it’s done via large desert-area solar farms than through citified rooftop panels.
So they expanded an earlier order to cut payments to new residential solar owners, also eliminating them for apartments, schools and businesses with panels. But it’s clear this won’t work out so well for other Californians no matter what the PUC claimed.
What the commissioners did not say (they almost never mention this key factor) was that getting power to cities from large new solar thermal farms in desert locations, hundreds more miles of transmission lines will be required. Rooftop solar requires no such power lines.
While the solar farms are owned by other companies and often subsidized by big federal grants, transmission lines are built and owned by the utilities. They cost billions of dollars, depending on the distance of a given solar farm from where it links to the grid.
Privately owned utilities fund the lines with loans or bonds whose interest is paid by consumers. At the same time, they are assured an annual profit usually ranging between 10% and 14% for each dollar they spend on capital improvements, lasting 20 years.
For sure, transmission lines are capital investments. Erecting them costs about $2.29 million per mile over many hundreds of miles.
This means that every $1 billion in consumer-financed dollars PG&E or Edison or SDG&E spends bringing solar power to its customers translates into pure profit of at least $100 million per year, with no risks attached.
That’s the actual essence of what the PUC has now ordered, because the mere prospect of taking income out of the solar ownership equation has already cut installations of rooftop solar substantially.
That’s precisely what the utilities wanted. They can now expand their stated need for solar thermal power as the state moves steadily toward full dependence on renewable energy.
For them, more big renewables mean more transmission lines and more profit.
Which also means that regardless of what commissioners said, the latest PUC move will translate to ever higher electricity payments for almost every Californian for decades to come.
Email Thomas Elias at [email protected].