Update: On September 6, PUCN Chairman Paul Thomsen reversed his initial ruling and concluded that SolarCity could take part in Nevada’s upcoming grandfathering dockets. The first hearing date is set for September, 19.
In late July, NV Energy asked the Public Utilities Commission of Nevada to allow existing rooftop solar customers to be grandfathered in under the state’s previous, more favorable solar tariff, rather than be required to adopt a contentious new rate scheme introduced at the beginning of the year.
The request was filed in two separate dockets, one on behalf of Nevada Power Company (16-07028) the other on behalf of Sierra Pacific Power Company (16-07029), both of which are subsidiaries of NV Energy. A pre-hearing conference was held on August 25, and regulators plan to move forward with a review of the proposal.
SolarCity, however, will not be a part of the discussion.
Earlier this week, the PUCN blocked the national rooftop solar installer from intervening in the grandfathering proceedings. Commissioner Paul Thomsen, presiding officer of the decision, determined that the fact that SolarCity has contracts with Nevada customers does not allow the company to represent those customers. He added that those contracts “will remain unchanged, regardless of the outcome of these dockets.”
“SolarCity is not an association and, therefore, cannot represent the interests of other persons simply because the other persons may have installed SolarCity equipment,” the order states. Thomsen found that SolarCity’s customers’ interests are already adequately represented by the Attorney General’s Bureau of Consumer Protection.
SolarCity issued a statement today condemning the PUCN’s decision, pointing to the company's repeated efforts to act on behalf of its customers.
“The Presiding Officer has excluded the one party that the people of Nevada actually chose of their own volition, their solar provider,” said Jon Wellinghoff, SolarCity’s chief policy officer. “It makes no sense to exclude these Nevada ratepayers from the table given SolarCity has been fighting for the grandfathering of these solar customers from day one.”
NV Energy’s grandfathering request was filed in July, as solar advocates, backed by SolarCity, sought to advance a ballot initiative that would restore the old rates for all solar customers in Nevada. It also came after a energy task force recommended that Governor Brian Sandoval introduce legislation on grandfathering in 2017. With momentum gathering, NV Energy’s "advice letters" asking regulators to take up the issue of grandfathering again within 90 days was welcomed as a way to speed up the approval process.
The entire grandfathering issue stems from a new rate tariff approved in December 2015. In that order, the PUCN granted NV Energy’s request to reduce the net-metering credit solar customers receive for sending excess solar power back to the grid. The commission also decided to lower volumetric energy rates and triple the fixed fees that solar customers pay. The changes took effect on January 1, 2016 and promptly brought the rooftop solar market in Nevada to a standstill, causing companies to cut jobs.
But the most controversial aspect of the order was that regulators decided to apply the changes retroactively to all of Nevada’s roughly 32,000 existing solar customers. These households made a decision to go solar based on a specific set of circumstances, including the availability of state incentives and net metering credits. Under the new tariff, rooftop solar no longer pencils out economically for many of these customers.
On January 8, shortly after the new rates took effect, the Bureau of Consumer Protection and an alliance of solar companies, including SolarCity, asked the PUCN to reconsider its ruling, underscoring the need to grandfather in existing solar customers under Nevada’s old rates. On February 12, regulators denied those requests. Instead, regulators issued a final ruling to transition rooftop solar customers onto the contentious new rate plan over 12 years, instead of four years, as initially proposed.
As solar advocates protested, Commissioner Thomsen insisted the rate changes were necessary to eliminate a $16 million per year cost shift from solar customers to non-solar customers.
NV Energy did not seek to apply the tariff changes retroactively in its original 2015 filing, and it has since expressed varying levels of support for the practice of grandfathering. In February, NV Energy addressed the issue by presenting the commission with seven rate options -- five of which recommended extending the transition timeline. The remaining two options recommended letting existing solar customers stay on the old rates for 10 and 20 years, respectively.
In February, as regulators took up appeals to revisit the rate change, NV Energy clarified that it supports 20-year grandfathering. But it wasn’t until July 27 that NV Energy issued its “advice letters,” making an official appeal for regulators to allow existing solar customers to stay on the previous rates.
“While SolarCity and other solar advocates appealed as soon as legally possible in support of grandfathering, NV Energy waited five months,” SolarCity stated in a press release. During that time period, NV Energy collected on the higher fixed charges existing solar customers are required to pay.
“The utility’s delay gives credence to the cynical notion of some that this proceeding is meant to rehabilitate NV Energy’s waning public image, rather than support what’s in the best interest of Nevada’s solar consumers and other ratepayers,” the statement adds.
Meanwhile, NV Energy claims that SolarCity and fellow installer Sunrun squandered the utility’s attempts to negotiate a resolution on the solar rates earlier this year and thus needed to act alone. "Unfortunately, it appears that these out-of-state solar suppliers are more concerned with increasing the subsidies needed to run their businesses than taking care of their approximately 32,000 contracted customers, who are our customers too," NV Energy said in a July press release.
NV Energy replied to a request for comment, but did not offer any additional information on the failed negotiations and declined to comment on the commission's decision to bar SolarCity from future grandfathering discussions.
If the PUCN does approve grandfathering, stakeholders will be watching closely to see how many customers qualify for the old rates. All existing customers prior to 2016? Or all existing customers prior to the date Nevada hit its net metering cap? There will also be questions about when and how NV Energy will return the money customers have paid to date. If regulators do not approve the practice of grandfathering, attention will turn to the state legislature.