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Legislators built a solar program for apartment dwellers. The SCC gutted it.

Ivy Main's picture
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Ivy Main is a writer, lawyer, and environmental advocate, and volunteers extensively with the Virginia Chapter of the Sierra Club. In addition to lobbying in the Virginia General Assembly for...

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The State Corporation Commission recently finalized regulations for the Multifamily Shared Solar Program, created by the General Assembly to give residents of apartment buildings and condominiums the ability to use solar energy from panels installed on their buildings. But in implementing the program, the SCC also made sure it can never be used.  

Dominion Energy is largely to blame here, as it so often is whenever customer-sited solar encounters barriers. The utility proposed to lard up the program with fees, none of them allowed by the law. But it’s the SCC’s agreement with Dominion that’s the problem—and not just for people in apartment buildings who want solar, but for the future of any solar in Virginia that isn’t utility-owned. 

2020’s Solar Freedom law set out to make it easier for residents and businesses to install solar onsite. At the heart of the law is net metering, the program that credits solar owners for excess electricity fed back into the grid. Net metering makes solar affordable for customers, so giving more people access to net metering means more private investment dollars, more jobs and a more resilient power grid. 

The multifamily shared solar provision is meant to extend net metering-like benefits to residents of apartment buildings and condominiums, who don’t own their building and its roof themselves. The law allows the building owner—a landlord or condo association—to have solar panels installed on the property, and let residents buy the electricity produced.  Residents who sign up for solar are to be credited for the solar electricity at the utility’s retail rate, giving the residents a benefit equivalent to net metering. The only added cost the utility is allowed to impose is an administrative fee.

“Administrative fee.” You probably think you know what that term means: a fee to cover the cost of administering the program because, duh, what else could it mean? It would pay for someone to do paperwork, or to tweak the billing software. It couldn’t amount to more than a buck or two for a customer in the program.

You think that way because you are not a Dominion lawyer. With no definition of “administrative fee” in the law, and no dollar limit, Dominion’s lawyers went to work shoveling every conceivable expense they could come up with into the humble little fee until it resembles one of those memes of a kitten the size of Godzilla. Now the administrative fee includes the utility’s transmission and distribution costs; standby generation; balancing costs; “nonbypassable charges”; even “banking, balancing and storing fees related to the utility’s processing and handling of the excess bill credits.” 

Then the SCC, faced with this long list of fees that have nothing to do with program administration and aren’t authorized in the law, closed its eyes and signed on. 

However, the regulations don’t tell us what all the kitten-stuffing charges add up to. To determine the dollar amounts, the SCC references “parallel rate proceedings,” by which it means regulations being written to implement a different law, also passed in 2020, creating a much larger program under the name of Shared Solar. And right now, in those parallel rate proceedings, Dominion is insisting that those various fees should add up to nearly $75 per customer per month. Mind you, that amount does not include the cost of the electricity from the solar panels. Adding $75 to the price of electricity makes the cost of buying solar energy through the program far more than the cost of buying electricity from Dominion. 

Carrying those charges over to the multifamily program instantly kills it. No landlord would install solar expecting residents to pay an extra $75 per month for their electricity. The result makes a mockery of Solar Freedom’s intent for “robust project development and shared solar program access for all customer classes.” Indeed, the law expressly requires the utility to credit customers at the retail rate, which is to be “inclusive of all supply charges, delivery charges, demand charges, fixed charges, and any applicable riders or other charges to the customer.” The whole point is to block the utility from piling on costs, excepting only that little kitten of an administrative fee

At this point the only way to salvage the multifamily program is for the General Assembly to amend the law. With the SCC refusing to understand the meaning of “administrative,” the only thing legislators can do is put a dollar limit on the kitten. Indeed, a dollar seems like the right amount. 

That would resurrect the multifamily solar program. As for the shared solar program, where Dominion first came up with the idea of penalizing customers $75 a month for buying solar energy from someone else, the SCC is still working on regulations. 

The two programs are based on very different laws. Where Solar Freedom’s multifamily solar provision mimics net metering, and therefore allows the utility to charge only an administrative fee, the shared solar law explicitly contemplates customers paying a “minimum bill” that will include transmission and distribution, standby charges, and so on, in addition to a (presumably for-real) administrative fee. All those bloated charges that Dominion shoehorned into the administrative fee for apartments and condos in clear violation of the legislative mandate, are expressly allowed by the shared solar law.

Except, of course, no one said anything about $75.  If customers have to pay Dominion $75 in addition to whatever they have to pay to the solar provider, no one will sign up, and there will not be a program. 

The implications are not confined to shared solar laws. Dominion is laying a foundation to set a high floor for customer billings that will be independent of how much electricity residents use, where it comes from, whether their use of renewable energy provides a public benefit, or even whether customer-generated solar reduces other utility costs.  

The solar industry and other parties have strenuously objected to Dominion’s calculations. They have also asked the SCC to hold an evidentiary hearing on the amount of the minimum bill to be charged to shared solar customers (and by extension, to multifamily solar customers via kitten-stuffing). The request gives the SCC a chance to weigh benefits as well as costs, and produce an outcome that will ensure a future for shared solar in Virginia. 

This column originally appeared in the Virginia Mercury on July 15, 2021.

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Matt Chester's picture
Matt Chester on Aug 5, 2021

The solar industry and other parties have strenuously objected to Dominion’s calculations. They have also asked the SCC to hold an evidentiary hearing on the amount of the minimum bill to be charged to shared solar customers (and by extension, to multifamily solar customers via kitten-stuffing). The request gives the SCC a chance to weigh benefits as well as costs, and produce an outcome that will ensure a future for shared solar in Virginia. 

Sounds like, regardless of the outcome, some real oversight and third party involvement is necessary

Bob Meinetz's picture
Bob Meinetz on Aug 5, 2021

Ivy, do you believe there are no transmission or distribution costs, that electricity grids maintain themselves? Do you believe apartment dwellers will forsake electricity after the sun goes down, or when the wind stops blowing?

Dominion has no obligation to provide any of these services for free. In fact, net-metering policies only force those who can't afford solar panels, or apartment buildings without them, to cover your costs for you. You might consult some of the lower-income residents in you area - ask them whether they mind paying for your transmission/distribution costs, or whether their astronomical electricity bill is already high enough. Their answer might surprise you.

Sorry to disappoint, but home solar owners in Virginia have a healthy dose of reality coming their way:

"California retail prices are 2-3 times higher than the actual cost avoided when a rooftop system pumps kilowatts into the grid. The retail prices are so high, because they are paying for massive fixed costs, expenses that don’t decline when a household exports solar power to the grid. These include most transmission and distribution costs, wildfire mitigation (think cutting trees and bushes around power lines), compensating past victims of wildfires, paying for energy efficiency programs, subsidizing electricity for low-income customers, and making early investments in new renewable technologies to help them get a foothold."

https://energyathaas.wordpress.com/2021/06/01/rooftop-solar-inequity/

Nathan Wilson's picture
Nathan Wilson on Aug 8, 2021

Yep, my power company generates electricity for 3¢/kwh (from subsidized-windpower, gas, and coal), and sells it to me for 10¢/kwh.  Most of the other 7¢/kwh is "other" costs, which really are not dependent on my total electricity usage; they are mostly peak-usage dependent or fixed costs, like maintaining the plants and lines, and sending out bills.

In other words, net-metering (in which fixed costs are waived and the power company buys electricity at retail rather than wholesale rates from PV system owners) is not a good-faith attempt at fair cost distribution, it is a deceptive hidden subsidy, meant to subsidize an industry in a way that most people won't notice.  But it is the job of utility regulators to fairly distribute costs.

If governments want to subsidize solar power, fine. But do it in a way that is transparent (so voters understand what is happening) and progressive (so that less of the burden falls on the poor); net-metering is neither.

The old system of per-kWh billing worked fine when everyone used about the same amount of electricity.  In today's world, we need billing reform, in which everyone has their bill divided into a realistic fixed cost and a per kwh cost that is near wholesale (and time-of-use dependent).  That will no longer have the simplicity of the old bills, and more importantly no longer reward efficiency and conservation like the old system.  But that is the price to be paid for our current infatuation with roof-top solar PV.

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