Net metering in Nevada is a public policy and political issue surrounding the rates that Nevada public utilities are required to pay to purchase excess energy produced by electric customers who generate their own electricity, such as through rooftop solar panels. The issue centers around the question paying solar customers the retail or wholesale rate for the generated electricity.
Before 2016, Nevada utilities paid those with solar panels the retail rate for electricity. At the end of 2015, the Nevada Public Utilities Commission approved new rules that changed that rate to the wholesale rate.
Background
Under a setup known as net metering, utilities must buy excess electricity generated by people with solar panels. For example, on a sunny day, a home with solar panels generates power. If the homeowners are away and the home is using less electricity than the solar panels are generating, that excess electricity flows to the electric grid. The utility company purchases that electricity.
Retail vs. wholesale rate
Utility companies buy power at a “wholesale” rate and sell to consumers at a “retail rate.” The retail rate is higher than the wholesale rate. The retail electric rate charged by utilities are the final rates that customers get charged for using electricity. The utilities calculate these rates by taking into consideration the cost of the purchasing the power (the wholesale rate) and the fixed costs the utility incurs. Fixed costs are items such as installing electric poles and wires, putting meters on people's homes and businesses, and implementing technology to maintain the electric grid. The wholesale rate is what the utility pays electricity providers to buy their electricity. A competitive marketplace exists from which utilities can purchase electricity. Throughout a single day, the price of electricity on the wholesale market can change.
History
Net metering subsidy has been in place in Nevada since 1997. Tim Webb, a manager at Robco Electric (one of the main sellers of rooftop solar panels in Nevada), said, "It was kind of like the solar gold rush here. All these companies flocked into town, set up an office and sold systems."
As of December 2015, net metering customers in Southern Nevada were compensated an average of $623 per year for their excess electricity, while Northern Nevada net metering customers received an average of $471 per year.
In 2015, the Nevada legislature passed a law that required the commission to examine the electric rate structure and to look at cost shifting. KRNV Channel 4 (NBC) of Reno, Nevada, defined cost shifting as “when non-solar residential customers are said to be subsidizing those without solar for using NV Energy’s grid.” (NV Energy is the major utility company in the state of Nevada, and it is owned by Berkshire Hathaway Energy, a subsidiary of Warren Buffett’s Berkshire Hathaway.) Specifically, the law requiring Nevada Public Utilities Commission's review was Senate Bill 374, passed during the legislature's 2015 session. The bill set a deadline of December 31, 2015 for the commission to decide on new electric rates.
On December 22, 2015, regulators in Nevada created major controversy following their decision to reduce rooftop solar incentives in addition to creating new fees for solar owners. As a result, a lawsuit was filed against the Nevada Public Utilities Commission based on the fact that lowering rates constituted as a violation of contracts made with installers.
Commissioner David Noble, who had presided over the commission's net metering docket, recently had decided to break his usual silence and speak out on the regulatory body's decision at the National Association of Regulatory Utility Commissioners (NARUC) meeting held in Nashville, Tennessee over the summer. He proceeded to explain the events leading up to the decision, making it out to be a cautionary about the unethical actions and reckless comments that may ensue in such dealings.
Noble began with the May 2015 signing of Senate Bill 374, which gave the Nevada Public Utilities Commission the responsibility to find a fair and suitable replacement for retail rates given to net metering solar owners, which had caused significant cost shifts negatively impacting non-solar consumers.
The new order calls for higher monthly rates for solar-owning customers from $12.75 to $17.90. In addition to increase in charges, the volumetric rate was lowered from $0.111/kWh to $0.108/kWh. Also, it was determined that over a 12-year period, the rate will reach $38.51 while the volumetric rate will drop to $0.999/kWh. The new rates and conditions apply to both new and existing customers.