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Here Comes the Sun

Providing electricity to millions of customers is a zero-sum game for both electric utilities and their customers. The generation, transmission, and distribution of electricity are therefore especially vulnerable to passionate single-issue groups eager to myopically promote their own slices of the energy pie. The complexity of energy issues is an unfortunate dynamic in mainstream news coverage, which typically follows the shallow, well-trodden path when covering the energy slices of that pie. In the case of rooftop solar it’s: Get a quote from a homeowner with rooftop solar, “balance” it with a quote from an electric utility or regulator, and call it good. This simplistic (and ultimately meaningless) view offers a black-and-white snapshot seldom examined in depth and heavily shaded by politics. It has also created an acrimonious divisiveness between residential solar’s (very) vocal advocates and the state’s investor-owned utilities and the regulators charged with providing electricity to the 40-million souls collectively residing in their service territories. You can read all about it most weeks in this very newspaper. 

California’s three large investor-owned energy utilities─PG&E, Southern California Edison, and San Diego Gas & Electric─operate under a mandatory “obligation to serve.” As regulated monopolies, these utilities must provide electricity to anyone residing in their vast service territories. Rates are determined in CPUC rate cases, and are based on hundreds of pages that quantify projections of generation, transmission and distribution costs, load growth, emergency response, and virtually every other aspect of generating, transmitting, and delivering the electricity that flows into your home 24/7 at the flip of a switch. 

California has gone after renewable energy in a big way over recent decades and state law codifies its promotion and growth. One of those laws obligates a local utility to buy back electricity generated by renewable sources, one of which is rooftop solar. The associated financial perks for wealthy homeowners are huge, including a 26 percent federal tax credit for home solar systems installed by December 31, 2022, a rebate for buying and installing a solar battery along with a rooftop panel system, a property tax exclusion on the added home value from a rooftop solar system, and various cash incentives for installing solar panels in California. 

This giveaway dynamic has predictably fueled a boom for solar companies that install rooftop solar, especially in rebate-rich California. But it’s not a boom that benefits everyone. As one example, salary.com reports that rooftop solar installers earn an average annual salary of $33,982, about half of HUD’s low-income guideline; that’s officially a poverty wage in California. Contrast this with a PG&E journeyman lineman’s average pay of $132,544 (a living, union wage). Starry-eyed “environmental” pro-solar supporters might well ask themselves what exactly they’re supporting when they shell out upwards of $15,000 to companies that pay poverty-level wages to their employees, who toil atop the roofs of wealthy homeowners. 

So who is eligible for this heavily subsidized largesse? Rich people, of course. For starters, the U.S Census Bureau’s American Community Survey for 2019 (the most recent year available for state-level data) found that California has the second-lowest homeownership among all states at 54.9 percent. (New York is first at 54 percent.) According to the renters’ rights organization Tenants Together, 16,906,728 Californians, or around 45 percent of us, are renters. So at least half of us who are renters are ineligible for rooftop solar right off the bat. Add to that the fact that, according to the Community Associations Institute, California now leads the nation with 49,200 associations, typical of condo ownership, much of which is also ineligible for rooftop solar, for a variety of reasons.

These stats matter because of the zero-sum energy pie. Wealthy homeowners installing rooftop solar are essentially supporting a low-wage private industry while effectively stopping payment to their utility, which then in turn makes up the difference by increasing rates for the remaining customers without either the ability or the means to install rooftop solar (which in California runs an average of 15 grand). In other words, these homeowners no longer contribute a dime to utility call centers, environmental programs, vegetation management, salaries, emergency response, and a thousand other costs associated with providing electricity to millions of Californians. It’s no less a subsidy for the rich than the tax breaks, home mortgage write-offs, and thousands of other programs that disproportionately benefit them at the expense of the poor. In this way, the private-home renewable-energy-promotion scheme contributes to California’s wealth divide as poor and low-income utility customers pick up the tab for rich customers who thumb their noses at their utilities and give their energy dollars right back to themselves in the form of utility payments for the excess electricity they generate but don’t need. Lest we forget amid all the pro-solar hype, the Census Bureau reported recently that “California still has the highest level of functional poverty of any state, averaging 18.2% of its 40 million residents impoverished during the three preceding years.”  

Yet the myth persists that installing rooftop solar is all about taking a courageous stand against climate change and supporting the environment. And, as with all true believers, rooftop solar advocates are now whipping themselves into a frothy outrage now that the CPUC is belatedly considering applying the brakes to this misguided, short-sighted boon to the wealthy seeking to get even wealthier by doing away with their utility bills.

Hardcore anti-utility believers will never accept any of this, regardless of the quantifiable big-picture unintended consequences in an issue as complex as this one. They’re the ones who condemn a utility’s vegetation management efforts then cry in outrage when one of their own trees has to be trimmed because of its proximity to a power line. It’s me-me-me all the time, with nary a nod to the bigger picture that includes us all, rich and poor.  

It’s hard to deal with zealots; it recently happened to me. There is a very impassioned cadre of residential solar promoters in our Bay Area condo community of 10,000 residents. One group came up with a dubious scheme to aggregate rooftop solar for multiple participating units. The fix was in. Perhaps in recognition of my generally recalcitrant nature, several representatives either called or emailed. When I told them I would never support anything that would benefit the rich and raise utility bills for the poor, they clearly thought I was nuts. You mean you don’t want to save money? Are you crazy? No, actually, I’m not. And by the way, not a one even mentioned the environment. It was all about sticking it to the utility and making money.

Sooo…if you really believe in solar, promote utility-scale solar projects that go into a rate base regulated and monitored by the government for the benefit of every Californian who pays an energy bill, regardless of his or her wealth.

6 Comments

  1. Bruce Broderick December 31, 2021

    Interesting perspective. Most of the people I know with rooftop solar barely break even on their utility bills. Most of the people I know with rooftop solar did it at a hardship in order to reduce carbon emissions. Most of the people I know with rooftop solar have to continually battle with PGE to correct over charging on a regular basis. Most of the people I know with Net Metering contracts are almost fed up enough with PGE to cancel the contracts, that is if they aren’t on a losing proposition lease with a big installer. These same people are about ready to upgrade to just self consumption with PGE as backup only. With the new Nem3 regulations looking like they will be passed by CPUC that include transmission fees to PGE extracted from residential solar generators, it will be the final nail in the coffin of their very expensive and barely affordable contribution to the whole in order to do their part in reducing climate change. Rooftop solar is looking more and more like just another ponzi scheme where the sincere pay the price and the affluent reap the benefits. The only way to make the privately owned utility companies work for the residential customers is to make the utility companies irrelevant at the residential level. Something that the utility companies are very afraid of.

    • Douglas Bauder December 31, 2021

      The utility companies are already irrelevant, and make no profit from buying and then reselling power. ZERO. The utility companies are in a pinch though, because they are forced to pass the costs of buying power from net metering customers at retail prices and then putting that same power back onto the grid for all customers. This obviously raises prices for non-solar customers. It’s very similar to owning an orange tree, then when all your oranges are ripe, demanding that the store pay you RETAIL prices for them. That’s how the current law is spelled out. In your article you continually point to bad behaviors by PGE and ignore the underlying policies that have gotten us here.

      • Bruce Broderick December 31, 2021

        I have to argue with your claim that, where I am anyway, that the utility makes no profit on solar. Here in Mendocino County our electrical provider is Sonoma Clean Power. (There is still a choice by some to continue with PGE). SCP charges a bit more for power than PGE under the guise of clean power that mostly comes from their geothermal production which is produced by pumping wastewater into geothermal wells to produce steam that turns turbines to produce electricity. They also purchase wholesale power from allegedly clean sources and resell it via PGE lines to their customers in both Sonoma and Mendocino Counties.
        PGE transmits the power from SCP for a fee, which now averages a little more than 20.00 per month for transmission fees, depending on usage. Plus the ready to serve fees and a variety of other governmental fees and charges. PGE owns all of the transmission equipment including the meters. In most cases those are Smart Meters so that PGE can fulfill it’s desire to eliminate the meter reader, and further streamline their operation, which they have almost successfully done. There are a number of us Smart Meter opt out, hold outs, that keep them from eliminating the position all together. My own reasons for opting out are irrelevant to this conversation except to say that it has more to do with distrusting the algorithms and operation of the Smart Meter systems than it has to do with things like EMF’s and the like.
        With the mandatory time of use rates for solar customers, we are charged the highest rates when production is waning. From 3:00pm to 9:00pm. The new rates are around 46 cents per KWH. The sell rate for Net Metered customers is around 5 cents per KWH. It doesn’t vary whether there is peak demand or not. The plus side to that arrangement has been that the solar power produced and sent to the grid is credited against the power consumed by the solar customer. Any excess is then sold to SCP at the 5 cents per KWH rate.
        So there has been a possibility of getting a small check back from SCP during the yearly true up. It’s never much because of the rate discrepancy. With the NEM3 rules coming down the pike, PGE can charge 17 cents per KWH for the power that is transmitted to SCP by the solar customer that is receiving 5 cents a KWH which would put the solar customer and their sometimes very large investment back in the red. A solution to this problem would be for the Net Metered solar customer to cancel their net metering agreement, keep their existing equipment and feed the produced power through a second inverter that is tied directly to the homes electrical system, thereby still using all of the produced solar and not exporting any of it. These systems could have batteries or not, depending on the situation and budget. This explanation is an oversimplification of the process, but I am only trying to give an outline of the solution.
        This solution, of course would not take care of those solar producers that have entered into lease agreements with third party companies that technically lease the roof of the solar customer but still find a way to charge them when there isn’t enough solar during a given month. Or the customers that have financed their equipment based on power production. Either of those types of setups are ponzi schemes anyway and should be outlawed.

  2. john ignoffo December 31, 2021

    Regardless of who are the primary beneficiaries, solar is hardly environmentally benign. Very toxic production that must be redone every 20 or so years. Renewables will work just fine when we reduce our energy consumption by 90%! Many Bright Green Lies out there…

  3. izzy December 31, 2021

    We’re in a bewildering matrix of persistent myths that shape policy in many areas for our Shining City on a Hill these days. Little of it makes practical sense anymore. As the voice-over at the end used to say,

    “There are 8 million stories in the Naked City. This has been one of them.”

  4. Cheryle Johnson May 7, 2022

    I worked with Marilyn Davin at Pacific Gas and Electric Company in its Corporate Communications Department in the 1980s. She fails to disclose that fact here or that, like me, she probably draws a PG&E pension. (Note mine is $223 per month as I left the company after a little more than 5 years. Marilyn likely retired after a full career there, although I cannot swear to that fact.)

    That doesn’t mean she doesn’t have an interesting perspective. She is of course right in listing out all the cost variables that go into setting utility rates. And people should be going solar because of its benefits, not for the tax incentives – although those same tax advantages would apply to “middle class” or “lower income” homeowners as well ( if there are any left in California).

    However, that she speaks of the poor and indigent as suffering at the hands of the wealthy in an effort to persuade homeowners that solar power is a rip-off is not an argument of compassion on her part given her prior PG&E association. It is a corporate bias for the utility industry as opposed to the renewable resource sector.

    The planet is dying. We have been killing it since the mid-1800s due to our reliance on fossil fuels, which PG&E uses to this day to generate electricity.

    Right now that is of much greater significance than whether or not the wealthy in California get to sell their excess solar power to PG&E for distribution on the grid.

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