Power Grab: San Antonio's CPS Looks to Eliminate Net Metering

After years of work to get net metering policies on the books in 43 states, we are seeing an onslaught of utility-backed measures to weaken or completely dismantle this important solar customer privilege. Surprisingly, the latest attack comes from Vote Solar’s 2012 “Utility Solar Champion,” San Antonio’s municipally owned utility, CPS Energy (CPS). Last week CPS unveiled its plan to dismantle net metering -- effectively eliminating solar as a customer option, and putting the brakes on the local solar distributed generation market.

Without warning, last Tuesday CPS Energy’s homepage featured an article laying out the utility's rationale for replacing net metering with a new tariff called “SunCredits.” The new program is set to go into effect for all new solar customers and all current commercial solar energy users in November, with residential solar customers grandfathered into net metering for ten more years. The move is sending shock waves through the solar industry and solar consumers in San Antonio.

Here’s how it works.

Under CPS’s new program, net metering credit would be replaced with a SunCredit, essentially a feed-in tariff, but priced low at the utility's marginal cost of existing generation, with a penny or so extra for incidentals. There are two big problems here.

First, with this proposal, CPS is making solar users mini-solar wholesale generators that must sell all their resources to the utility. Essentially, it takes from San Antonians the right to reduce their electricity bill by installing solar energy on their roofs. Think about that for a second. It’s the functional equivalent of telling customers they can put in all the compact fluorescent light bulbs they want, but they are still going to be charged as if they are using incandescents.

Second, the price that CPS is offering to pay these new mini-wholesale generators is far less than what the solar generation is worth. From the publicly available materials we’ve seen, we believe that the process CPS Energy used to determine the SunCredit tariff ignores most of the benefits rooftop solar generates. In other words, it gives solar customers a bad deal. Under this program the utility plans to credit solar customers at roughly $0.056 cents per kilowatt-hour for their solar production, a 44 percent decrease from the credit customers receive now under net metering. Also problematic for customers looking to make a long-term solar investment, CPS Energy plans to change this price each and every year.

This chart shows how CPS plans to assess the price it will pay for rooftop solar energy.

Figure 1: CPS Energy’s internal calculation of solar SunCredits in San Antonio

This approach undervalues solar on a number of fronts, including:

CPS is not giving any value to the future stream of benefits for solar (even though systems are on-line for 25+ years). In fact, the only question the utility appears to be asking is, “What costs would we have avoided last year if we had sold fewer kilowatt-hours due to our customers using solar energy?”
It is unclear what capacity value CPS is assigning to solar.
It is unclear if any value is given for reducing the operation and maintenance expenses of the grid.
It appears that no value is given for providing a fuel hedge against rising natural gas costs.

The firm that developed Austin Energy’s Value of Solar Tariff (VOST), which is currently at a healthy 12.8 cents per kilowatt-hour, just did a study on the value of solar in CPS Energy territory. Its valuation for San Antonio is almost twice as high as what CPS Energy has proposed to pay customers.

Here’s that calculation from Clean Power Research.

Figure 2: Clean Power Research’s valuation of solar energy exports in San Antonio

That huge discrepancy raises all kinds of questions about the methodology used to develop the SunCredit program. But one thing is clear: more transparent and data-driven discussion is needed before this SunCredit program is taken seriously. In the interim, the existing net metering program should be preserved. It may be rough justice, but rough justice is better than no justice at all.