The debate over Nevada's rooftop solar industry is missing the point

By Michael Schaus
  • Wednesday, April 20, 2016

 By Michael Schaus

The debate over Nevada’s solar industry is not going away anytime soon, with solar companies and activists continuing their efforts to reverse the PUC’s decision to cut back on net-metering rebates.

A referendum seeking to return to the state’s previous, more favorable, net-metering rules remains in legal limbo, but the “No Solar Tax” political action committee is still hoping to put the issue before voters on November’s ballot.

The group, backed primarily by solar companies, has a rather misleading name. The new rebates imposed by the PUC are hardly a “tax.” In fact, they’re nothing more than a decrease in ratepayer-funded subsidies for the solar industry.

Lynn Jurich, co-founder and chief executive of Sunrun Inc., told the Wall Street Journal how the PUC’s decision changes things in Nevada:

“The framework we’ve used in this country is predominantly that homeowners should be credited at the retail rate when that energy flows back into the grid.”

The PUC’s decision, however, reduced the credit solar customers receive on their utility bills to an amount that more accurately reflects the average wholesale cost per kilowatt. This move by the PUC reflects the concern that lawmakers voiced during the 2015 legislative session that the higher rebate rates were essentially subsidizing the rooftop solar industry.

The concern over artificially high net-metering rebates is no different than the concern over expensive large-scale solar projects. NV Energy recently agreed to purchase energy from the new massive solar energy plant, Crescent Dunes, at more than $0.13 per kilowatt hour — roughly the same amount the utility charges customers for electricity.

Clearly, such an agreement is not in the interest of ratepayers who will ultimately have to pay higher rates to sustain this higher cost of power. And if it is fiscally irresponsible for NV Energy to purchase solar power from Crescent Dunes at nearly retail rates, isn’t it equally as irresponsible for NV Energy to purchase power from John Doe’s rooftop solar array at a similar price?

What remains unmentioned in most debates over the appropriate level of net-metering, however, is the fact that it is a government mandate, rather than an organic market-driven transaction.

Imagine if government mandated similar rules in other industries. What if grocers were required to purchase, at full retail prices, the surplus vegetables from local backyard gardens?

The justification for government’s control over net-metering is that utilities would otherwise have no incentive to purchase excess power from what is essentially an energy competitor. In other words, the PUC “needs” to regulate solar rebates because NV Energy has a government-approved monopoly in the market.

But it doesn’t have to be this way. Rather than preserving government power over the market, wouldn’t it make more sense to simply abolish NV Energy’s utility monopoly?

If Nevada — like Texas — embraced a free-market approach to energy production, consumer choice and corporate competition would provide superior energy regulation. Utility providers, solar companies and even customers would be able to negotiate rates among themselves — free from political pressure or bureaucratic favoritism. The viability of Nevada’s solar industry wouldn’t depend on rulings by an unelected commission.

More importantly, consumers would be free to shop for the energy solutions that made the most economical, or ecological, sense for their needs.

Of course, that might be part of the problem for companies such as Sunrun and SolarCity. Without government-imposed net-metering rebates, possibly fewer consumers would decide to take part in expensive solar-panel leasing contracts.

Just as NV Energy depends on its monopoly status for its very survival, the solar industry depends heavily on government-mandated favoritism for its.

Whether or not the PUC decided on an “appropriate” net-metering rebate shouldn’t be the focus of the debate in Nevada. The more important point is that government intervention created this problem in the first place.  

It’s an observation that the PUC, the solar industry and NV Energy are all happy to see overlooked.

What does that say about their actual focus on ratepayers?

Michael Schaus is communications director of the Nevada Policy Research Institute, a nonpartisan, free-market think tank. For more visit http://npri.org.  


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