LAFAYETTE, Calif. — It was only two years ago that Elroy Holtmann spent about $20,000 on a home solar array to help cover the costs of charging his new electric car. With the savings on his monthly electric bills, he figured the investment would pay for itself in about a dozen years.
But then the utilities regulators changed the equation.
As a result, Pacific Gas & Electric recently did away with the rate schedule chosen by Holtmann, a retired electrical engineer, and many other solar customers in north-central California. The new schedule will make them pay much more for the electricity they draw from the grid in the evening, while paying those customers less for the excess power their solar panels send back to the grid on sunny summer days.
As a result, Holtmann’s solar setup may never pay for itself.
“They’ve taken any possibility for payback away,” he said with resignation, looking up at the roof of his 1970s ranch-style house in this suburb a short drive east of Berkeley, California.
The paradox is playing out around the country. Even as policymakers at the federal and state levels promote clean energy to fight global warming, the economics of electricity can often be at odds with those goals.
Thrust in the middle are utility regulators. Even if they support greening the grid through technology adopters like Holtmann, the regulators are also responsible for ensuring that the utilities can afford to supply power to the largest number of customers at the most equitable rates. That includes people without the money or inclination to install solar collectors.
“The grid is no longer just a cheap way to get electrical commodities to people,” said Michael Picker, president of the California Public Utilities Commission. “People want choices, they want customized services,” he said. “And how do you make that fair to everybody, because not everybody is moving as adopters at the same pace?”
Similar dynamics are playing out in some parts of Europe, including Spain and Britain, as public officials push for green energy to justify its costs.
For more than a century in the United States, the public utility rate system assumed a one-way flow of electricity from central power plants to their customers. The role of utility regulators was to adjudicate reasonable rates for the consumer, while allowing an adequate rate of return on the money power companies spent generating and distributing the electricity.
But now, even though rooftop solar energy still accounts for less than half of a percent of the energy generated across the country, its growing popularity is challenging regulators and utilities to rethink their old ways.
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