Analysis of the Nevada PUC Rate Change

The three republican appointed members of the Nevada Public Utility Commission just released new charges and electric rates that have stopped all new solar installations in Nevada as well as financially crippling customers that have installed solar in the past.  All the major solar companies have closed their offices and most solar workers in the state have been laid off.

The Decision of the Nevada PUC to retroactively charge a huge connection/maintenance fee to solar customers as well as change from Net Metering at parity to a wholesale rate has eliminated all new  solar in Nevada as well as poisoned the national solar environment.

How financially bad is this decision for existing solar homeowners? Depends if you own your system or lease it.

If you lease your system then this is financially ruinous:

Let's say you live in Las Vegas and offset a usage of 1000 khw a month.  Our calculator suggests a 6000w system for this.  If Solar City installed that system for free then you signed a contract to purchase the electricity from that system for 90% of the going electric rate in Las Vegas.  Your old utility bill was a $10 connection fee and $100 power usage fee.  So, instead of paying $110 a month to the utility, you pay $10 to the utility and $90 to Solar City.  In the original net-metering frame work you save $10 a month or $120 a year by going solar.

The new rate structure raises the connection fee to $40 a month over the next 10 years.  In addition it only pays you $.03 per excess kwh you generate instead of the original $.10.  Assuming you were getting credit for 50% of the daytime power and using it at night that means that you are now getting $15 a month credit for daytime over-generation but being charged the full $.10 a kwh for the 50% overnight use which you pay $50 for.  So your generation loss is $35 then you add an additional $30 a month for the additional connection fee for a total bill of $65 month to the utility. 

Remember, you are contractually required to continue paying Solar City $90 a month for 20 years for the power you generate and use.  This totals $155/mo for electricity now instead of the $110 you paid prior to going solar.  The difference is $45 a month, $540 a year and $10,800 over the 20 yr span of your Solar City contract.  No wonder all the solar companies have left Nevada and left the customers holding the bag.

Self owned, DIY system:

Let's instead assume you installed your own system using our 6000w kit.  You paid an upfront cost of $8390 after the federal 30% tax credit.  You expected to receive a benefit of $.10 per kwh generated   which is $100 a month or $1200 a year.  At this rate you would reach payback in 7 years.  With this new decision you are still going to have to pay the $40/mo connection fee.  You are still going to own the utility $35 a month because they compensate you only $.03 per kwh for overgeneration but change $.10 a kwh for nighttime usage.  So your bill to the utility is now going to be $75/mo.  This is less than the $110 you were paying and it means a $35 a month savings instead of the originally expected $100.  This extends to payback period from 7 to 20 years. So you are not out financially but certainly still a very unhappy camper.  

Solar company installed:

If you paid a solar company to install your system then it's about as bad as leasing because the original system cost was twice the DIY system cost.  If there is a payback period it is about 40 years.

Coping (How to make the best of a bad situation):

If you own the system then you have a number of options:

  • Lobby your state representatives.  I can't emphasize this enough, it's the only reasonable way forward.
  • Vote out the people who appoited the people on the Public Utiltiies Commission.  Get reasonable people in office representing YOU, not the electric company or oil/coal interests.
  • If it's a small system I'd suggest uninstalling it and selling the parts to someone in another state.  The $40/month connection fee just isn't justifiable.  Alternately you could expand your system to spread the $40 fee over more generation but I doubt you'll be in the mood to do that because it's not lucrative anough.  How does uninstalling and selling the system affect the 30% federal tax credit you received?  I don't know and the experts don't seem to know because it was never considered when the law was written.
  • If it's a larger system then you are stuck with it so the below ideas can make the best of a bad situation.
  • If you lease the system or can't uninstall it then the reasonabe solution is to make your power usage profile match your power generation profile so you don't face the wholesale/retail price difference.  
  • Altering your power usage profile means using more electricity during the day when the sun is shining and less when it's not.  This can be accomplished by installing commercial electic timers from Home Depot/Lowes to control the larger electric using appliances.  Set your electric hot water heater to only turn on at 10am so it generates your hot water using the solar power for use later.  If you don't have an electric hot water heater, then convert to one.  Do the same for your refrigerator and any freezers you have, start to run at noon so the water heater is done using power by then.  Set your air conditioner to overcool the house during the afternoon then your house can retain that coolness for later at night running less.  Start your electric cloths dryer as you leave in the morning or even put a timer on that so it starts when the sun is up.  Ditto on the dishwasher or your electric heat in winter.  Think of other things that can be time shifted to match your profile. 
  • Finally, if you were considering going solar then consider going with a small system that matches your energy use profile and DONT TELL THE UTILITY you are solar.  Is this legal, maybe not.  Might you get caught if you sping the meter backwards accidently, maybe.  There are also new batteries coming out from Tesla and Enphase that can store you overgeneration for use later.  You could also make part of your house "Off-Grid" so the fridge, freezer, water heater are not connected to the grid but to solar.  This would be completely legal and you would not be subject to the "Solar Tax" of $40 because it's not on the grid anymore than your pocket solar calculator is.