301 Moved Permanently

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nginx

The Public Utilities Commission of Nevada (PUCN) does not establish the energy policy of the State of Nevada; that role is reserved for the Nevada legislature. Nevada’s original net energy metering (NEM) policy was enacted by the legislature in 1997 to incentivize the fledgling rooftop solar industry. Legislators capped participation to minimize the resulting shift in costs to non-NEM customers. Eighteen years later, the rooftop solar industry sought to eliminate the cap entirely. Legislators, with support from the rooftop solar industry, passed S.B.374, removing the cap but including provisions requiring that non-NEM customers be protected from cost shifts that the cap had been established to prevent. Legislators expounded their objectives on the record.

One legislator said, “It has always been our attempt to back down the subsidies because at some point, why should the neighbor next door have to compensate for that to work? [A]t the end of the day, we as legislators have a responsibility to ensure that we take care of all the ratepayers.”

Another legislator said, “When these things go away, you do have to change your business model somewhat. If you have made billions of dollars the last few years, you should be able to afford to do that. While we will have some people disagree with that, that is exactly what we believe. Some of these industries will have to change their business model to fit what Nevada is going to be doing.”

In passing S.B.374, the legislature made clear that it was prioritizing the protection of non-NEM ratepayers over incentivizing rooftop solar development.

 

Rate design

Prior to the passage of S.B.374, the legislature set NEM rates mandating that electric utilities’ NEM customers receive full retail rate compensation for net excess energy production. In passing S.B.374, the legislature directed the PUCN to set NEM rates that were “just and reasonable.” The PUCN conducted hearings and found that the legacy rates were not “just and reasonable” because NEM customers were not required to pay their full share of fixed costs, resulting in an under-recovery that was costing non-NEM customers $16 million annually.

The new rates approved by the PUCN revised rate components to recover the utilities’ fixed and variable costs with a time-of-use option and no demand charge, while fairly compensating NEM customers for the value of the net excess energy production.

S.B.374 mandated that the commission determine whether the new rates should apply to existing NEM customers. With no difference in the utility’s cost to serve different vintages of NEM systems, the PUCN held to the ratemaking principle of treating equals equally and applied the same rates to all NEM customers. To avoid rate shock, the PUCN ordered that the new rates be gradually implemented over a 12-year period.

 

The path forward

The PUCN recently approved 329 MW of new solar generation for Nevada’s portfolio of renewable resources. At prices averaging 4.1 cents/kWh, these substantial commitments to solar energy reduced solar costs statewide by 35% while substantiating the PUCN’s support for solar that benefits all ratepayers.

The PUCN is a regulatory agency governed by law. Commissioners, as administrative law judges, must only consider evidence that is offered through the formal hearing process. Time spent attempting to discredit the PUCN is time not spent developing evidence for the record and is akin to trying to strike out the umpire in baseball.

As the PUCN begins its review of general rate cases that will revisit NEM rates, I encourage parties to focus their efforts on providing evidence that can be utilized to create a path forward for rooftop solar that results in just and reasonable rates for all Nevadans.

 

Paul A. Thomsen is chairman of the Public Utilities Commission of Nevada, a position he has held since October 2015. Previously, Thomsen served as Nevada Gov. Brian Sandoval’s appointee as the director of the Governor’s Office of Energy.