Why Nevada legislators are mostly staying out of the fray on solar energy

Marco Krapels, senior vice president of strategy for SolarCity, speaks to supporters gathered at Town Square to rally for restoration of lower rooftop solar rates, Monday Jan. 25, 2016.

Despite lobbying by rooftop solar companies to restore lower rates for their customers, Nevada legislators appear reluctant to step in.

Why? Because while several agree that existing customers should get to keep their old rates, they're awaiting a decision from the Public Utilities Commission of Nevada on the issue that could determine the next steps.

Last week, the national rooftop panel installer SolarCity, through a political action committee supported by several groups, proposed a ballot referendum to undo 2015 legislation giving the Public Utilities Commission authority to set a long-term rate structure. They argue that in approving increased bills for customers last year, the commission's three members did not adhere to the legislation’s intent. The same PAC is calling on legislators to convene a special session.

All of this comes after the commission, which regulates NV Energy, approved the rate increases on the argument that the move would eliminate a cost shift to other ratepayers. Over the next four years, the rates will raise fixed fees and significantly reduce the value of credits that solar customers can earn by generating excess electricity under a program known as net metering.

But right now, many legislators are waiting to take action — at least until next week, when the commission will consider exempting some customers from increased bills or lessening their immediate impact.

Revisiting a grandfather clause

At a hearing Monday, the commission will begin weighing arguments on whether to grandfather some solar customers. The Bureau of Consumer Protection, which represents all ratepayers in matters involving rates, favors grandfathering customers for 20 years. NV Energy has laid out seven options.

NV Energy is recommending its grandfathering proposals apply to about 27,000 Nevadans who had solar systems installed or submitted applications for net metering before Sept. 10. Several NV Energy proposals might not be considered grandfathering, as they extend the implementation period for the new rates as opposed to restoring the prior ones.

"I think that's a good first step,” Republican Assemblyman Derek Armstrong of Las Vegas said about the commission’s upcoming hearing.

Sen. Patricia Farley, the Las Vegas Republican who spearheaded legislation giving the commission authority to develop new rates for solar customers, also appeared to be in favor of revisiting a grandfather clause. “I think it’s a good conversation to have,” she said.

In a statement, Democratic Minority Leader Sen. Aaron Ford said he hoped the commission would “consider grandfathering existing solar customers into any net-metering rate changes.”

They join congressional leadership, including Sen. Harry Reid and Nevada Reps. Dina Titus and Joe Heck, who have asked the commission to grandfather existing customers, at the very least.

A special session?

When it comes to regaining control from the commission over net metering policy, several lawmakers, including those who support grandfathering, argue that the move is premature.

SolarCity CEO Lyndon Rive has urged legislators to call a special session to create a short-term fix. He would suggest increasing a cap to include more customers at the prior rates. Instead of being based on the utility’s peak capacity, he believes a cap should be about 5 percent of the utility’s energy sales.

After the commission’s decision, SolarCity was one of several companies to withdraw sales and installations operations from the state. It laid off more than 550 employees. Rive says his recommendation would give the industry about a two-year window to add more customers at prior rates.

“If that were to happen, I would take the risk of rehiring everybody,” he said.

With the commission poised to revisit other matters in its decision over the next few weeks, legislators are hoping the quasi-judicial body will strike a balance that allows the solar industry to continue without unreasonable cost shifts. Solar advocates argued that the cost shift the commission has relied on is flawed. They argue that it does not take into account the advantages of solar for all ratepayers, such as environmental benefits and a decreased need for NV Energy to invest in costly infrastructure.

“I think a special session right now is premature because the issues are still being worked out by the commission at this point," Armstrong said. However, he added, “I've spoken to many legislators and everyone is worried about it."

Ford echoed Armstrong's sentiment. “Whether future legislative action or a ballot initiative is the best way to grow our solar industry remains to be seen," he said in a prepared statement.

Farley also said a special session was unlikely.

“I'm not of the opinion that's going to happen,” she said. “But that doesn't mean it won't happen."

Still, legislators said they were paying attention to developments, and some were worried about the ramifications of the commission’s decision as solar companies move operations out of the state.

“Some of the legislators I’ve spoken with are waiting for the action of the (commission) concerning the grandfathering,” said former Gov. Bob List, part of an alliance advocating for rooftop solar and the ballot measure. “If the (commission) does not fix it, I think there is a good likelihood that those with whom I’ve spoken would be supportive of a special session.”

Other legislators appear open to a special session more immediately.

“If we’re going to call a special session for Faraday (Future), I think we should call a special session for the solar industry,” said Republican Assemblywoman Victoria Seaman, a reference to the recent special session to approve an incentive package to lure the Chinese-backed auto manufacturer to the valley. "Jobs are being lost. The solar industry is leaving Nevada.”

Seaman isn’t alone in supporting a remedy outside the commission. Democratic Sen. Ruben Kihuen, a candidate for Congress, said in a statement that he would “fully support the proposed referendum or other ways to fix the issue but hope the (commission) takes action first.”