Today, the Georgia Public Service Commission (PSC) took another step towards using solar power to reform the state’s largest monopoly electric utility, Georgia Power.
Georgia Power sought to impose a charge, referred to as “supplemental power service tariff” (SPS Tariff), on those customers who use solar energy to offset their electricity consumption from the utility. The tariff would have been on customers installing solar systems with a single bi-directional meter, often referred to as behind the meter or net energy metering, which allows the customer to generate their own energy for onsite consumption and to send any excess energy back to Georgia Power. It would not have impacted Advanced Solar Initiative participants, which are required to send (and sell) all solar energy they generate directly to the grid (via a second meter, i.e., dual metering).
The tariff would have resulted in a charge of $5.56 per kilowatt (kW) of solar capacity installed. This means the owner of a typical 5 kW residential solar system would have to pay nearly $28/month, eliminating over 50% of the customer’s savings from going solar. Even with the massive price reductions experienced in the solar market, such a cost burden would make most behind-the-meter projects economically unviable in Georgia Power’s service territory, and in turn reduce customer options for becoming more energy independent.
Georgia Power’s proposal was in step with numerous other utilities that have been seeking to establish penalties on solar generators across the country. The Edison Electric Institute (EEI) raised a red flag for investor-owned utilities earlier in the year claiming that distributed generation, like home solar installations, posed a potential “death spiral” to the traditional utility business model. As a result, one by one we’ve seen utilities trying to institute (most unsuccessfully) some type of charge or other penalty on solar generators. These heated debates have evolved in prominent solar states like Arizona, to less developed markets like Louisiana.
The utilities argue that because electric rates are primarily volume based, customers with behind-the-meter solar systems will consume, and therefore purchase, less from their utility, but still require and receive valuable grid benefits (e.g., backup power). In turn, other customers (without solar systems) are left to cover those fixed costs, creating a cost shift, or “cross-subsidization” effect.
However, the utility claims are typically weighted towards an inequitable focus on costs without also providing the same level of diligence in quantifying the benefits. An analysis of numerous studies demonstrates that the value of distributed generation can be substantial, to the point where this generation may actually provide net benefits to all customers on a grid, not just those with solar systems.
With that knowledge, SACE and several other advocacy and interest groups, as well as the general public, challenged Georgia Power on their lack of quantifiable evidence to justify a solar tariff. The Georgia Solar Energy Industries Association also brought in expert witness, Karl Rabago, for his second testimony before the PSC in less than a year. Commission staff agreed with the tariff opponents, and recommended the PSC rule against imposing the tariff. Georgia Power conceded and dropped the solar tariff proposal – which SACE applauded – in their settlement agreement on November 20 and which was ultimately approved by the PSC.
The SPS tariff proposal was only the tip of the iceberg in Georgia with regards to determining the actual value of solar generation. Soon, Georgia Power should be filing their proposed “solar avoided cost” rates to be used – at least in part – for the additional 525 megawatts (MW) that was added to ASI through the company’s Integrated Resource Plan. Fortunately, we (and other solar stakeholders) will be working to review these solar avoided costs rates and ensure Georgia Power has demonstrated a sufficient level of diligence in recognizing the benefits – not just costs – of solar generation.