The Nevada Supreme Court upheld a lower court ruling on Thursday that blocks constituents from voting to restore favorable rates to rooftop solar customers. The decision puts increased pressure on lawmakers to implement a policy change during the next legislative session.
The court ruling addresses a ballot initiative championed by the Bring Back Solar Alliance, a rooftop solar advocacy coalition backed by SolarCity. The referendum sought to repeal a piece of law that allowed utility regulators to impose higher fees on home solar customers.
Regulators approved the new tariff rate in late December. The order increased the fixed service charge for net-metered solar customers, and gradually lowered compensation for net excess solar generation from the retail rate to the wholesale rate for electricity over four years. The changes took effect on January 1, 2016 and promptly brought the rooftop solar market in the state to a standstill, causing companies to cut jobs. The changes were applied retroactively to all net-metered solar customers, eliciting a strong backlash from solar companies and consumer groups.
In February, the Public Utilities Commission of Nevada rejected requests from NV Energy and solar advocates to approve a 20-year grandfathering period for Nevada’s roughly 32,000 existing solar customers (previous estimates put the number at 18,000). Instead, regulators voted unanimously to transition rooftop solar customers onto the contentious new rate plan over 12 years, instead of the initially proposed four.
More than 115,000 people signed the Bring Back Solar Alliance’s petition to overturn the solar rate changes. But after expressing some concern over the ballot wording last month, the Nevada Supreme Court ruled this week that the motion is not a referendum, but rather an “initiative petition,” which means solar advocates would have to launch a new petition urging lawmakers to pass a bill undoing the solar rate changes. Only if legislators fail to approve the measure during the 2017 session can it go to voters in 2018. The initiative petition requires more than 55,000 new signatures by the fall in order to proceed.
“The Supreme Court decision basically invalidated the ballot signatures,” said Chandler Sherman, deputy campaign manager for the Bring Back Solar Alliance, in an interview. “115,000 people said they want the opportunity to vote on this issue in November, but since this can’t be in the hands of the people because of the Supreme Court decision, we hope the legislature will take action to enact the will of the people and reverse the PUC decision, restore net metering and allow people to go solar again.”
Sherman said the Alliance does not currently plan to file a ballot initiative, although it is still an option. Now that the referendum is off the table, solar advocates are looking into filing a “bill draft request” with the state legislature instead. Similar to an initiative petition, a bill draft request calls on lawmakers to take up a legislative issue.
“Either way, it’s in the hands of legislators going forward,” said Sherman.
Nevada Governor Brian Sandoval also plans to push lawmakers to alter the new solar rates. In May, the governor’s New Energy Industry Task Force, convened in response to the net metering decision, passed a motion to grandfather existing solar customers on the old solar rates for 25 years. Recommendations from the Task Force will underpin legislation introduced by Governor Sandoval next year.
In an interesting twist, Sandoval announced last month that he will not reappoint PUCN commissioner David Noble, who wrote the order to increase solar fees and not allow grandfathering. Sandoval has been critical of the PUCN’s decision not to grandfather existing solar customers (which has become a highly politicized issue in the state) and appears to be holding Noble accountable.
On July 27, two days before the Nevada Supreme Court ruled on the referendum, NV Energy reentered the solar policy fray, filing a request for regulators to keep customers who installed their rooftop solar systems prior to December 31, 2015 on the previous net metering rates for 20 years. The utility asked for the grandfathering rule to also apply to customers with active or pending applications as of December 31, 2015.
When NV Energy initiated the request to reduce net metering compensation in July 2015, the utility asked that no changes be made for existing customers. Facing criticism, NV Energy also issued a statement in February saying it supports grandfathering. With its latest filing, utility executives blamed the unfavorable outcome squarely on national solar companies.
“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,” said Kevin Geraghty, senior vice president of energy supply at the utility. “It seems that they created uncertainty for customers who purchased or leased a rooftop system by not clearly communicating that their rates were subject to change in future regulatory proceedings. Many of these net metering customers entered into 20-year leases believing that they would be locked into a rate, and that they would save money because NV Energy rates would increase every year. Neither of these sales pitches are true.”
NV Energy’s latest filing requests a response from regulators in 90 days. However, it may be too late for meaningful regulatory action. The net metering docket has been untouched since the February rehearing. So to approve grandfathering, the PUCN would have to open a proceeding and decide to go back on a ruling it has already passed twice. NV Energy’s filing, coming amid the referendum and action from the governor, could help make grandfathering a reality. Though some may question why the utility didn’t take stronger action sooner.
A report from Credit Suisse notes that the approval of grandfathering in Nevada could have ramifications for the entire solar industry, “as it could restore nationwide faith in the grandfathering precedent.” But even if the old rates are restored for customers who installed their systems before December 31, 2015, the change does nothing to reboot the Nevada rooftop solar market going forward.
A recent poll found that a majority of respondents are in favor of bringing back net metering “to allow better rates for rooftop solar customers.”
“Constituents are paying attention — it’s a top-of-mind issue for Nevada voters and something people care about and want to fix,” said Sherman. “Now it’s up to the legislature.”
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