Kit Carson Electric CEO: Rooftop solar not paying its fair share

'The current model won't work in this new energy world'

By Doug Cantwell
dcantwell@taosnews.com
Posted 1/16/20

Kit Carson Electric Cooperative CEO Luis Reyes explained at a two-hour public briefing Friday (Dec. 10) why the utility's net-metering policy for rooftop solar array owners - "rooftoppers" - no longer works.

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Kit Carson Electric CEO: Rooftop solar not paying its fair share

'The current model won't work in this new energy world'

Posted

Kit Carson Electric Cooperative CEO Luis Reyes explained at a two-hour public briefing Friday (Dec. 10) why the utility's net-metering policy for rooftop solar array owners - "rooftoppers" - no longer works.

Rather than announce an alternative plan, he asked the 30 attendees - who included local installers, rooftop owners and several members of the nonprofit Renewable Taos - to come back in two weeks with a solution that solar owners and other KCEC members would all consider a win-win.

Who it affects: Reyes noted, however, that KCEC was willing to honor existing net-metering agreements with current rooftop solar owners. Whatever new policy it adopts will apply only to future installations.

The basic problem is fairly simple: If you have a rooftop photovoltaic (PV) array, you have the option to sell any excess power you generate back into the KCEC grid. At the end of the year, you receive credit for that surplus against the power you draw from the grid during hours when your array isn't generating.

Here's the part that has some members ticked off: Reyes said KCEC pays rooftoppers more for the surplus energy than the co-op pays its regular supplier. If rooftoppers get credited at the retail rate - 11.1 cents per kilowatt hour under the existing rule - they're getting 3.5 to 6.6 cents more - depending on whom you talk to - than KCEC pays supplier Guzman Energy at its wholesale rate.

So, according to Reyes, the rest of KCEC's 27,000 nonsolar members are, in effect, "subsidizing" the 550 rooftop solar owners. "Rooftop solar arrays are currently contributing about 2.7 million kilowatt-hours to the KCEC grid annually," he said, "so we're talking about a subsidy of $250,000.

"This is not just an economic issue," Reyes added, "it's a question of social justice." The founding principle of a cooperative, he said, is that it serves and benefits all members equally.

A problem that won't go away

Reyes wants to move quickly on the issue because rooftop arrays currently contribute about 3 megawatts of power to the KCEC grid during peak sunshine hours. "That's about 9 percent of our total capacity," he added, "which is a substantial amount."

Another reason is that the problem's been around for three years. "We asked the co-ops in 2016," Reyes said, "but they didn't want to take it on. Nobody wants to touch it because it's a really contentious issue. So we had to take it to PRC [the Public Regulatory Commission].

"It's going to require some PRC changes and some legislative changes," he added. "We've asked PRC to docket a case so we can figure out the best way to move forward."

Hidden costs factor into the 'subsidy'

There's also the matter of KCEC's debt service costs, which get blended into each member's monthly bill. But nonsolar members carry a larger share of the load than rooftoppers.

According to KCEC spokesman Michael Santistevan, net-metering customers pay a service charge like every other member. "But if they underproduce," he said, "they pay only the debt service cost for the power they offset. If their array produces 5,000 kWh and they use 6,000 kWh, they pay the debt service cost only on the 1,000 kWh instead of the 6,000 kWh. A regular member, however, has to pay the debt service cost on the entire 6,000."

But what happens if the rooftopper generates 6,000 kWh and uses only 5,000? In that case, KCEC currently has to pay them at the "avoided cost" rate of 3.5 cents for the excess 1,000 - and they pay zero debt service costs, which nonsolar members must pay based on their total usage.

Rooftoppers have special needs

On top of the rate and service-cost discrepancies, there's the infrastructure cost KCEC incurs in order to safely accommodate this two-way delivery system. "Behind-the-meter applications," as they're called, require additional equipment to ensure safety and provide backup power.

Historically, the Kit Carson grid was built as a one-way system with substations that received power transmitted over long-distance, high-tension lines from large coal-burning power plants and distributed that energy to residences and businesses.

"We have to maintain the obligations of the utility: safety, protection, backup power, emergency power," said Reyes. "If for some reason a behind-the-meter application doesn't work, that residence is expecting us to supply it at the same cost as everyone else. That's an obligation we have."

Renewable Taos talks back

At their Dec. 13 weekly meeting, Renewable Taos members got into a lively, sometimes heated discussion of Reyes' briefing.

"I think the subsidy works the other way," said rooftopper John Gusdorf. "If I generate 10 kWh of excess in a day, those 10 kWh go to my neighbors. They go through Kit Carson's meter - KCEC gets $1.15 in payment, and I get a credit.

"At night, I take those 10 kWh back," Gusdorf continued, "because my solar array is not generating anything, and KC pays Guzman 8.8 cents for that energy at their wholesale rate.

"The subsidy issue is phony," said Gusdorf. "If it's there at all, we [the rooftoppers] are subsidizing other people, which is fine with me. I don't mind contributing a little bit of low-cost renewable energy."

Gary Ferguson pointed up the value of supporting a local rooftop solar industry, which he feels would die if KCEC reduces the benefit to rooftop owners.

"All of this rooftop money stays local," he said. "It pays the installers and providers. If the power goes out, whatever happens to the county, it's all local. Whereas we're sending millions out of state - not $250,000 but millions - out of state to buy from the power brokers, none of which ever comes back at all."

Ferguson noted that if you shut down the solar array business and they lay off all their people, they're gone. You won't be able to bring them in six months or a year. "In the long run, if you look at the Energy Transition Act," he added, "we're going to need gigawatts of renewable energy at the statewide level. We won't be arguing about a mere 15 or 20 megawatts."

Bob Bresnahan, a Kit Carson board member and founding member of Renewable Taos, took the middle ground. "Rooftop solar, while certainly a benefit to the environment, is still two or three times more expensive per capita than large solar arrays that are tied to the grid. Besides that, rooftop solar is simply unaffordable for many households.

"Next year, KCEC will achieve a high level of solar penetration," he added. "This means that when new rooftop solar installations come online, we're going to have to curtail solar generation somewhere. So the question of fairness arises. Are we going to curtail it at the grid scale, which is costing us about 4 cents per kWh [from KCEC solar installations], or are we going to curtail it behind the meter [from rooftop arrays]?"

Bresnahan indicated that he had negotiated the "grandfather clause" with Reyes, which would keep existing agreements in place with current rooftop owners.

"I feel that new rooftop is not in the interests of our community going forward," Bresnahan said, "unless it has storage included."

Another choice

Bresnahan proposed "decoupling" as one solution to the alleged inequity. In other words, the actual cost of the energy would be separated from infrastructural costs for billing purposes.

"What's currently happening is that infrastructure costs are being layered onto the energy costs that get passed along to KCEC members," said Bresnahan. "If we just passed through the energy costs to members at the wholesale rate along with a small handling charge, then we could bill solar owners for a true infrastructure charge that covers the costs related to their array."

Bresnahan also said he'd asked Reyes to commit to solving this issue locally. "We really want to respect and nurture our rooftop owners - not undermine them. We have to give everybody who's involved, including existing rooftop owners and local installers, a voice in the solution. We can find a win-win if we get everyone in it together."

Storage has to be considered

Jay Levine, the RT president, said, "We really need to figure out how storage fits into this. I think it's fair to ask people installing new solar to add storage to their system, especially now that the cost of solar has gone down so much. There has to be a way for KCEC as the utility to manage that."

Levine also mentioned a safety issue Reyes had brought up. "There's a concern about feeder lines - the local distribution that goes into a neighborhood. If there's too much solar in a neighborhood, the voltage could overwhelm those feeder lines, and that's a big problem."

But that can also be resolved by storage, he added, either behind-the-meter storage at the rooftop installation or storage on the grid in that particular area.

Levine agreed with Bresnahan that more discussion of decoupling is in order. If we break out these numbers, he said, then each household is paying only for its own usage and infrastructure needs.

"If we break these things up, then rooftoppers are putting power on the grid at the same rate Guzman is charging, so it eliminates that idea of rooftoppers being subsidized," Levine added.

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