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

“We see the monthly charge as taking California backwards when it comes to incentivizing clean energy,” said Bernadette Del Chiaro, executive director of the California Solar Energy Industries Association, which represents about 200 rooftop solar installation companies. “It’s $120 a year out of ratepayers’ pockets no matter how energy efficient they are or how much they offset with solar.”

For those who pay for solar upfront – typically small power users – this charge would mean it would take longer to recoup their investment, Del Chiaro said. And for those who lease solar panels, their monthly payouts would increase. In either case, some people might decide it’s not worth it to go solar, and that’s the calculation rooftop solar installers fear the most.

Patrick Redgate, chief executive of Ameco Solar Inc. in Paramount, said the impact will be felt most by those with small power bills.

“I’m looking at one customer’s bill with our company and it comes to about $440 a year,” Redgate said. “You add $120 in this mandatory payment to the utility and that’s a 27 percent increase over what they are currently paying for power. At the very least, our customers would be upset that their power bill is going up 20 percent or more. Word will get out and that will make it harder to attract others to switch to solar.”

Another solar panel installer said the fee would lengthen the payback time for households using low levels of electricity, most commonly found in multifamily buildings.

Ron Mulick, chief executive of Solartronics Inc. of Agoura Hills, said the time for someone with a $75 monthly electric utility bill to recoup their upfront investment in solar panels is now about five or six years. The $10 monthly fee, he said, would add a year or so.

“When you start talking about payback times of seven or eight years, that’s when it gets much harder to close a solar sale,” Mulick said.

Also, Mulick said, the monthly fee could go up in the future despite the negotiated caps.

“Who’s to say the utilities won’t be back in a few years with another bill that says the fee should be set at $50 a month?” he said.

Aging grid

Utilities say the fee is necessary to maintain the state’s aging power transmission system, which requires hundreds of millions of dollars in investment each year to prevent outages. Recent state policies to spur solar rooftop power generation have prompted thousands of residential customers to install solar panels and dramatically reduce their utility bills; sometimes the utilities even pay them for excess power they put back on the grid.

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