Wednesday, November 19, 2014 by Gene Davis

AE proposes rate change to improve value of solar

At Monday’s Electric Utility Commission meeting, Austin Energy officials presented a rate change that promises to create greater stability in the compensation of residential customers for the value of electricity generated by their solar units.

The rate change is part of a broader effort by the utility to help meet the ambitious solar energy goals laid out by City Council Member Chris Riley’s resolution, which Council approved in chaotic fashion in August. The resolution, in part, aims to increase the local solar goal from 100 to 200 megawatts by 2020.

The new Value of Solar Tariff, or VOS, which takes effect Jan. 1, 2015, is calculated based on a five-year rolling average. Austin Energy calculates the existing tariff on an annual basis. With the implantation of the five-year rolling average calculation in 2015, the tariff will rise from 10.7 cents per kilowatt-hour generated to 11.3 cents.

Deborah Kimberly, Vice President of Customer Energy Solutions, said calculating the tariff based on the five-year average should create less rate fluctuation. In 2014, the tariff dropped from 12.8 cents per kilowatt-hour generated to 10.7 cents, which irked many Austin Energy solar customers. Kimberly said fluctuating natural gas prices is the primary cause of the tariff fluctuation.

“We actively sought to provide a means by which we were responsive to stakeholder concerns,” Kimberly said.

Dale Bulla was among the solar customers frustrated with the tariff drop in 2014. He said the drop came “out of the blue,” and that such instability is detrimental to the goal of expanding solar systems in Austin.

“Stability, I think, is very important, in my opinion, to the future of (solar systems) spreading in our community,” Bulla said. “I think that a long-term plan to give some long-term consistency would be very helpful.”

In addition to explaining the new calculation mechanism for the tariff, Kimberly told commissioners that Austin Energy would allow leased solar system hosts to receive VOS credits starting in 2016. Leased systems, which allow customers to rent the equipment from an outside party and pay by the month instead of purchase the equipment upfront, are currently not eligible for VOS credits.

However, customers of the leased VOS systems will not be eligible for the same tax credits as purchased systems. Kimberly said the purpose of the incentives is to help customers overcome the upfront costs that go into purchasing and owning a solar system for the roof of their house. Therefore, the tax credits would not make sense for the leased systems, since there are little upfront costs, she said.

“We want to make sure there is equity in terms of how we treat those two systems,” she said.

Kimberly and Austin Energy Solar Manager Danielle Murray also told commissioners that the utility plans to remove the year-end credit sweep and allow solar credits to roll over from year to year. In 2013, the Monitor reported that some solar owners were upset not only because of the reduced solar rate, but because any credit left at the end of the year would be erased at the beginning of the next year. The value of solar concept approved by the Council in 2012 included a provision that any credit that was carried over would be set to zero in the first billing month of each calendar year.

Following the Austin Energy report, commissioners grilled Kimberly and Murray about how the utility determines the VOS tariff. Commissioner Clay Butler also pressed Kimberly point-blank on whether she believes Austin Energy has a local solar goal of 200 megawatts or 100 megawatts by 2020.

The Monitor reported in August that Austin Energy officials were deeply concerned over the so-called Riley Resolution.

Kimberly responded that it is her understanding that the utility’s current goal is for 200 megawatts of local solar. However, she added that the Riley resolution “is currently under review by Council and Austin Energy staff.”

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Key Players & Topics In This Article

Austin Energy: As a municipally-owned electric utility, Austin Energy is a rarity in the largely deregulated State of Texas. It's annual budget clocks in at over $1 billion. The utility's annual direct transfer of a Council-determined percentage of its revenues offers the city a notable revenue stream.

Electric Utility Commission: The advisory body charged with oversight of Austin Energy, the City of Austin's municipally-owned electric utility.

value of solar: A calculation used by Austin Energy to determine what the utility will reimburse its customers for home generation of solar power. It has been a contentious topic, with solar advocates suggesting that the figure is off.

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