Legislators built a solar program for apartment dwellers. The SCC gutted it.

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The State Corporation Commission recently finalized regulations for the Multifamily Shared Solar Program, created by the General Assembly to give residents of apartment buildings and condominiums the ability to use solar energy from panels installed on their buildings. But in implementing the program, the SCC also made sure it can never be used.  

Dominion Energy is largely to blame here, as it so often is whenever customer-sited solar encounters barriers. The utility proposed to lard up the program with fees, none of them allowed by the law. But it’s the SCC’s agreement with Dominion that’s the problem—and not just for people in apartment buildings who want solar, but for the future of any solar in Virginia that isn’t utility-owned. 

2020’s Solar Freedom law set out to make it easier for residents and businesses to install solar onsite. At the heart of the law is net metering, the program that credits solar owners for excess electricity fed back into the grid. Net metering makes solar affordable for customers, so giving more people access to net metering means more private investment dollars, more jobs and a more resilient power grid. 

The multifamily shared solar provision is meant to extend net metering-like benefits to residents of apartment buildings and condominiums, who don’t own their building and its roof themselves. The law allows the building owner—a landlord or condo association—to have solar panels installed on the property, and let residents buy the electricity produced.  Residents who sign up for solar are to be credited for the solar electricity at the utility’s retail rate, giving the residents a benefit equivalent to net metering. The only added cost the utility is allowed to impose is an administrative fee.

“Administrative fee.” You probably think you know what that term means: a fee to cover the cost of administering the program because, duh, what else could it mean? It would pay for someone to do paperwork, or to tweak the billing software. It couldn’t amount to more than a buck or two for a customer in the program.

You think that way because you are not a Dominion lawyer. With no definition of “administrative fee” in the law, and no dollar limit, Dominion’s lawyers went to work shoveling every conceivable expense they could come up with into the humble little fee until it resembles one of those memes of a kitten the size of Godzilla. Now the administrative fee includes the utility’s transmission and distribution costs; standby generation; balancing costs; “nonbypassable charges”; even “banking, balancing and storing fees related to the utility’s processing and handling of the excess bill credits.” 

Then the SCC, faced with this long list of fees that have nothing to do with program administration and aren’t authorized in the law, closed its eyes and signed on. 

However, the regulations don’t tell us what all the kitten-stuffing charges add up to. To determine the dollar amounts, the SCC references “parallel rate proceedings,” by which it means regulations being written to implement a different law, also passed in 2020, creating a much larger program under the name of Shared Solar. And right now, in those parallel rate proceedings, Dominion is insisting that those various fees should add up to nearly $75 per customer per month. Mind you, that amount does not include the cost of the electricity from the solar panels. Adding $75 to the price of electricity makes the cost of buying solar energy through the program far more than the cost of buying electricity from Dominion. 

Carrying those charges over to the multifamily program instantly kills it. No landlord would install solar expecting residents to pay an extra $75 per month for their electricity. The result makes a mockery of Solar Freedom’s intent for “robust project development and shared solar program access for all customer classes.” Indeed, the law expressly requires the utility to credit customers at the retail rate, which is to be “inclusive of all supply charges, delivery charges, demand charges, fixed charges, and any applicable riders or other charges to the customer.” The whole point is to block the utility from piling on costs, excepting only that little kitten of an administrative fee

At this point the only way to salvage the multifamily program is for the General Assembly to amend the law. With the SCC refusing to understand the meaning of “administrative,” the only thing legislators can do is put a dollar limit on the kitten. Indeed, a dollar seems like the right amount. 

That would resurrect the multifamily solar program. As for the shared solar program, where Dominion first came up with the idea of penalizing customers $75 a month for buying solar energy from someone else, the SCC is still working on regulations. 

The two programs are based on very different laws. Where Solar Freedom’s multifamily solar provision mimics net metering, and therefore allows the utility to charge only an administrative fee, the shared solar law explicitly contemplates customers paying a “minimum bill” that will include transmission and distribution, standby charges, and so on, in addition to a (presumably for-real) administrative fee. All those bloated charges that Dominion shoehorned into the administrative fee for apartments and condos in clear violation of the legislative mandate, are expressly allowed by the shared solar law.

Except, of course, no one said anything about $75.  If customers have to pay Dominion $75 in addition to whatever they have to pay to the solar provider, no one will sign up, and there will not be a program. 

The implications are not confined to shared solar laws. Dominion is laying a foundation to set a high floor for customer billings that will be independent of how much electricity residents use, where it comes from, whether their use of renewable energy provides a public benefit, or even whether customer-generated solar reduces other utility costs.  

The solar industry and other parties have strenuously objected to Dominion’s calculations. They have also asked the SCC to hold an evidentiary hearing on the amount of the minimum bill to be charged to shared solar customers (and by extension, to multifamily solar customers via kitten-stuffing). The request gives the SCC a chance to weigh benefits as well as costs, and produce an outcome that will ensure a future for shared solar in Virginia. 

This column originally appeared in the Virginia Mercury on July 15, 2021.

The SCC’s vanishing trick: turning shared solar into no solar

Photo courtesy of Department of Energy, via Wikimedia Commons.

With Virginia fully committed to the clean energy transition, you would think that by now, residents would be able to check a box on their utility bill to buy solar energy, or at least be able to call up a third-party solar provider to sell them electricity from solar.

Not so. Sure, if you’re fortunate enough to own your own house or commercial building, and it’s in a sunny location and the roof is sound, you can install solar panels for your own use. Renters, though, are completely out of luck, which means almost all lower and moderate-income people are shut out of the solar market.

Actually, we were all supposed to be able to buy solar by now. A 2017 law required utilities to offer a “community solar” program. Utilities would buy electricity from solar facilities and sell it to customers. At least one electric cooperative followed through, but although Dominion Energy, Virginia’s biggest utility, created a program and had it approved by the SCC in 2018, the company has never offered it.

So this year the General Assembly passed two bills that would finally bring the benefits of solar energy to a broader range of customers. One would be community solar but under a different name. It would let anyone buy electricity from a “shared solar” facility, with at least 30 percent of the output reserved for low-income customers.

The other, the leadoff section of the Solar Freedom legislation, would let residents of apartment buildings and condominiums share the output of a solar array located on the premises or next door.

The bills were narrowed in committee to apply only in Dominion Energy territory (and for the multifamily program, to a part of Southwest Virginia served by Kentucky Utilities). Dominion also lobbied successfully for changes to the shared solar bill that raised red flags with solar industry members and advocates. Dominion has a long history of putting barriers in the way of customers who want solar, and the final language of the shared solar legislation pretty much invited that sort of mischief.

Still, it was left to the State Corporation Commission to write rules implementing the programs, so customers had reason to hope Dominion would not be allowed to make the programs unwieldy and expensive.

Ha. What has emerged from the SCC in the form of proposed rules manages to be both incoherent and everything Dominion wants. The reason for that is clear: most of the rules are copied and pasted from proposals Dominion submitted in August.

Adopting the recommendations of a company that failed to follow through on its own program seems like a bad idea. Hasn’t Dominion abdicated its right to tell other companies how to execute community solar?

And of course, with Dominion writing the rules, the programs won’t work. The shared solar option doesn’t kick in until at least 2023, and customers won’t be told what it will cost them. The SCC proposes to hold an “annual proceeding” to decide each year how much subscribers will have to pay in the form of a minimum bill, an amount that can then change from year to year.

This minimum bill is not the eight or nine dollar fixed charge that all customers pay today; it’s a whole new charge representing various of Dominion’s real or imagined costs of doing business, which Dominion says it needs to recover from the subscribers to compensate it for the fact that some other company is now selling them electricity.

How much might this be? No one knows. And because no one knows, it’s also impossible for solar companies or other third-party providers to offer the program. They can’t sell a product whose price is unknown, and banks aren’t going to loan them money to build a solar facility with no assurance that there will be customers.

There are really only two ways to save this program. The SCC could hold an evidentiary hearing upfront to examine the costs Dominion claims it needs to recover and then decide what the minimum bill ought to be. If that number is so high that the program can’t work, the SCC gets the privilege of telling the General Assembly there won’t be a shared solar program after all.

Alternatively, the SCC can follow the lead of states that already have successful programs and set the minimum bill (upfront) at a level that still saves customers money, so projects have a fighting chance of getting off the ground. If Dominion thinks it is losing money on the deal, that’s a claim it can pursue in its next rate case — which is where the dispute belongs.

Either way, the industry needs clarity, and it needs it now.

Multifamily solar: from straightforward to hopeless

The drafters of Solar Freedom thought they’d avoided the mess that threatens to tank the shared solar program. The multifamily provision of Solar Freedom is simply a way to let residents of apartment buildings and other multifamily units enjoy the same benefits available to homeowners who install solar under the net metering program. Instead of putting solar on a roof they own, they can buy the output of solar panels on the roof of the building where they live. It’s not net metering, but that’s the model.

Since the solar is onsite, none of these projects will be big. Keeping it simple and inexpensive is important. The law provides that utilities will credit participating customers for their share of solar at a rate “set such that the shared solar program results in robust project development and shared solar program access for all customer classes.” More specifically, the commission “shall annually calculate the applicable bill credit rate as the effective retail rate of the customer’s rate class, which shall be inclusive of all supply charges, delivery charges, demand charges, fixed charges and any applicable riders or other charges to the customer.”

The law couldn’t be clearer: there is to be no minimum bill, and the utility cannot load up a customer’s bill with lots of miscellaneous extra charges. All those charges that the SCC loads into the shared solar program’s minimum bill are, for the multifamily program, already included in the retail rate.

End of discussion? Not hardly. The SCC’s implementing rules — which are Dominion’s rules — get around this problem by dumping all the minimum bill elements from the shared solar rules onto the program provider instead (that is, the company that owns the solar panels).

Solar Freedom doesn’t actually allow that, either, so the SCC has decided these costs should be part of the one fee the utility is allowed to collect, for “reasonable costs of administering the program.” Never mind that items like “standby generation and balancing costs” have nothing to do with administering the program.

Oh, and the SCC won’t decide what the administrative charge will be until it holds an annual proceeding. And the amount can change every year. So once again, the SCC has designed a program that no solar company will be able to offer.

The SCC rules are so blatantly contrary to the program mandate set out in Solar Freedom that one can’t help but wonder whose side the SCC is on.

It is certainly not the customers’. We want solar.

The SCC is accepting comments on the proposed rules for both the shared solar and multifamily programs through Monday.

This article originally appeared in the Virginia Mercury on October 30, 2020.