How much is your solar power worth? The fight over solar’s future

Jonathan Munoz holds a solar panel on the roof of a house in Los Gatos, California, on Tuesday, Aug. 4, 2015. Jonathan Munoz holds a solar panel on the roof of a house in Los Gatos, California, on Tuesday, Aug. 4, 2015. Photo: Connor Radnovich, The Chronicle Buy photo Photo: Connor Radnovich, The Chronicle Image 1 of / 1 Caption Close How much is your solar power worth? The fight over solar’s future 1 / 1 Back to Gallery

With a vote set for Thursday, a fierce lobbying battle has broken out at the California Public Utilities Commission over two questions whose answers could govern the growth of solar power in the state:

How much should solar homeowners be paid for excess power they provide the grid? And how much should they pay to maintain the grid itself?

After months of debate, the commission is scheduled to vote Thursday on new rules for “net energy metering,” the system that compensates solar homeowners for their surplus power. For homeowners thinking of putting panels on their rooftops, net metering is a powerful incentive — so strong that solar companies consider it the most important state-level policy encouraging their growth.

California’s utility companies, however, consider the existing system far too generous to solar homeowners, calling it a subsidy that forces non-solar customers to pay more for power than they otherwise would. They want solar homeowners to get less compensation for their excess electricity and pay more in monthly charges to maintain the grid.

The commission issued its proposed new rules in December, with terms that seemed largely favorable to the solar industry. The state’s three large, investor-owned utilities — Pacific Gas and Electric Co., Southern California Edison and San Diego Gas and Electric Co. — hated the proposal so much that they came up with their own joint alternative and urged commissioners to adopt it. So far, however, no commissioner has publicly backed the utilities’ plan or agreed to put it up for a vote.

“We think the (commission’s) proposed decision is not headed in the right direction,” said Aaron Johnson, vice president of customer energy solutions at PG&E, which has 210,000 customers with rooftop solar arrays. “The most important thing is to begin reducing over time the subsidy to an industry that has seen its costs go down 50 percent in the last five years.”

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The smallest details can count.

The utilities and the solar companies are even arguing over a specific footnote within the commission’s proposed rules. Depending on how that footnote is treated, solar homeowners could end up paying either $5 more in fees per month than they currently do or $15. The commission initially estimated $5.

“Had anyone known this was going to be an additional charge to solar customers, there would have been outrage in the streets,” said Walker Wright, director of public policy at solar leasing firm Sunrun. “We’re on pins and needles here, and the anxiety level’s pretty high.”

The fight over net metering has played out in states across the country. Late last year, Nevada regulators approved changes that the solar industry considered so onerous that SolarCity, the nation’s largest solar leasing company, cut 550 jobs within the state.

No one expects so drastic an outcome in California, home to most of the U.S. solar industry. Roughly 450,000 California households have solar arrays, representing about half of all residential installations nationwide. And state officials have made a concerted effort over the last decade to spur the industry’s growth.

The commission kept that goal in mind when proposing new net energy metering rules in December. The commission rejected, for now, the utilities’ request to impose new monthly fees that would apply only to solar homeowners.

Rather than change the compensation rate for excess power, the commission proposed that new solar homeowners pay a one-time fee of $75 to $150 to connect to the grid, and spend more each month on “nonbypassable charges.” Those charges, paid by most utility customers, help cover the costs of subsidizing utility service to low-income households and paying off lingering costs from the state’s electricity crisis 15 years ago.

The utilities’ joint proposal calls for compensation rates that would decrease as the number of solar households grows. Utilities would pay 15 cents per kilowatt hour until rooftop solar power equals 7 percent of a utility’s peak load. (None of the utilities have hit 5 percent yet, although both PG&E and Southern California Edison will likely do so this year.)

Once solar power accounts for more than 7 percent of a utility’s peak load, the compensation rate would drop to 13 cents. Among PG&E customers the current compensation rate tends to be 17 to 20 cents per kilowatt hour.

David R. Baker is a San Francisco Chronicle staff writer. E-mail: dbaker@sfchronicle.com Twitter: @DavidBakerSF