Nevada’s chief regulator speaks out about state’s solar controversy

April 13, 2016

The Nevada Public Utilities Commission decided late last year to significantly alter the state’s net metering policy and change rates for NV Energy customers with rooftop solar. The board’s three members have become a lightning rod for criticism from solar advocates and even received threats because of their decision.

Fortune Senior Writer Katie Fehrenbacher recently interviewed commission Chairman Paul Thomsen, who candidly discussed the debate around the group’s decision and the path forward for the state’s solar industry in this feature, “The Other Side of Solar Firestorm in Nevada”.

On the rooftop solar lobbying groups’ political tactics:
“From a political standpoint, lobbying works really well. But in hearings—where people follow the administrators act and take evidence and cross examine parties—I guess I was a little shocked to see that they had so much of a PR and media focus. As they well know, we have to examine the evidence that’s in front of us.”
“The industry wanted us to make factual decisions based on (actor) Mark Ruffalo’s testimony, and not the evidence in the case. For better or for worse, this commission makes decisions based on expert cross examination of the evidence of the case.”
“The solar industry really wants to have this debate in the media and outside of professional scrutiny. We had lots of data requests for information for them, which were not given to the commission. We put forward that we wanted to look at 11 variables to appropriately value the excess energy rate and they didn’t provide quantifiable evidence for one single factor of those 11. Our staff did.”

On consumer protection for solar customers:
“I’ll tell you, we sat through 20 hours of public comment and the most moving parts of that were the seniors who said, ‘I’ve taken out a second mortgage on my home to put on solar that starts at the retail rate and escalated 3% annually.’ I was gobsmacked to hear that. That to me is a reprehensible sales tactic. I wish the commission had the ability to prevent that from happening.
“In Nevada, in the same 2015 session, there was a proposal for a consumer protection bill regarding rooftop solar and it was killed by SolarCity and Sunrun. I really hope that the Nevada legislature continues to look at how we protect consumers if they need it.”
On the need to reform net metering:
“We were one of the first states to say there is empirical evidence that there is this cost shift. The [solar] industry didn’t want to hear that. They can try to discredit all the studies they want but we have an open public case and all of the financial analysts and economists in this building that set rates said we found this cost shift and here’s our proposal to mitigate it.”
“The subsidy we found was $16 million a year. So over 20 years that’s an over $300 million subsidy, or cost shift that non-solar customers were providing to solar customers. Under our proposal, we’ve reduced that subsidy by two-thirds. So they’re still receiving a $100 million subsidy, or cost shift, as we modify net metering going forward.”
On whether the Commission’s decision will have a dire effect on Nevada’s rooftop solar industry:
“Yes and no. I’ll be really candid. There are certain businesses and customers that solar is a good fit for. When you look at MGM, who put solar on the roof of their convention center and can avoid demand charges and can use power in the middle of the day, it’s a brilliant application.
“But a huge part of the growth potential for Sunrun and SolarCity is that person who is not home during the day, and their home is not consuming power during the day. Normally it would never make sense, because why would I want to put a generator on my roof, and produce power when I don’t need it unless I have net metering.”
On the value of universal grid-scale solar vs. private rooftop solar:
“You say what’s the difference between solar power coming off a rooftop that the utilities have to pay 11 cents for, versus the 4.5 cents they’re paying for solar energy from large-scale solar panel projects? The delta has gotten so big. That’s the debate.
“The question that people bring up is since large-scale solar has gotten so cost effective, why hasn’t rooftop solar? (SolarCity CEO) Lyndon Rive says competition breeds innovation, and I would say subsidies do not breed innovation. And that big subsidy [net metering] that hasn’t changed in close to 20 years has resulted in this very drastic over pricing of a product that now has to figure out how to compete. That’s where we were.”