On May 18, 2022, 235 self-described “consumer, anti-monopoly advocates, public interest and environmental organizations, and rooftop solar companies” (Petitioners), petitioned the FTC to exercise its authority under Section 6(b) of the FTC Act to study electric utility industry practices that they claim impede renewable energy competition and harm consumers (the FTC Petition) (link and press release).
Why did they make this filing? It appears that they did so to stave off actions by certain states to reduce compensation for energy produced by DERs under net energy metering (NEM) laws and policies.
The participants in the rooftop solar industry are on the verge of possible defeat, or a partial defeat, in their most important state, California. Even though NEM reform battles may eventually occur in most every state with NEM (it ended in a loss in Hawaii years ago), California matters most. And California’s regulators preliminarily have determined that the subsidies to NEM participants are too high. So, Petitioners hope that the can persuade three FTC Commissioners to assist them in quashing all efforts to reform “full NEM,” whether in California or elsewhere.
The concept of full NEM is simple. A retail customer produces energy from a DER (typically, but not always with on-site, rooftop solar panels) and the energy not consumed on site in real time is credited to the customer at the full retail rate. Thus, this means that the customer producing energy from rooftop solar that is not in excess of its total needs during the billing period gets paid a rate equal to the utility’s cost of energy plus the utility’s costs of transmission, distribution, back-up power, and much more. This compensation is many times higher than the amount paid for energy and capacity sold by solar and wind power developers selling to the market or bilaterally. (Note that no actual wind or solar power companies or their trade associations signed onto the Petition.) This over payment to NEM participants results in the costs of the utilities’ transmission and distribution system (as well as many other costs) being shifted from the NEM participants to other customers, generally from wealthier people with larger houses on which to put solar panels to power customers without. Currently, California has a closed (but ongoing) NEM 1.0 program (full NEM) and an open NEM 2.0 program (best characterized as “almost full” NEM).
Continue Reading The FTC Petition – A Thinly-Veiled Attempt to Protect Full Net Energy Metering for DERs