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California Solar Advocates and Legislature Working to Fix TOU Rate Disincentive

| Written by John Farrell | No Comments | Updated on May 10, 2007 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/california-solar-advocates-and-legislature-working-fix-tou-rate-disincentive/

Responding to concerns and evidence put forward by solar power companies and advocates, Governor Schwarznegger has pledged to fix a flaw in California’s Solar Initiative that has caused a reported 78 percent drop off in proposed photovoltaic installations in the state. A new law that took effect on January 1, 2007, requires interconnected solar projects that receive state incentives to accept "time of use" (TOU) electricity tariffs that can potentially add significant costs to the homeowner or business if their solar system’s capacity can’t cover all their electricity consumption.

TOU rates mean that consumers and businesses pay different prices for electricity depending on what time of day it is and sometimes TOU rates are adjusted based on the the time of year. The hours when there is the highest demand for electricity are the periods that will have the highest prices for electricity. In California, solar projects are typically matched very well to the peak demand periods when the sun is blazing and the air conditioners are buzzing. If the solar systems don’t generate all the required electricity that is needed on-site, the project owners are being forced to purchase very high cost TOU electricity to make up the difference. Under this scenario, many solar systems are no longer economically attractive and people and businesses are choosing to not install the solar projects. In testimony submitted to the PUC, preliminary screening of some proposed solar projects had the owners paying more for electricity with the solar project than they would without it.

This TOU rate requirement for solar incentive recipients poses a substantial barrier to distributed energy development in California and should be addressed as soon as possible.

The Los Angeles Times reported this morning that legislation has been agreed upon and the deal worked out by the governor’s office directs the California Public Utilities Commission (CPUC) to vote in June to allow prospective owners of solar energy systems access to the lower rates charged non-solar utility customers. The plan would be in force for two years while a permanent solution can be worked out.

The California Solar Energy Industries Association (CAL SEIA) filed a joint petition along with Vote Solar and PV Now to the CPUC on March 5, 2007, to request temporary relief from the requirement to use TOU rates for customers participating in the solar incentive program. The advocacy group Americans for Solar Power (ASPV) and San Diego Gas & Electric (SDG&E) filed comments in support of the petition. According to Cal SEIA, Southern California Edison (SCE) was generally opposed to the petition but also suggested that if TOU rates were optional until new rates are developed they would be supportive of that as well.

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About John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power. More

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