BIG STORY: Dominion’s solar proposal could dim S.C. market, critics say

By Sam Spence, special to Statehouse Report  |  Dominion Energy’s South Carolina customers with solar power systems could face higher bills under a new proposal before state regulators this month.

The energy utility says the additional fees are designed to account for differences in how solar customers are charged, ensuring they are sharing infrastructure costs with non-solar Dominion ratepayers.

But solar energy industry and conservation advocates say the regulatory move could kill the state’s solar power market by raising costs for customers who invest their own money in renewable energy.

At issue is a proposal that would add at least $428 per year to the bills of Dominion’s residential solar energy customers, but typical customers could pay hundreds more.

Dominion and its critics have been jousting in front of the S.C. Public Service Commission (PSC) for months. A formal public hearing on the issue is scheduled for March 23.

Energy independence

A 2014 law limited solar generation in the state to 2 percent of the state’s peak-time capacity. By 2019, as the state got close to the limit, state legislators threw solar companies a lifeline with the Energy Freedom Act. In addition to lifting the 2 percent cap and forcing utilities to allow more solar-generation capacity, the law set a May 31, 2021, deadline for regulators, utilities and solar companies to settle on how solar-generating customers would be charged going forward.

About 11,000 Dominion customers maintain residential solar energy-generating projects in South Carolina, which is less than 1.5 percent of its total 750,000-ratepayer customer base, according to the company.

Currently, those customers are able to use any power their systems generate within their own systems and sell any excess energy generated back to Dominion with a program known as net metering. Customers with solar systems applied for or established by May 31, 2021, will continue to receive credits on their bills equal to the retail value of the power they produce until 2025 or 2029, depending on when they established service.

Dominion’s proposed “solar choice metering tariff,” laid out in the Energy Freedom Act, would add two monthly fees to residential customers’ bills: a $19.50 “basic facilities charge” and a “subscription fee” of at least $16.20, based on system size. (For businesses, the facilities charge increases to $32.50.) With an average-sized residential system, according to the Solar Energy Industries Association, that subscription would be $27 per month, adding up to an additional $558 per year.

Those fees, combined with adjusted credits for energy sold back to Dominion, would decrease the value of residential net metering by 55 percent, according to Timothy Beach, a California energy consultant who served as a witness for conservation and solar advocates intervening in Dominion’s request before the PSC.

“This tariff would result in a 55 percent reduction in the bill savings for a typical residential solar customer, such that a typical residential solar system would no longer be economic in (Dominion’s) service territory,” Beach told the commission in his January testimony.

Dominion notes solar customers must pull power from the grid when their panels cannot generate electricity, a cost that can’t be overlooked.

“The reality is that solar customers on our system still rely on non-solar generating sources 75 percent of the time, and it’s only fair that they share the costs for safe, reliable generation,” according to a statement provided by Dominion Energy spokesman Paul Fischer.

Shifting stances

Haggling over the intent of the 2019 law has been the subject of much debate between Dominion and its detractors.

Leaving responsibility to state regulators, the Energy Freedom Act called for new policies that sustain the state’s private solar energy industry and provide solar options that minimize financial impacts — “cost shifting” — for non-solar customers.

“The intent of South Carolina solar legislation was to establish rules that fairly allocate costs and benefits among all customers to eliminate any cost shift or subsidization,” Fischer said.

But the law itself calls for cost shifting to be eliminated “to the greatest extent practicable … while also ensuring access to customer-generator options.”

And according to the law’s co-author, S.C. Sen. Tom Davis, R-Beaufort, the 2019 law intentionally reflects the time when it was written: in the twilight of the V.C. Summer nuclear fiasco that raised rates for then-SCE&G customers and cleared the way for Dominion to swoop into South Carolina in the first place.

“It has been widely reported that this new law is about promoting clean energy, and that’s partially true,” Davis wrote in a May 2019 Post and Courier op-ed just after the bill was signed. “But it’s really about something more fundamental: It is a first and important step away from the energy-production monopolies that have saddled South Carolinians with some of the highest electricity bills in the nation, and toward real competition through an open market of many buyers and many sellers that will provide downward pressure on the cost of producing energy.”

The total price of solar generation already dropped 45 percent over the past decade, as the industry grew into the seventh-highest solar-generating state in the nation, according to the Solar Energy Industries Association. The group said the industry is expected to nearly double again over the next five years — under the current trajectory, that is.

Priced out

Energy advocates and industry executives say the higher prices could drive out companies that have already invested in expanding solar capacity in the state.

“You cannot decrease the value of that metering by 60 percent to the consumer and expect as many of them to say, ‘Yes, I’m going to invest thousands of dollars, or tens of thousands of dollars for commercial. into this into this effort,” said Frank Knapp, who is intervening as a private solar customer, but who also heads up the S.C. Small Business Chamber of Commerce.

Eddy Moore, an energy expert with the Coastal Conservation League, testified that the Energy Freedom Act does more than just stipulate who bears the costs of solar.

“It requires development of rates that will enable customers to produce meaningful bill savings, while serving a broader public good.” he said. “This is a sophisticated objective and one that seeks to empower customers with new rights, departing from the status quo approach to rates and rate design. 

“If they adopt this source choice tariff, as proposed by Dominion, basically, we will see the closing of reputable solar companies in South Carolina,” Knapp said, pointing to a state consumer protection website that warns about solar scams.

That doomsday scenario for the industry could come to pass, according to some in the private solar industry.

“We are deeply disappointed that Dominion continues to advocate for policies that hurt home solar and takes away decision-making for people to choose their own power,” said Tyson Grinstead of Sunrun, one of the largest solar energy companies in the U.S. “We hope that the Public Service Commission weighs the benefits of customer choice and home solar in their decision on Dominion’s anti-solar proposal.”

Dominion counters that the new tariffs would not remove consumers’ choice to invest in solar energy.

“The proposed Solar Choice tariff will not discourage South Carolinians from choosing solar,” Fischer said, explaining solar customers would be charged lower rates during off-peak hours. “This is a big win for customers who want more freedom and control over their bill.”

Don Zimmerman, the CEO for Charleston-based Alder Energy, was not as optimistic in his testimony to the commission, calling the proposal “disastrous” and “industry-killing” for residential and commercial customers alike.

“Only one conclusion can be drawn: (Dominion) intends on punishing businesses that want to generate their own electricity,” he said.

Sam Spence is editor of the Charleston City Paper. Have a comment? Send to: feedback@statehousereport.com. Make sure to add your name and contact information for verification.