The chief executive at the largest U.S. rooftop solar provider is warning that proposed solar rate increases from traditional utilities in California could effectively kill off the booming industry here.

SolarCity CEO Lyndon Rive described solar rate proposals from regulated utility monopolies including San Diego Gas & Electric as a tactic to fend off competition that does not boost the utilities’ bottom line.

Proposals from SDG&E, Southern California Edison and Pacific Gas and Electric would do away with bill credits that compensate rooftop solar customers at the full retail rate for electricity, a system known as net energy metering.

Each of California’s three big investor-owned electric utilities has developed its own replacement solar tariffs, borrowing components from an array of billing methods utilized in other states — including Arizona, the scene of a protracted showdown between utilities and the solar industry.


“They vocally say they support solar,” Rive said of California’s big utilities. “But then this proposal clearly states, they want to kill solar. Let’s stop kidding each other – no, you’re trying to kill solar.”

In filings with utility regulators, SDG&E estimated its solar tariff proposal would allow solar adoption rates to grow by 8 percent to 9 percent annually through 2025. The goal, SDG&E said, should be sustained solar growth without subsidies.

SDG&E’s default proposal would add a fixed fee to bills as well as a demand charge based on peak electricity use during any 15-minute period, regardless of overall monthly energy consumption.

The reasoning is that those fees more accurately reflect the costs of providing service to grid-connected solar customers, who use utility wires as much if not more than standard electricity users.


Demand charges are a common component of rates for California’s business and institutional customers, but would be new to household consumers.

From SolarCity’s perspective, a demand charges make it much more difficult to forecast household solar savings over time under a long-term power contract or loan.

“How in the world can you forecast solar benefits?” Rive said. It doesn’t work “to say, ‘Hey, make sure your demand doesn’t change over the next 15 minutes — for the next 20 years.’”

“The irony is that every single customer that goes solar reduces its demand,” he said.


SDG&E’s vice president for customer services, Victor Vilaplana, defended the utility’s approach in an email.

“SDG&E’s proposal is one of the few that will give customers the control to lower their bill by changing behavior which will, in turn, reduce demand,” he wrote. “Customers would see bill benefits if they reduce their consumption and shift their usage to lower cost time periods.”

PG&E also is seeking a demand charge for solar customers, while Edison has proposed a new charge based on the generating capacity of a customer’s solar panels.

SolarCity and the affiliated trade group The Alliance for Solar Choice are urging the California Public Utilities Commission to keep in place net metering, and its full retail pricing for solar energy, through 2020.


The solar industry is bracing for the expiration of a key federal tax credit at the end of 2016 that offsets 30 percent of solar energy system costs.

“To me this is highly disappointing that the utilities would come out with this type of proposal,” Rive said, in reference to demand charges. “They know as well as we do that their proposal would kill the industry. They’ve seen it play out.”

Rive pointed to SolarCity’s experience with customers of Arizona’s second largest electric utility, the Salt River Project, where rate changes put in place in December are adding about $50 to the average bill of a new solar customer. The bill increase is mostly the result of demand-based charges.

SolarCity says it has relocated hundreds of staff members from Arizona as business dried up. The San Mateo-based company has sued the Salt River Project in federal court on allegations of anti-trust violations. The public utility says the claim is without merit.


Stakes are higher in California, where investor-owned utilities already serve about about 250,000 rooftop solar customers.

SDG&E has framed its tariff proposal as a matter of equity and fairness. Solar customers, it says, avoid paying for maintenance and modernization of the power grid. Other customers, it says, are picking up the tab.

Rive contends that rooftop solar is introducing competition into the utility arena — a good thing if California wants to meet its aggressive goals for reducing greenhouse gases linked to global warming.

“It’s pure competition,” he said. “If solar scales up, the way the utility stays competitive is they have to reduce their costs. To every business, that’s normal.”