As states across the nation consider different solutions to reform net energy metering (NEM) to address the higher costs and cost shift caused by outdated net metering policies, Dominion Energy South Carolina this week defended its proposed solar choice metering tariff in the Palmetto State as fair and necessary.
“The reality is that solar customers on our system still rely on non-solar generating sources 75 percent of the time, and it’s only fair that they share the costs,” Ashley Cunningham, a spokesperson for Dominion Energy South Carolina, told Daily Energy Insider.
The South Carolina Energy Freedom Act, which unanimously passed the South Carolina legislature and then was signed into law by Gov. Henry McMaster on May 16, 2019 as Act 62, empowers electric customers to make their own decisions about the installation of solar panels on their homes or businesses.
And in accordance with Act 62, Dominion Energy South Carolina was required to file a successor tariff, which it did, proposing a solar subscription fee and rate changes for solar customers’ basic service, among other items. Dominion’s proposal is currently under consideration in hearings being held this week by the South Carolina Public Service Commission (SCPSC).
“The law was very intentional in its efforts to make sure customers do not suffer from subsidization when solar is added to the system — basically that one group of customers doesn’t unfairly pay higher prices to benefit another group of customers,” Cunningham said. “Dominion Energy can’t generate solar power on rainy days, but all of our customers — those with solar and those without — count on us to provide uninterrupted service, even when the sun isn’t shining.”
The approximately 11,000 Dominion Energy customers in South Carolina who use solar on their properties also export a lot of it back to the grid. This means about 740,000 non-solar customers must pay for maintaining power lines, generation stations and all other associated costs, while also paying for the energy their utility is producing, explained Cunningham.
“We agree with solar developers on the importance of solar growth in South Carolina, but we can’t forget about so many who are struggling financially,” Cunningham said. “We heard them during our recent regulatory rate review, and we paused that process. These are the same customers we’re trying to protect from unfair subsidization.”
As Cunningham further explained, Dominion Energy South Carolina’s proposed solar choice net metering tariff incorporates several ratemaking tools that work in conjunction with the South Carolina General Assembly’s intent in Act 62.
“Existing solar customers will continue to receive one-to-one compensation until the end of 2025 or into 2029, depending on when they initially enrolled,” she said. “This grandfathering period was also determined by the state legislature in Act No. 62.”
If approved, Dominion customers in the state could elect to put solar on their roofs and sign up for the new rate on June 1, 2021.
“With the proposed tariff, solar customers can take advantage of a special time-of-use rate plan, which encourages them to conserve energy,” Cunningham said. “If solar customers are willing to change their consumption patterns and take advantage of the approximately $0.07/kWh rate — available for all but the peak time periods — and use their solar energy during peak periods, the economic benefits are clear and there is essentially no difference from the payback periods people enjoy today.”
Solar customers also would benefit from the actual value of the energy they export to the grid, said Cunningham. “The more energy the customer uses on-site, the greater the benefits to the customer,” she said. “If residential systems are oversized and rely more heavily on export value, the benefits are reduced. This is a big win for customers who want more freedom and control over their bill.”
Opponents of Dominion’s plan, including the Southern Environmental Law Center and the Solar Energy Industries Association, say the utility’s proposed charges could end up costing the average homeowner with rooftop solar more than $750 a year. They also contend that by adding grid access charges, a monthly subscription cost, and a low export rate for net metering customers, Dominion is inflating solar costs and disincentivizing investments in rooftop solar.
Cunningham said that Dominion Energy South Carolina recognizes that certain intervenors would prefer that solar subsidies continue in full, but said that the law does not allow for that.
“Rather, it requires the commission to establish solar choice metering requirements that fairly allocate cost and benefits in order to eliminate any cost shift or subsidization associated with net metering to the greatest extent practicable,” she told Daily Energy Insider.
The South Carolina Office of Regulatory Staff has agreed with Dominion’s proposal, which also is supported by the Edison Electric Institute (EEI), which represents all of the nation’s investor-owned electric companies, including Dominion Energy.
“The intent of the original net metering policy was to incentivize early adopters, not to create huge subsidies from one group of customers to another,” testified Adam Benshoff, EEI’s vice president of regulatory affairs, during Tuesday’s virtual public hearing on Dominion’s proposed tariff.
“Now that the cost of solar systems has come down significantly, there’s simply no need for these continued subsidies,” Benshoff told SCPSC commissioners. “And in states that have seen rapid growth in rooftop solar, they have had to develop new policies to reform net metering to provide continuing certainty for the marketplace.”
Benshoff pointed out that South Carolina is one of 14 states that are either in the process of transitioning away from retail NEM or have already adopted an alternative compensation mechanism. The reason for this transition seems to vary by state, but there are some common threads, Benshoff told the SCPSC.
“Commissions seem to clearly recognize now that retail net energy metering does unfairly compensate customer generators for the services that they provide or, more accurately, under the retail structure, for the services that they’re not providing, like transmission and distribution services,” he testified.
Some of the incentives originally created in the early 1980s to jumpstart this market, Benshoff added, “are simply no longer needed due to the falling price of renewable energy.” And the substantial cost shift from NEM participating customers to non-participants … creates inequities” between those who can and cannot afford rooftop solar, he said.
“There are a number of ways to transition from retail net metering and we’re seeing them implemented across the country,” Benshoff said. “The [Dominion] proposal before you appears consistent with the Act 62 directive to fairly allocate costs and benefits to eliminate that cost shift to the greatest extent possible.”
Following today’s virtual public hearing on Dominion Energy South Carolina’s proposal, which is slated to run into the early morning hours of Wednesday, the SCPSC meets again to discuss the proposal on March 24.