A solar array at Domino’s Farms near Ann Arbor, Michigan. Image: Mark Houston
By Casey Hull
Capital News Service
A new order by the Michigan Public Service Commission (MPSC) will reduce savings for homes deciding to generate electricity from solar energy, according to some lawmakers.
And that means less savings and reduced incentives for anyone hoping to save money by adding solar panels to their home.
The solar power community is upset by the change and some legislators are attempting to reverse the effect of the ruling.
Under the order, utility companies will have to pay solar households only the wholesale cost for the energy they produce. Utilities must pay a household or small business for putting energy into their grid. Consumers Energy and DTE Energy are the two largest servicers of solar households in the state.
Most individuals generating their own energy are still connected to the power grid as a backup source of electricity for cloudy days and at night. During the day, excess electricity flows into the grid and solar system owners are credited for that energy by their utility.
Under the new system, the energy going into a household from a utility company will cost the full rate. Energy from the solar household going into the energy grid will be paid at a lower wholesale rate.
MPSC staff estimate that solar households will be paid about 10 cents a kilowatt hour. At that rate it would take solar households an additional two to three years, or about 33 percent longer than with current rates, to cover the cost of installing solar panels.
The new policy begins on June 1 and affects only homes and businesses that install new solar systems. Existing contracts will remain valid and unchanged for up to 10 years.
Legislation in the House Energy Policy Committee would repeal any grid charge and block the changes approved by the MPSC.
“They have not taken the time to properly weigh the pros and cons of solar energy and because of that, they have come up with a rate that is lopsided,” said Rep. Yousef Rabhi, D-Ann Arbor, one of the sponsors. “That’s a big reason we introduced the bills.”
The co-sponsors include Reps. Scott Dianda, D-Calumet, and Tom Barrett, R-Potterville.
The MPSC was directed to create the new system by a state energy law in 2016. The commission was told to develop a new metering program that allows energy companies to make money on their services and that reflects a customer’s fair and equitable use of the grid, said Sally Talberg, the chair of the MPSC.
“The commission looks forward to working with stakeholders who may propose refinements or new data and with the Legislature if it seeks to pursue a different approach,” she said.
Rabhi said the proposed metering program fails to accomplish what the Legislature ordered.
“In the legislation that created the grid tariff, it was pretty clear that the Public Service Commission had to take into account the benefits that solar brings to the grid,” such as economic and environmental benefits, Rabhi said.
“Then there are the more tangible things such as providing energy to the grid during the daytime when energy is needed most.”
“The real problem is that they have put into place an interim rate. They have changed the rate in such a way that the benefits of solar are not factored in,” Rahbi said.
Utility companies say that solar households should be paid for the electricity they produce at an equal price to large-scale utilities.
Brian Wheeler, the senior public information director for Consumers Energy, said, “If you want to look at a home with a solar array like a power plant, they both serve as power generators and both will receive the wholesale rate moving forward.”
Like a home in this example, a power plant draws energy from the grid to operate, he said. And just like a solar home, it generates more energy to put back in the grid.
“Just like a power plant, anyone’s home or a customer of ours, they’re paying the price that represents the cost of generating and then distributing energy throughout the grid,” Wheeler said.
John Sarver, a board member at the Great Lakes Renewable Energy Association, said, “Right now the rate is around 15 cents a kilowatt hour. We believe that metering, as it’s structured now, is fair.”
“There are benefits to when homeowners invest their own money in a solar system and put their excess production on the grid,” Sarver said.
One such benefit is that household solar arrays produce the most energy during the summer and can assist with increased demand on the energy grid by air conditioning units.
Sarver said he doesn’t believe that the smaller payments will have an extensive negative impact on new solar power users. “People will still buy systems even if the return on their investment is lower.”
An alternative to working with utility companies is to purchase batteries to store the generated power.
“If we’re not careful with new policies, we may be encouraging people to take a serious look at batteries and store the power on site, and that doesn’t help anybody,” Sarver said.
“The economics of going off the grid is debatable, but the technology is certainly there.”