Are state utility regulators at last ready to embrace customer-owned solar?

Almost four years ago, Virginia’s State Corporation Commission approved a request from Appalachian Power to impose “standby charges” on grid-connected homeowners who installed solar arrays between 10 and 20 kilowatts. The approval came not long after the SCC had given the same authority to Dominion Power (now Dominion Energy Virginia).

The standby charges, dubbed a “tax on the sun,” effectively shut down the market for these larger home systems. Since then, Virginia utilities have made no bones about their desire to dismantle the rest of the Virginia law that has enabled the growth of the private solar market.

The law permits solar owners to “net meter,” giving them credit at the retail rate for the electricity they feed onto the grid on sunny days and letting them use that credit when they draw electricity from the grid at other times.

Utilities say net-metering customers don’t pay their fair share of grid costs. Solar advocates say the subsidy runs the other way: both the utility and society at large benefit when more customers install solar. Independent studies find the “value of solar” to be above the retail rate; utility-funded studies find much lower values. In Virginia, the debate continues to rage, but in 2014, at least, the SCC came down squarely on the utility’s side.

Fast forward to 2018. This year the General Assembly passed a law called the Grid Transformation and Security Act that, among other things, envisions an electric grid of the future that incorporates distributed generation like rooftop solar. And suddenly the staff of the SCC sees customer-owned solar in a new light.

Members of the commission staff filed testimony last month in response to Dominion’s 2018 Integrated Resource Plan, which proposes large amounts of utility-built and owned solar. Associate Deputy Director Gregory Abbott devoted much of his testimony to bashing Dominion’s solar plans.

But just when a reader might have concluded that Abbott hates solar, he pivoted to the suggestion that Dominion should consider offering rebates for customers who install their own rooftop solar:

“Given that the company is developing a Grid Transformation Plan that is designed specifically to integrate customer-level DERs [distributed energy resources], and given the company’s peak load forecast, staff believes the company should explore developing a rebate program to incent customer-owned rooftop solar systems,” Abbott wrote. “Staff believes that it is logical to incent these DERs particularly since the Company’s Grid Transformation Plan pursuant to the GTSA is designed specifically to handle these DERs. Staff also notes that such a program could be considered to be a peak shaving program and eligible for cost recovery through Rider CIA. To the extent that the program passed the economic tests, it may obviate the need for some of the more expensive capacity resources as described in the company’s proposed build plan. Such a program would be more environmentally benign as it would take advantage of existing brownfield sites rather than the greenfield sites required for utility-scale solar.”

These are, of course, precisely the arguments made by advocates for distributed solar.

The support from SCC staff comes at an opportune moment, as the Northam administration considers making distributed solar a centerpiece of its new Energy Plan.

It could also complicate Dominion’s efforts to limit and penalize customer investments in solar. Last year Dominion’s opposition doomed a raft of bills intended to make it easier for customers to use Virginia’s net metering law. When solar advocates try again in the 2019 session, having the support of the SCC could change the minds of legislators who, until now, have been happy to accept Dominion’s arguments.

All this assumes the SCC commissioners agree with their staff on the value of customer-owned solar to the grid.

If they do, it could signal a new day in Virginia for customer-owned solar.

Editor’s note: The views of our opinion contributors are their own and do not necessarily reflect those of the Virginia Mercury.