California Regulators stiff arm utilities on solar for the public

This is a perfect example of corporate interest versus that of the people they serve. Corporations should die when the situation requires it. We are going to end up using renewable resources. Let's all get used to that fact.

Let me lay it out.

The average cost of peaking power in the LA area is about $0.35 kwh. That is the average year round price the utility buys the power for in order to meet consumer demand.

The cost of purchases of this peaking power - mostly from gas plants - are rolled into a lump with all the other sources needed for 24/7 provision of power and an overall average is obtained, and a percentage approved by the CPUC is added as profit for the utility.

When you put a system on your roof with their "net metering" program, they credit 1:1 the power you produce against the power you consume.

Since the value of the power you consume is set by including the lower, off-peak power costs into the formula, this gives the utility a significant savings over what they would pay for the power on the open market. And it deprives the investor in the solar plant of the full value of the power they are producing.

The reason the utility doesn't want to expand the program is the effect it has on other power producers and the utility. It lowers peak power prices by reducing demand, and it reduces the the overall amount of power the utility sells thereby reducing their cash flow disproportionate to the savings they realize on the peak power.

A "subsidy for the rich" my ass.

"this gives the utility a significant savings over what they would pay for the power on the open market."

I thought the utility companies were paying more to buy power from customers than from their standard providers. Otherwise I understand everything you said in both of your posts. Much of which makes me yearn for independent customer produced power. But that's not too feasible on several levels, yet. If ever.

Thanks. I always learn a lot from you. Are you employed in this field?

The utility just trades the solar plant owner retail electricity (about 14 cents) for the peaking electricity, which is far less valuable. They should be paying 35 cents for the solar electricity. BTW, at an average of $0.35/kwh Southern California has some of the least expensive peaking power in the country.

I suppose I "work in the field". My background is cultural anthropology and I've been studying the transition to a carbon free energy system for over 10 years now. I'm self employed, researching the public debate surrounding the transition away from carbon. If things go well this research will find its way into a book. If I were to look for a job, I'd label myself an energy policy analyst.

So how on earth do they manage to survive when baseline price for customers in my area is 6 cents per kWh?

Also, I wonder if the quality of power coming from solar customers is part of the reason for the lower price. You know about the capacitive loading and all of that stuff that happens with big commercial users. I don't even remember if capacitive is the proper word, it's been so long.

So if my brain is working properly, which is doubtful, someone is subsidizing the utility companies. Otherwise how could they survive on baselines so far below their cost of buying energy? Am I missing something?

$0.06/kwh (I'm assuming that is delivered cost) is probably among the lowest retail price in the country. The area where you are probably has 2 characteristics:
- It must get most of its electricity from paid off, old thermal and/or hydro plants.
- Quantity needed for peak demand is rather modest

Let's take two simplified extremes:
Bulk power purchased by contract years ahead of time makes up 60% of the peak demand, the rest is purchased months, weeks, days or hours ahead of the anticipated peak in excess of bulk contracts.

You'd average 60% cheap and 40% increasingly more expensive. I live in an area something like this. Our summertime population explodes with tourists that want air conditioning.

Bulk power is 85% of peak demand and 15% is purchased at auction. An area with very stable use patterns and a mild climate would possibly be something like this.

You might enjoy reading about "electricity markets" to appreciate the wholesale side of the picture.

And you're right, it's an old thermal area. That rate is artificially lower than normal due to the fact that they just got an incentive for their Chevy Volt ownership.

I'm still not understanding how the utilities are making money when they pay more for power than they sell it for. I'm reading things incorrectly, probably. They pay 35 cents per kWh, and baseline is (in my parent's case) 5 cents. What am I missing (besides a few brain cells)?

The term baseline is not commonly used. You might want to check your bill to see what it is called; it's probably itemized as "cost of generation" or something like that.

They have a huge amount of debt outstanding, and they have calculated revenue to pay that debt off based on decades of generating electricity from the present mix. They have a bit of flexibility meeting new demand, but when it starts to cut into the market share of the generators that provide the core revenue stream, they get very, very nervous.

Since the revenue drop is more than the money saved on fuel, their only response possible if the market share of fossil or nuclear is reduced is to charge more for the electric they can still sell into the market they still have is to raise per unit prices. This, of course, just makes the situation worse.

It refers to the bill of the consumers who buy solar home systems.

(roughly) and slashes the bill for the additional participants.