NV Energy proposes net metering, demand charge analysis in new application

Dive Brief:

NV Energy filed a joint application on behalf of its subsidiaries outlining how it plans to implement Nevada's new net metering tariffs signed into law earlier this year.
The new rates credit new rooftop solar customers at 95% of the retail electricity rate, declining 7% for every 80 MW of rooftop solar arrays deployed until it reaches a floor of 75% of the retail rate.
The application also outlines how the utility plans to use time-of-use rates in order to encourage energy storage deployment as well. However, NV Energy urged commissioners to open a proceeding to examine the the impact of the new net metering requirements on all customers and an analysis of "the need for maximum demand charges for all customers."

Dive Insight:

It's come full circle: NV Energy has finally filed its application with the Public Utilities Commission of Nevada (PUCN) to comply with the new net metering rates after a protracted battle between utility and solar interests over how to compensate rooftop solar users for excess energy exported to the grid.

The battle led to the PUCN drastically cutting the net metering rates at the end of 2015, and making an unprecedented decision to not grandfather existing rooftop solar users into the original rates. The backlash from that decision hit the national stage, as two top solar developers, Sunrun and SolarCity (now a Tesla solar unit) pulled their operations from the state. Gov. Brian Sandoval (R) condemned the decision and chose not to re-appoint two of the key regulatory architects behind it. In addition, Chairman Paul Thomsen resigned earlier this year.

Much of 2016 was spent reversing the decision, leading to the passage of Assembly Bill 405, which restored net metering rates close to the retail rates and protected the customer's right to generate their own energy. Tesla and Sunrun resumed operations in the state after Gov. Sandoval signed the bill into law.

But the debate may not be over. NV Energy has outlined how it plans to implement the new rates complete with time-of-use rates to encourage energy storage adoption. The utility also wants to implement demand charges, but refrained from including them in this initial application.

"Customers who can install technologies that reduce peak demand, or the need to build larger facilities, should benefit from their decisions," NV Energy wrote. "One way to reward this decision-making is through the implementation of a properly designed maximum demand charge."

NV Energy proposed instead the PUCN should undertake an analysis of demand charges on all customers.

Industry officials have long touted demand charges as a technology-and-revenue neutral solution to accurately price the value of distributed energy resources. It is also a more certain method for utilities to recoup costs. But solar interests say the charge essentially negates any savings from rooftop solar arrays.

Arizona utilities had initially proposed mandatory demand charges on their rooftop solar customers. Solar companies, including national installer Sunrun, managed to negotiate a settlement that offered a buffet of demand charge and time-of-use rate options instead, following a regulatory decision to eliminate its retail rate net metering program.

At the time of the settlement, Sunrun's Vice President of Policy Alex McDonough said the deal should not serve as a model in other states, but allowed the company to stay in Arizona's solar market.

It's unclear whether or not NV Energy will take its cue from the Arizona debates. The utility is not backing down from its argument that the policy shifts costs to non-rooftop solar customers.

"Recognizing that the extent of the impact of net metering on customer rates is still unresolved, NV Energy continues to be concerned that its customers are paying more for energy than is necessary as a result of the mandates contained in AB405," the utility wrote. "In addition, certain customers with private generation are receiving services for which they are not paying full cost of service, which in turns results in other customers having to pay those costs."