Los Angeles Business Journal

Solar Feels Heat From State Fee

ENERGY: Utilities say proposed charge needed to offset losses. By Howard Fine Monday, August 12, 2013

A new fee of up to $10 a month could hit residential customers of Southern California Edison and two other utilities in the state.

The utilities say the fee is necessary to offset the loss of revenue from customers who switch to solar power. The money will maintain the state’s power transmission grid.

But rooftop solar installers say the fee would cast a shadow on their prospects. With much of the industry’s growth now coming from middle- and lower-income households hoping to cut their power bills, they see the fee as a deal-breaker for many potential customers.

“Right now, it’s all about the ability of people to save money by switching to solar,” said Ken Button, president of Verengo Solar in Torrance. “You introduce a new charge that people must pay and lots of those people won’t switch. And that will cut into our ability to grow our business in California.”

The proposed charge was inserted into a bill last month after negotiations between consumer advocates and utilities, including Southern California Edison, a unit of Edison International in Rosemead. If the bill clears a state Senate committee, it will go to the full Senate and then to the governor.

The utilities say a new charge is necessary to help pay for fixed costs as more people install solar panels and pay less to the utilities. They argue that households with solar panels still need the transmission grid, either for more power than the panels provide or to sell their excess electricity to the utility.

Theodore Craver, chief executive of Edison International, told analysts on an earnings teleconference call earlier this month that this exodus of paying customers is a problem.

“Especially important is the ability to recover fixed costs through a charge carried by all residential customers,” Craver told analysts. “This is important because California policies encouraging residential rooftop solar are subsidizing those who install rooftop solar, and shifting fixed costs to those who do not.”

Consumer groups fought to keep the charge as low as possible and got a cap of $10 a month, or $5 a month for low-income customers. The exact fee levels would be set by the California Public Utilities Commission. The fee would be tacked on all household accounts regardless of whether they have solar panels.

Solar objections

But solar companies, including Verengo, were not part of these negotiations over the bill, AB 327 by Henry Perea, D-Fresno, and were alarmed when the amended bill language containing the fee was introduced last month. The fee will apply to customers of Edison, Pacific Gas & Electric and San Diego Gas & Electric.

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