The new billing plans charge flat rates for electricity in a tier system based on typical usage, giving customers less financial incentive to conserve. Solar panel owners are crying foul over the new schemes.
Manuel Balce Ceneta / AP / Via apimages.com
Solar panels are sprouting on rooftops across the country, thanks to plummeting costs. And in response to this solar revolution, many power companies are seeking dramatic changes in how they charge for electricity.
Nearly 600,000 United States homes and businesses generate their own solar power. In 42 states, if these solar users generate more electricity than they use, power companies are required to buy the excess. Some utilities have responded by imposing surcharges — $50 a month for Arizona residents, for example — causing an uproar in several states.
But a bigger fight is playing out in 19 states, where newly approved or proposed billing plans are changing how everyone — not just solar panel owners — pays for electricity.
States colored in red have a plan or proposal to charge fixed-rate electricity prices. Those in yellow are expected to have proposals within two years, while those in orange have had recent public debates over electricity rates. States in gray have seen no moves toward the new pricing structure.
Environmental Law & Policy Center in Chicago
But here's the thing: These companies aren't just increasing the price per kilowatt hour. Instead, the new plans start out with a higher base monthly rate for everyone on the electrical grid, before the meter even starts running.
It's like a cell phone data plan, in which people are charged different flat rates depending on their typical usage, energy analyst Gregory Nemet of the University of Wisconsin, Madison, told BuzzFeed News.
A utility in Phoenix, for example, debuted a billing plan charging $18.50 a month as a base rate, on top of a complicated tier system based on usage. A typical summer month of 1,000 kilowatt hours of juice would cost $24 for the first 400, plus $41 for the next 400, and another $26 for the last 200.
"The result is that people have much weaker incentives to conserve energy," Nemet said, because they will have to pay a fixed price regardless. This change, he worries, may mean that fewer people will invest in efficient appliances and rooftop solar panels.
Industry critics say this billing switch is a deliberate attempt to hurt solar. "Why should I invest in solar panels if I have to pay about the same for electricity anyway?" Bradley Klein of the Environmental Law and Policy Center in Chicago told BuzzFeed News. "We see these rate changes as a troubling trend where utilities are trying to insulate their profits and invert the math on how solar pays back over time."
Some lawmakers are pushing back against the new plans, arguing that they're unfair to people who use less power, such as students, people living in apartments, and the elderly. Last week, Minnesota regulators approved a 4.6% increase per kilowatt hour for Xcel Energy, but nixed the company's request for a base rate charge. At the same time, a Connecticut legislative committee released a bill capping base rate charges at $10 a month.