Does LADWP Want to Charge Solar Customers For Grid Access?

A report from the Los Angeles Department of Water and Power suggests that the utility doesn't want to expand one of its most popular rooftop solar programs unless it can charge participants more for using its power grid at night. But unlike its investor-owned counterparts elsewhere in the country making the same argument, LADWP would rather expand a different solar incentive program instead, and that program might well prove more effective in making Los Angeles a solar city.

That's the gist of part of a recent report from LADWP to the City Council, in which the utility's General Manager Marcie Edwards suggests that in order to expand the utility's "net energy metering" program beyond its current cap of 310 megawatts, LAWDP would need to "unbundle" the rate paid to solar customers for energy they put back into the grid. Edwards says that will keep utility customers who don't have solar panels from paying more than their fair share of the cost of maintaining the city's power grid.

The idea that non-solar ratepayers are paying more than their fair share of grid maintenance costs than customers with net metering arrangements has gotten a lot of traction nationwide in recent months, in part due to a push by the Koch brothers' American Legislative Exchange Council to make net metering an issue. Solar advocates point out that rooftop solar actually saves ratepayers money by reducing the need for new power plants and transmission lines. But LADWP may be carving out a third path in the controversy: pushing for an expanded feed-in tariff program as an alternative to net metering.

Under a net metering arrangement, the energy a property owner's solar panels produce powers electrical appliances on site, with any extra power feeding back into the grid. That extra power rolls through the property owner's electric meter, running it backwards. In theory, a homeowner with a big enough set of solar panels could run her meter backward far enough that each monthly electric bill gets "zeroed out," even if she uses power from the grid at night when her panels aren't producing.

LADWP's net metering program will be maxed out in 2016, when the program's cap of 310 megawatts of generating capacity is reached.

A feed-in tariff arrangement, by contrast to net metering, doesn't involve a ratepayer's electric meter. Instead, the person who owns the solar panels simply sells all the power those panels produce to the utility, often at a premium rate.

LADWP's existing feed-in tariff program is one of the largest of its kind in the United States, though with its current cap of 100 megawatts by 2016 it pales behind programs like the German feed-in tariff, which has turned that cloudy Central European country into the planet's solar leader.

The important detail here is that because feed-in tariffs don't involve zeroing out an electric bill for a consumer who still gets some energy from the grid, they sidestep the whole issue of unequal burden-sharing for grid maintenance that net metering contracts have been generating.

Here's the relevant section of the LADWP report, delivered to the L.A. City Council to fulfill an April request for an update on the utility's solar programs.

In other words, by adjusting the price net metering customers are paid for their locally-grown solar power so that it doesn't reflect that part of the retail electricity rate that goes to maintain the grid, LADWP will keep solar homeowners paying their alleged share of the costs of running the grid. The report continues:

What are those "other alternatives"? Edwards spells that out earlier in the report:

So it looks like LADWP is signaling a preference for feed-in tariff solar over net metering solar. One industry that's almost certain to object is the third party solar leasing sector: solar leasing companies generally prefer net metering arrangements, which allow them to act as the middleman between property owner and utility.

We'll be keeping an eye on this discussion.