Sen. Rodríguez urges City Council to oppose EPE’s “solar penalty” proposal
Austin – Sen. José Rodríguez wrote a letter to El Paso City Council urging them to oppose El Paso Electric Company’s proposed pricing scheme for solar customers. EPE proposes to charge more to customers who seek to conserve power and lower costs; this is bad for El Paso and could set a dangerous precedent for other communities across Texas.
“Quite frankly, I still do not see how solar customers are functionally any different than other customers trying to lower their energy bills by, for example, using energy efficient appliances or weatherizing their homes — or for that matter, going completely off grid and using a portable generator,” wrote Sen. José Rodríguez. “If EPE gets its way, only solar customers would be charged more for wanting to rely on EPE’s grid less.”
Note: Text of the full letter is below.
The Texas Public Utility Commission plans to begin hearings on the proposal, and an overall rate increase request from the utility, on Aug. 21. A similar request was made by the utility in 2015, and the rate case ultimately was settled without inclusion of the solar penalties, which in this latest proposal could increase rates for some solar customers by 100 percent. EPE argues that solar customers, because they use less electricity, do not pay for maintenance of the grid, the system that delivers energy from a power plant to a customer. However, in developing this argument, EPE discounted facts that show how solar customers actually help the system.
“It’s shameful that EPE still refuses to consider the numerous positive contributions residential solar brings, including less demand on their grid during peak usage. Solar also helps keep electricity costs low for all ratepayers by eliminating the need to construct new power plants,” the letter states. “Additionally, excess energy produced by a solar customer can be immediately sold by EPE to the customer’s neighbors — at a substantial up-charge — without any extra infrastructure costs to the utility.
“According to an OPUC filing in the 2015 rate case, EPE did not consider any offset for the value of solar energy when it calculated costs of solar customers, producing an outcome biased in favor of the utility. Consumers should not be coerced into dependence upon utility-generated power simply because the utility wants to maintain its profits.”
Text of the full letter:
August 3, 2017
The Honorable Dee Margo
The Honorable Peter Svarzbein
The Honorable Alexsandra Annello
The Honorable Cassandra Brown
The Honorable Sam Morgan
The Honorable Dr. Michiel Noe
The Honorable Claudia Ordaz Perez
The Honorable Henry Rivera
The Honorable Cissy Lizarraga
City of El Paso
300 N. Campbell
El Paso, Texas 79901
VIA U.S.P.S. & ELECTRONIC MAIL
RE: Application of El Paso Electric Co. to change rates, Public Utility Commission of Texas Docket No. 46831
Dear Mayor and Council Members:
I write in opposition to El Paso Electric Company’s (EPE) proposal to create a new rate category that unfairly targets small businesses and residential customers who install solar. I previously wrote to the El Paso City Council to protest the solar proposal included in EPE’s 2015 rate case filing, which was ultimately settled without inclusion of the solar provisions. Because the utility’s current proposal is functionally identical to the 2015 proposal, and has expanded to apply to small commercial customers, I again respectfully request that the City of El Paso formally oppose EPE’s attempt to dramatically disincentivize the growth of solar generation in El Paso.
Once again, EPE proposes segregating residential solar customers into a new rate class and increasing their bills, this time by almost 100 percent, according to testimony filed in the rate case by the Solar Energy Industries Association (SEIA). By contrast, other non-solar residential customers’ bills would raise roughly nine percent, meaning solar customers’ rate increase is ten times more than their non-solar neighbors.
But this alone does not tell the full story. Because of the variation in how EPE’s proposal would impact individual customers, SEIA stated more than half of solar customers would see a loss of 40 percent of the savings they expected from installing solar systems — savings they relied on to pay for their investment in the solar systems. Other customers would actually pay more for electricity than if they had never installed solar systems at all.
Right now, all residential ratepayers’ bills are calculated using a predictable billing method. All customers, solar and non-solar alike, are charged based on the energy they actually use. Solar customers differ only in that, through net metering, they earn credit for any solar power they self-generate, thus lowering their electric bills.
EPE’s new demand charge would instead be based on when each individual customer uses EPE’s electric grid most that month. For nearly all solar customers, this will, of course, be at times when the sun is not shining and their solar panels are unable to offset energy demand. In other words, rather than charging solar customers based on the electricity they actually use, EPE wants to add a new demand charge that also bills them on the maximum amount of electricity they use at the same time during the month, regardless of when that happens. On top of this, EPE also proposes solar customers be switched to a “time of use” rate that charges more for electricity used in the hot El Paso summers.
The complexity of EPE’s proposals for solar customers would make it impossible for them to reliably predict their monthly electricity costs under EPE’s plan. The utility would not notify a customer of their highest demand until after the billing cycle finishes and they’ve already been slapped with a high fee. EPE has not described how it will meaningfully educate consumers whose rates will change, and the utility has no plans to provide customers information necessary to alert them of potential high charges before they are incurred.
As a matter of basic fairness, it is simply not appropriate to apply steep demand charges — which are usually reserved for sophisticated commercial ratepayers like big box stores, factories, or refineries — to otherwise ordinary neighborhood homes or small businesses. While sophisticated commercial ratepayers have staff who can manage the company’s electricity use to deal with demand charges, residential consumers cook dinner when it is time to eat, cool their homes when it is hot outside, and refrigerate their food all the time to avoid spoilage.
This proposal clearly undermines the major reason why customers invest in solar at all — the confidence that it will pay for itself through lower monthly electric bills. What new customer would install solar panels today if they cannot predict what, if any, their energy savings will be? Under EPE’s proposal, solar customers may actually pay more money per month for energy they did not use!
Quite frankly, I still do not see how solar customers are functionally any different than other customers trying to lower their energy bills by, for example, using energy efficient appliances or weatherizing their homes — or for that matter, going completely off grid and using a portable generator. If EPE gets its way, only solar customers would be charged more for wanting to rely on EPE’s grid less.
This new rate class proposal contradicts the intent of Senate Bill 1910, a bill that I and then State Rep. Dee Margo passed in 2011 to introduce solar net metering to EPE’s service territory. At the time, EPE requested the legislation because it also included provisions to shore up EPE’s status as a vertically-integrated monopoly, protecting them from joining the other 75 percent of Texas in a competitive deregulated electricity market. EPE agreed to solar net metering to get those protections. Yet now the utility would contravene the will of the legislature and game the system by handicapping a customer’s ability to save money by installing solar systems.
Like my colleague Rep. Joe Pickett, who introduced legislation in the special session that would prohibit EPE’s solar proposal, in light of EPE’s recent rate case, I too think we may need to examine at the state level the utility’s dogged attempts to quash the spread of solar — as well as perhaps reexamine EPE’s monopoly status.
I am particularly disturbed to see that EPE continues to push misleading narratives to support this discriminatory rate proposal. For one, the utility argues that solar customers “unfairly shifted” costs to other ratepayers. This is false. Rates for all users are set through the rate-making process alone. Residential customers are not paying more on their electric bills because a neighbor has solar.
Instead, through demand charges, EPE would systematically overcharge solar customers when compared to their neighbors. This is not just my opinion, but was the conclusion of the state’s Office of Public Utility Counsel (OPUC), which represents residential consumers, as a class, in utility proceedings. In the 2015 rate case, OPUC testified that EPE’s proposed demand charges are unjustified because there is no relationship between those charges for solar customers and their use of the grid at peak times. In the current rate case, OPUC continues to oppose demand charges for solar customers.
The truth is EPE has been coming after residential solar because they see its enormous growth as a threat to their profits — which, by the way, jumped more than 18 percent to $96.8 million since their last rate case. When the utility filed its 2015 rate case, it reported approximately 522 solar customers in its service territory. That number jumped to nearly 3,000 as of July, according to the El Paso Times. Nevertheless, solar customers still comprise only about one half of one percent of EPE’s total customers.
EPE’s disdain for this small minority of customers was on full display when, according to the Houston Chronicle, an EPE vice president told an audience at a solar conference in Austin, “We are competing with our own customers.”
It’s shameful that EPE still refuses to consider the numerous positive contributions residential solar brings, including less demand on their grid during peak usage. Solar also helps keep electricity costs low for all ratepayers by eliminating the need to construct new power plants. Additionally, excess energy produced by a solar customer can be immediately sold by EPE to the customer’s neighbors — at a substantial up-charge — without any extra infrastructure costs to the utility. According to an OPUC filing in the 2015 rate case, EPE did not consider any offset for the value of solar energy when it calculated costs of solar customers, producing an outcome biased in favor of the utility. Consumers should not be coerced into dependence upon utility-generated power simply because the utility wants to maintain its profits.
Strangely, EPE does seem to appreciate the benefits of solar when it comes to its own utility-scale solar generation plants. The utility will recover the costs of these plants through rates charged to all customers. Meanwhile, individual homeowners or small businesses installing solar do not cost their neighbors anything.
EPE’s current effort to disincentivize solar is not happening in a vacuum. EPE is the latest in an organized, nationwide series of efforts to remove customer choice that have already demonstrably damaged the solar industry and ratepayers. The New York Times recently reported on the success of organized efforts at the state and federal level by traditional investor-owned electric companies like EPE, led by their lobby group the Edison Energy Institute and the Koch brothers-funded American Legislative Exchange Council (ALEC), to slow growth of solar. According to the Times, since 2013, when Edison first sounded the alarm that solar “raises the potential for irreparable damages to revenues and growth” for traditional utilities, utilities convinced lawmakers in Hawaii, Arizona, Maine, Indiana, and Nevada to phase out net metering. In 2017 alone, 42 utilities in 25 states took action to change solar-related policies, according to a recent report from the North Carolina Clean Energy Technology Center.
Make no mistake — El Paso is now the Texas test case. If EPE succeeds in undermining solar here, then we will surely see similar proposals spread across Texas.
I ask that the City of El Paso, being the largest municipality with original jurisdiction over EPE’s rates, formally oppose the creation of a partial requirements class and demand that all residential and small business customers are charged fairly.
I appreciate your thoughtful consideration of this matter.
Sincerely,
José Rodríguez
cc:
The Honorable Joe C. Pickett
P.O. Box 2910
Austin, TX 78768
The Honorable Joe Moody
P.O. Box 2910
Austin, TX 78768
The Honorable Mary González
P.O. Box 2910
Austin, TX 78768
The Honorable César Blanco
P.O. Box 2910
Austin, TX 78768
The Honorable Lina Ortega
P.O. Box 2910
Austin, TX 78768
The Honorable Poncho Nevárez
P.O. Box 2910
Austin, TX 78768
Public Utility Commission of Texas
Attn: Filing Clerk
1701 N. Congress Avenue
Austin, Texas, 78711
Mary Kipp
CEO
El Paso Electric Company
100 N. Stanton
El Paso, Texas 79901
Cassandra Quinn
Assistant Public Counsel
Texas Office of Public Utility Counsel
1701 N. Congress Avenue, Ste 9-180
P. O. Box 12397
Austin, Texas 78711-2397
Solar Energy Industries Association
Michael J. Jewell
Jewell & Associates, PLLC
506 West 7th St., Ste. 1
Austin, TX 78701
***
José Rodríguez represents Texas Senate District 29, which includes the counties of El Paso, Hudspeth, Culberson, Jeff Davis, and Presidio. He represents both urban and rural constituencies, and more than 350 miles of the Texas-Mexico border. Senator Rodríguez currently serves as the Chairman of the Texas Senate Democratic Caucus. He is Vice Chair of the Senate Committee on Agriculture, Water, & Rural Affairs, and a member of the Senate Committees on Natural Resources & Economic Development, Transportation, and Veteran Affairs & Border Security.
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