Buffett's Utility Gets Win Over Musk's SolarCity on Creditsby and
Nevada regulators cut payments for excess solar rooftop energy
SolarCity has said the new rules would force it to leave
Nevada regulators decided to cut the credits that rooftop solar customers get when they sell power back to the grid, handing a victory to Warren Buffett’s local utility.
The Public Utilities Commission of Nevada voted 3-0 on Tuesday to phase in changes to the state’s so-called net metering payments over four years. The reduced rates would apply to all rooftop customers. The credits have been a strong incentive for individuals and businesses to install their own solar panels in recent years.
The move, proposed Monday in a draft order, has already drawn criticism from the solar industry. SolarCity Corp., the largest installer of rooftop panels in the U.S., had warned the proposal would force it to cease sales and operations in Nevada. The company, which counts billionaire Elon Musk as its chairman and largest shareholder, has also said that thousands of jobs could be lost in the state.
"This will set the course for net metering customers in Nevada to be billed significantly more for their utility service than they expected when they installed their rooftop systems," said Stephen Munro, a policy analyst for Bloomberg New Energy Finance. "It also would stunt demand for new rooftop solar systems by lengthening their payback periods."
The decision is a setback for the renewable-energy sector, which is coming off a string of victories. Last week, it won congressional approval of a federal tax credit extension and got a proposed ruling in California that largely kept net metering in place.
Nevada could set a precedent for other states, Hugh Wynne, an analyst at Sanford C. Bernstein & Co., wrote in note Tuesday. Regulators across the country are grappling with how to spur the development of clean energy sources while ensuring operators can collect enough money to maintain and update their grids.
“While the people of Nevada have consistently chosen solar, the state government today decided to take that choice from them, and damage the state’s economy,” SolarCity Chief Executive Officer Lyndon Rive said in an e-mailed statement.
"Most disturbing is the commission’s decision to retroactively sabotage existing solar customer’s investments by not grandfathering them onto current rates," Rive added. "The Nevada government encouraged these people to go solar, and now the government is putting them at great financial risk.”
NV Energy, the Nevada electric utility at Buffett’s Berkshire Hathaway Inc., had proposed increased charges and reduced payments to rooftop solar customers, saying the current model forced non-solar customers to subsidize those who did use the green power. Jennifer Schuricht, a spokeswoman, said the utility was reviewing the order to determine its impact on customers.
Two of the largest solar installers in Nevada fell in New York trading. SolarCity slid 6.8 percent to $51.32. Sunrun Inc. tumbled 13.4 percent. Sunrun said in a statement it expects to challenge the Nevada decision.
The commission said in the draft ruling that annual subsidies for each residential solar net metering customer in southern Nevada averaged $623. They were $471 in northern Nevada.
“Today’s decision falls short of serving the best interests of Nevada energy consumers," Jessica Scott, regional director of renewable energy advocate Vote Solar, said in a e-mailed statement. "The Public Utilities Commission of Nevada just changed the rules of the game for all Nevadans that have invested in rooftop solar."