Homeowners, however, should not expect a bonanza. For people and businesses in Pacific Gas and Electric Co.’s territory, the compensation rate will be roughly 4 cents per kilowatt hour. It may later rise to 5.8 cents per kilowatt hour, but that isn’t certain.
The new rules, adopted by the California Public Utilities Commission, frustrated solar power advocates, who wanted a higher price.
“These solar systems will be reliably operating at peak periods of the day,” said Adam Browning, executive director of the Vote Solar Initiative advocacy group. “The commission is severely undervaluing their contribution.”
The new rules apply to utility customers who generate more electricity than they use over the course of a full year.
A 2009 state law ordered the commission to set up a system for compensating such customers. But relatively few people will be able to take advantage of the new system.
Homeowners already receive a credit on their utility bills whenever their panels produce excess electricity. To sell electricity back to the utility, however, the total amount of solar power a customer generates over the course of a year must be greater than the total amount of electricity that customer uses during the same period.
Caution over subsidies
According to PG&E, only 2,450 of the utility’s 5.1 million electricity customers would have qualified in 2009, although the number is expected to grow. Of the few who would have qualified, more than 40 percent generated 100 kilowatt hours or less of excess electricity for the year.
Commission President Michael Peevey had argued for using a different formula to set the compensation rate, one that would have given homeowners more money. In PG&E’s territory, the rate would equal 9.3 cents per kilowatt hour.
The other four commissioners, however, argued against setting the price too high, saying it would amount to an additional subsidy for a solar industry that already receives several.
“I love solar as much as anyone,” said Commissioner Mike Florio. “At some point, I think we have to say, ‘How much subsidy is enough?’ What we really want here is a mature solar industry that can stand on its own.”
Rate to vary over time
The compensation rate will be based on a spot price for buying electricity a day in advance, and it will change over time. In addition, homeowners will also receive compensation for the “renewable energy credits” that the utilities get in exchange for buying the excess electricity. Utilities use the credits to help comply with a state law requiring the use of more renewable power.
But the California Energy Commission has not yet set up a system for tracking credits generated by small-scale solar systems. Once the energy commission takes that step, homeowners selling their power to the utilities may receive an additional 1.8 cents per kilowatt hour, bringing the total to 5.8 cents per kilowatt hour.