Saturday, October 8, 2016

Solar Thoughts

For a few days now I've been trying to express my thoughts on the 4-3 decision by the Provo City Council to implement a new fee on rooftop solar customers. I've responded to a couple of email and talked with several people in person, but I felt overwhelmed each time I sat down and stared at a blank screen to write this blog post.

A "closed" neighborhood Facebook group began discussing this issue and asked me to join in. I found it much easier to respond to specific questions and statement and by the end of the night I found that I touched on most of the aspects that I've wanted to write about. Afterwards, as this topic has come up, I've wanted to point back to what I wrote in that group. So I'm going to highlight some of that conversation here, removing others' identity and editing for clarity: (Actually I did a lot of editing and rearranging to make it flow more logically.)

Resident A Is there something that says how much solar users can expect to pay when this goes in effect?
David Harding $3 per month for each kW of system capacity. This will be waved on the first 2 kW of existing systems and applied to the whole system of new installations. The motion that passed calls for the fee will go into effect on January 1st.
LikeReply2October 5 at 10:48pm


Resident B How are solar customers not participating in the infrastructure fees? My fees have not changed since I've has solar other than a decrease in kw used....
David Harding The sizing of power distribution infrastructure (which determines the cost) is not based on the total energy used (which is measured in kWh), it is based on the peak flow of energy (measured in kW). Peak demand is what determines the capacity of the infrastructure that must be provided.
David Harding Customers with high demand spikes and low overall usage cost a lot to serve and don't generate a lot of revenue to cover those costs. Customers with lower demand (flatter usage, minimal spikes) and high usage don't cost much to serve and generate a lot of revenue. But our current meters can't tell the difference between a high demand and a low demand customer.
David Harding Unless it is coupled with a battery, roof top solar generally doesn't decrease a customers peak demand very much, if at all, but significantly reduces their power usage. If you can follow my poor description, it should become obvious why net metering creates subsidization. The base charge is not sufficient to cover all of the fixed infrastructure costs.
Resident A David Harding Thank you for the information. I'm starting to get a better picture of what's happening. I'm more than happy to pay my share, I just want to be sure that I'm being charged in a sensible, thought-out way.
David Harding Oh, it's definitely thought out. But it doesn't address whether solar has value to the community outside of the power equation. It also doesn't take into account the Council's obligation to customers who made long term investments depending on policies that the Council previously put into place.
Resident A It seems to me that the easy solution is to charge people a flat rate across all customers for infrastructure, and then a separate line item for actual power usage. It sounds like Provo Power doesn't actually know their own infrastructure costs, so this may not be possible.

This fee sounds like this fee is a greedy shot in the dark. Maybe it will help, but at this point it just sounds like they are actively discouraging new solar installs, and punishing people that are trying to be responsible power users.
Resident C Provo Power does not allow people to disconnect from the grid and charges a $600 hook-up fee. Non-solar customers do not pick up that cost. The city buys the power produced at full price and charges full price to the neighbors who use the power produced by solar customers. The credits given to solar customers covering the Google fiber and transportation fees is a flaw in the billing system that can easily be fixed. That inequity is not a product of solar customers but of a poor billing system within the city. If the city council was struggling about balancing fairness they would not target solar customers but change the rate structure so that all of the 24% of Provo power users who don't pay their infrastructure costs would pay their fair share. Mr. Walter laid out a fair rate change in the work session meeting on Tuesday. Looking only at solar customers to make up their infrastructure costs, I believe, was a very unfair thing for the council to do.

Resident A I agree that solar customers should be paying for infrastructure. Absolutely. But if the council is looking for equity, that charge needs to be split evenly. Targeting solar customers doesn't seem equitable.
Resident D As I understand it....solar customers are not participating in the infrastructure costs...yet they are utilizing the infrastructure.
Resident A Resident D So, I'm back to my original proposal: A flat infrastructure charge for all customers. Whether you use solar or not. Whether your solar covers all your usage or not. Then, after that line item, a separate charge for the actual power used. That would be my idea of equitable.
Resident D I think that would be most transparent. And I think Solar should pay separately for the Transportation Utility Fee and Fiber infrastructure.
Resident A Resident D Yeah. I agree with that totally.
Resident E A *huge* step in the right direction here would be to address the larger iniquities in the system. It's the fact that solar is being singled out that is most upsetting. Fix the structural problem in how infrastructure costs are split between users *first*; then address the unique challenges of solar.
Resident F Maybe it should be transparent in the bills and delineate the infrastructure.
David Harding Raising the base charge is an option. Currently the base charge that everyone pays covers only a third of the infrastructure costs, and less than a quarter of all fixed costs (which include infrastructure). Raising the base charge to cover more of the fixed costs would be matched with a reduction in the electrical usage rate ($/kWh) to make it revenue neutral. It is estimated that raising the base charge to even cover just the infrastructure costs would raise the bills on 15,000 customers (others would see their bills reduced).

The 24% number assumes that the fixed costs are split equally across all users. Some users place more demand on the system than others (based on peak demand, not total energy used) and are more costly to serve than those who put less demand on the system. A demand-based distribution of fixed costs is much more reflective of the cost to provide power to that customer. We just don't have the ability to measure demand at individual residences...yet.

It should be noted that such a change would also make roof-top solar less financially attractive to the solar customer, probably much more so than the $3/kW-mo capacity fee.

Resident E The fee will scale based on the size of their array, despite this supposedly being put in place to account for fixed infrastructure costs.
David Harding The intent was to address more than the fixed costs, part of our power bill goes to fund the general operations of the city. Larger solar systems avoid more of these charges, but with the solar capacity charge more is recouped. Keep in mind that the $3/mo-kWh fee doesn't remove all of the subsidy (but it may be enough to remove all of the potential return on investment).
Resident D I also don't think that Solar customer should be exempt from paying the Fiber and the Road fees as a separate line item.
UnlikeReply2October 5 at 9:59pmEdited
David Harding In the name of transparency, I like Larry Walter's idea to pull the "General Fund Transfer" portion out into it's own line. This would open up a new option, once we have the smart meters in place, to calculate the general fund transfer portion for all customers based on their gross usage rather than net usage.
Resident B  Can you help explain to those of us who have solar, who were under the impression that we could have solar for free of a fee penalty living in Provo, are now subject to a monthly fee? It takes about 10 years to pay off the panels without any type of usage fee. This fee rate week destroy any type of solar progression in Provo and seems to contradict the $2000 state incentive for solar purchase. The city of Provo is now working against our awesome governor's pro-clean energy push.
Resident B The biggest frustration is in that when i called Provo City power last fall it was made clear to me that Provo city was not planning on placing any fee. I would have never purchased solar in a city with a grid fee, the savings do not add up.
LikeReplyOctober 5 at 10:11pm


Resident D I may just be guessing here...but what IF Solar is the unknown and they just wrapped their heads around recent data and are now trying to address the problem...then they wouldn't actually be singling out Solar. It certainly seems like there is a lot more to discuss surrounding this issue.
David Harding I appreciate your calm approach, Resident D, seeking for understanding. But I think we should have addressed the problem going forward, not retroactively.













Resident G I feel like those that already have solar power should be grandfathered out or at a minimum be phased in. I know I made my decision to go solar based on numbers that did not include the city adding additional fees. This has only made more of us want to go completely off grid as soon as possible. Won't the city lose more money if they no longer have us tied into the grid or are they hoping this pushes more people to go off grid?
Resident H I will seriously be considering batteries now and might also completely get off the grid. Unfortunately batteries aren't quite there yet. But with the Gigafactory coming online soon things will change very soon and I think it will be much easier to get fully off the grid.
Resident D I absolutely understand that perspective.
Resident E I'm not even sure that it's legal to be off grid. Will new construction pass inspection without an electrical hookup?
David Harding I have high hopes for what becomes possible when we align our electrical rate structure with the cost to provide electrical service. We will need to wait until we have the smart meters in place, but that will be coming very soon. With things like demand-based fees (this is how commercial customers are currently charged) and time-of-day pricing, technologies like batteries (with and without attached solar) can become very financially advantageous -- for both the customer and the publicly owned power utility!
David Harding

Write a reply...
Resident H I still don't understand why this solar tax got put in place before the smart meters. Cart before the horse here. We know the smart meters will provide some very good detailed data on usage. Could we really not have waited to get some good data from the smart meters before throwing new taxes out? Once that data is out there and can be analytically instead of emotionally driven then I think more people could get behind change. They did spend time talking about how the Smart meters that have already been budgeted for will be installed soon so that they can monitor actual usage. Could we not have waited to get good solid data before pulling the trigger on this decision?
David Harding The urgency that I felt on this issue is due to the drop in solar installation costs and the related increasing rate in solar adoption. Net metering was put in place when solar was so expensive that only people willing to lose a significant amount of money would install solar, and net metering was a way to take the edge off. Now new solar installation (*may*) pay for themselves over their lifetime and even provide a return on the investment (but only because of a subsidization that is far greater than the ROI for the customer). People are upset (myself included) that solar customers who already have their systems, were not grandfathered. The number of current solar customers is small and grandfathering would not have been a significant cost (relatively speaking). But if we waited another 18 months the number of solar customers could have quadrupled, making it much more difficult to grandfather.

My preference would have been to grandfather current solar customers and place a moratorium on new net-metering contracts. After the new meters are installed and we have a coherent rate structure, new potential solar customers would be able to make an informed decision.
Resident D I wish they would have studied for a couple more weeks.
Resident E Solar users are very cost conscious individuals. Remember these are people that are investing thousands in technologies with a rough payoff of 10 years or more in the future. They are committed, stable, responsible members of the community. They are al...See More
Resident H I cannot like this comment enough.
Resident D I totally know these solar users and they are the cream of the crop...and my beloved neighbors. So how would you create equity?
Resident E At the magnitude of the deficit under question, equity shouldn't be the first priority. Build trust and dialog first. The city can afford a few more years to work this out, study other cities, and find good solutions.

I don't have solar now, but I'm building a new home soon and Provo's solar-friendly policy had encouraged me to consider installing solar. Now I'm nervous about the prospect - not because of this specific fee, but because of the apparent knee-jerk implementation of it. What other fees are going to come down the line?

At the very least, existing solar users should have been grandfathered in. Now all of a sudden there is a lot of uncertainty about how the city will act in the future.
David Harding

Resident H It was a sad day that Provo implemented this tax on solar customers. Such a step backwards for this great area. It really hurts.

Resident A The City Council doesn't seem to think there's more to discuss. If they did, they would be talking, not creating fees that don't make sense.
Resident D Well there are options.
Resident D The Council moves by 4 votes.
David Harding And we lost the vote to grandfather current solar customers by a 3-4 margin.
David Harding

Write a reply...
Resident H It's time for me to tap out of this conversation. The council made a choice that I and many others disagree with. It's done, move on. Just remember next time it's time to vote.
David Harding I'm not yet ready to move-on on this one.
Resident C I think that if the discussion continues, in the end we can work out a good and balanced ordinance that most people can agree upon
David Harding Resident C, but all sides need to be willing to learn, understand, and seek for the best interests of everyone involved.

Monday, October 3, 2016

Net Clothing

My wife and I were shopping at a fun boutique down on Center Street. We found a couple of shirts that I liked and got in line to buy them. We overheard the conversation going on between the store owner, who was working the register and the shopper in front of us. The shopper had selected three shirts from the store, but only wanted to pay for one of them and wanted to exchange two home-made shirts for the other two boutique shirts. The home-made shirts were actually pretty cute1, but were obviously of inferior quality2 than the boutique shirts. The store owner explained that she works with local producers, but that they are carefully selected and sign contracts so that the boutique can get a reliable supply of clothing at a good price. She explained that she buys the shirts wholesale and has to mark them up in order to pay for, among other things, rent for the store and wages for employees.

I was in line behind this customer thinking to myself, "it's great that we have have crafty people who are locally producing clothes, there are a lot of advantages, and we should support them, but it is silly to expect to get full retail, at your own convenience, regardless of the opinion of the retailer."

Then the lady in front of me said matter-of-factly, "Well, that doesn't matter, there is a new law called "Net Clothing" which requires you to charge me only for the difference in quantity of clothes that I buy. She laid down the home made shirts, cash for the third shirt, picked up the three boutique shirts and walked out of the shop.

The owner was pale and in shock when I stepped up to the counter. When she came to, she apologized to me and said that she'd have to charge us 5% more for our selection. She still had to pay rent and her employees, and now had an unpredictable stream of goods that she would have to compensate for.

I left the store thinking, "that law doesn't make sense. It's just not fair."

I'm sure you realize that this is not an actual experience, but an allegory. There is no law (that I know of) called "Net Clothing", but there is a common law across US called net metering which requires power companies to give full credit to "distributive generation" customers (those who produce power by solar, wind, or other technologies) for any electricity that they add back to the grid. Because Provo Power is a publicly owned utility, Utah's net metering law doesn't actually apply, but we have previously adopted a "Net Metering" policy on our own.

1,2In the allegory I suggested that the home-made shirts were "actually pretty cute" but were of "inferior quality". By "actually pretty cute" I'm acknowledge that roof-top solar has a lot of attractive qualities, and like local art and crafts, should be encouraged. By "inferior quality" I'm referring to the intermittent nature of the power source. Solar can't be used at night, but at least we know that and can plan on it. During the day, solar *might* be available, but it may not be. When securing contracts, solar production can't be relied on. And those contracts cost money whether the energy is used or not. My point is that there are pros and cons to solar energy.

I believe in solar energy. It isn't cost effective now, but future advancements will make it so. Those future advancements are funded by the commercialization of the current technology. Incentives are needed to speed commercialization and fuel the advancement. Incentives should be defined, deliberate, and phase out, just like the incentives offered at the state and federal level. Abusing the current electric rate system to act as an incentive is poor policy. It leads to things like sub-optimal panel placement which maximizes energy production, but not value. Provo will soon have smart meters deployed to every residence and will have a smart billing system which can be used to align customer incentives with the costs of providing electricity. In the mean time, Provo Power customers who are considering installing solar panels need to understand that they can not assume that the current electric rate structure will never change.

Resident who want to lessen the environmental impact of their electrical usage may want to consider Provo Power's Renew Choice program.

What's Up? - 3 October 2016

What's Coming Up?

COUNCIL WORK MEETING

2:00 PM, Tuesday, September 20th, City Conference Room, 351 West Center

  1. A report on vendor selection for software related to the Council priority to improve public engagement (16-042)
    Encouraging Public Engagement is one of our nine active priorities. As part of this effort we have been looking into some software that will facilitate online engagement with residents in a moderated environment. The findings and recommendations of the staff will be presented.
  2. A discussion on parking
    1. A discussion on the Joaquin Parking Study (16-068)
    2. A discussion about potential amendments to parking standards in Transportation Oriented Development (TOD) & University zones  (16-109)
  3. An update regarding process for the quarterly review of 25 fees (16-102)
  4. A discussion on vendor selection and implementation of Body-Worn-Cameras for Police Officers (16-103)
    The Police Department is considering the implementation of body-worn cameras for its officers. Both the policy and the appropriation for the camera system is proposed. The policy tries to strike a balance between privacy and transparency. The cost will be somewhere around a half million dollars over a 5-year period.
  5. A report and continued conversation regarding the balance of private solar energy generation, consumption, and net metering alternatives (16-093)
    We've been talking about this for a while now. I'll go back to what I've written in the past, "In order to encourage conservation, and to reduce the burden on our lower energy users (who are assumed to also be lower income), we have previously set base fees low and charged higher usage rates. The base fees aren’t enough to cover the fixed costs of servicing homes, but the gap is made up by the higher usage rates. This system has worked well, but can be exploited by solar roof top and other “distributive” generators, who get the full benefit of being on the “grid” (like having their lights come on whether the sun is shining or not) but may not be paying toward the grid at all. During this discussion we will be looking into changes to our electrical fee structure in order to better meet our goals (conservation, reliability, low cost, fair costs, etc.)" This isn't about punishing certain customers. This isn't about a revenue shortfall. This is about making sure our electric rate structure makes sense even while the power landscape morphs.
  6. A discussion on potential legislation related to Trampoline Gyms (16-105)
    This item has also been discussed for a while now. I believe that we are getting close.
  7. Closed Meeting

COUNCIL MEETING

5:30 PM, Tuesday, September 20th, City Conference Room, 351 West Center

          Public Comment

  1. A resolution consenting to the Mayor's appointment of James Miguel as the Chief of the Fire Department for the City of Provo. (16-107)
    I don't believe I've met Mr. Miguel and haven't received any information about him so I look forward to learning about his qualifications.
  2. An ordinance enacting Provo City Code Chapter 6.11 (Trampoline Gyms) to regulate the licensing of Trampoline Gyms in Provo. (16-105)
    Same as Item 6 in the Work Session.
  3. An ordinance amending Energy Rates on the Provo City Consolidated Fee Schedule. (16-093) 
    Same as Item 5 in the Work Session.
  4. A resolution appropriating $260,000 in the General CIP Fund for purposes related to the Fleet Facility Project and applying to the fiscal year ending June 30, 2017. (16-110)
    There is no information on this item in the packet.
  5. A resolution approving a Power Plant Property Lease Agreement between Provo City and Utah Municipal Power Agency. (16-024)
    There was an old, inefficient, polluting power plant on this property before the campus was redone. It will be replaced with a much cleaner, quieter power plant. The plant is not run regularly, it is used for contingencies.
  6. An ordinance amending the Zone Map Classification of approximately 2.44 acres of real property, generally located at 1290 North Geneva Road, from Agricultural Zone (A1.5) to One-Family Residential (R1.10), Lakeview North Neighborhood. (14-0013R)
    This is a plot with a long and ugly history.