Solar Industry Riled by DPU Approval of New Infrastructure Fee in Boston

Eversource utility customers who install solar panels a year from now will be on the hook for new fees under a new Department of Public Utilities order that is generating controversy within the renewable energy industry.

The new charges will cast a shadow over the solar market, according to an industry representative, although a top Baker administration official described the order as “balanced,” weighing the need for new investments in electrical infrastructure with protections for electricity customers.

“This is nationally precedent-setting in the wrong way and it’s definitely problematic for the solar industry in the Commonwealth,” said Dave Gahl, the director of Northeast state affairs for the Solar Energy Industries Association.

The minimum charge that new Eversource solar customers will owe after Dec. 31, 2018 will create a “sustainable pathway to pay for infrastructure,” according to Energy and Environmental Affairs Secretary Matt Beaton.

“I think if you look at where they came in and where they ended up, it was a very fair decision that makes sure that we have future investment as we transition into a more distributed energy generation – renewables – over time,” Beaton told the News Service.

Under an April 2016 solar energy law signed by Gov. Charlie Baker, the DPU can authorize utilities to charge a “monthly minimum reliability contribution” on solar customers once the state reaches the capacity to produce 1,600 megawatts of solar electricity – a benchmark that was reached last year, according to the DPU.

Eversource will need to conduct outreach with customers to explain the policy change and tell them how they can avoid the charge, according to the Baker administration, which said the minimum charge will not affect existing solar customers or low-income customers.

For many residential customers the minimum charge would be $10.88 per month. Some Eversource customers now pay nothing for electricity because their solar energy production exceeds their monthly use, according to the company.

In addition to the monthly charge, solar customers will need to pay a “demand charge” which will be assessed based on the hour-long period when they use the most electricity from the grid in a month, according to Gahl.

“This order is a huge step backwards for a state that was one of the early national leaders in grid modernization and solar policy. It will discourage customer adoption of clean energy across the Commonwealth, further slowing clean energy job growth and investment and threatening to undermine the Baker-Polito Administration’s goal to achieve another 1,600 megawatts (MW) of solar,” said Northeast Clean Energy Council Executive Vice President Janet Gail Besser, a former National Grid executive and DPU chairwoman. “Mandating a demand charge for residential customers at this scale is unprecedented. These changes are particularly concerning because Eversource lacks the ‘smart’ metering needed to inform customers about their peak demand and energy usage.”

A demand charge has been in place for commercial customers for decades, according to Eversource, which said the demand charge accounts for peak electricity usage regardless of the total consumption of kilowatt hours.

The DPU order dated Jan. 5 was paired with another rate-setting order. It was the first fully litigated rate case in eastern Massachusetts in more than 25 years for the utility, which has changed names over the years. The case is the first distribution rate increase in eastern Massachusetts since a 2005 rate settlement agreement, according to the company.

The DPU late last year approved a rate increase of $12.2 million for Eversource customers in eastern Massachusetts and $24.8 million for western Massachusetts. After the new federal tax law – which among other things provided tax cuts for corporations – the utility proposed lowering its existing rates for eastern Massachusetts by $35.4 million, along with a smaller hike of $16.5 million for its customers in the western part of the state.

The order also eliminates the ability for Eversource customers to be charged varying “time-of-use” rates that fluctuate with the cost of purchasing electricity wholesale. Market electricity prices spike during peak demand although individual utility customers often pay a flat rate.

Only 172 Eversource customers were charged based on time-of-use rates, a tiny fraction of its total customer base, according to the Baker administration. Eversource has a total of 1.4 million customers in Massachusetts territory spanning 3,200 square miles.

Critics of the state’s system to reward property owners for installing solar electricity have contended that those who can afford to install solar panels are subsidized by other ratepayers. Even properties that provide a net addition of solar wattage to the grid make use of the wires and transformers owned by utilities to draw power when the sun is down.

The amount of installed solar capacity in Massachusetts now totals 1,900 megawatts, according to the administration.

“Massachusetts continues its efforts to stabilize the cost of energy for the state’s ratepayers and achieve our aggressive greenhouse gas emissions reductions goals,” said Peter Lorenz, spokesman for the Office of Energy and Environmental Affairs. “The Order approved by the Department of Public Utilities significantly reduced the proposed energy rates while requiring important investments in advanced technologies in an effort to strengthen the state’s clean energy economy and reduce greenhouse gas emissions.”


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