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Power companies clash with small but growing solar industry

For years, power companies have watched warily as solar panels have sprouted on the nation's rooftops. Now, they're fighting hard to slow the spread.

Alarmed by what they say has become an existential threat to their business, utility companies want to roll back government incentives promoting solar energy and other renewable sources of power. At stake, they say, is the future of the electricity industry.

According to the Energy Information Administration, rooftop solar electricity — the economics of which often depend on government incentives and mandates — accounts for less than a quarter of 1 percent of the nation's power generation. And yet, to hear executives tell it, such power sources could ultimately threaten traditional utilities' ability to maintain the nation's grid.

"We did not get in front of this disruption," Clark Gellings, a fellow at the nonprofit Electric Power Research Institute, said during a panel discussion at the annual utility convention this summer. "It may be too late."

Advocates of renewable energy, including solar industry executives who stand to get rich from the transformation, say such statements are wildly overblown. For now, they say, the government needs to help make the economics of renewable power work for ordinary Americans. Without incentives, the young industry might wither.

The battle is playing out among energy executives, lawmakers and regulators across the country.

In Arizona, for example, the country's second-largest solar market, the state's largest utility is pressuring the Arizona Corporation Commission, which sets utility rates, to reconsider a generous residential credit and impose new fees on customers, months after the agency eliminated a commercial solar incentive. In North Carolina, Duke Energy is pushing for new charges for solar customers.

Nowhere, though, is the battle more heated than in California, home to the nation's largest solar market and some of the most aggressive subsidies. The outcome has the potential to set the course for solar and other renewable energies for decades.

At the heart of the fight is a credit system called net metering, which pays residential and commercial customers for excess renewable energy they sell back to utilities. Currently, 43 states (including Florida), the District of Columbia and four territories offer a form of the incentive, according to the Energy Department.

Some keep the credit in line with the wholesale prices that utilities pay large power producers, which can be a few cents a kilowatt-hour. But in California, those payments are among the most generous because they are tied to the daytime retail rates customers pay for electricity, which include utility costs for maintaining the grid.

California's three major utilities estimate that by the time the subsidy program fills up under its current limits, they could have to make up almost $1.4 billion a year in revenue lost to solar customers, and shift that burden to roughly 7.6 million nonsolar customers — an extra $185 a year if evenly spread.

Utilities in California have appealed to lawmakers and regulators to reduce the credits and limit the number of people who can participate. It has been an uphill fight.

Power companies clash with small but growing solar industry 08/16/13 [Last modified: Friday, August 16, 2013 4:48pm]
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