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Are Poor Customers Subsidizing Solar Panels For Wealthier Ones?

Lucrative for homeowners and industrial customers who can afford them, solar panels are not without their own issues. The equity issue - whereby the claim is made that poorer customers subsidize the utility costs of wealthier ones, is investigated.
June 7, 2012, 10am PDT | Irvin Dawid
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Giving utility users credit for the electricity their solar panels produce, a program known as "net metering", is critical for expansion of the solar industry, especially solar panel installers. Diane Cardwell interviews delighted homeowners and school district officials who are seeing their investments pay off, and unhappy utility officials who claim that their costs are increasing as more customers turn toward solar.

As more customers install solar panels and have their electricity bills reduced by the power the utilities are required to purchase, "the utilities not only lose valuable customers that help support the costs of the power grid but also have to pay them for the power they generate. Ultimately, the utilities say, the combination will lead to higher rate increases for everyone left on the traditional electric system."

"Low-income customers can't put on solar panels - let's be blunt," said David K. Owens, executive vice president of the Edison Electric Institute, which represents utilities. "So why should a low-income customer have their rates go up for the benefit of someone who puts on a solar panel and wants to be credited the retail rate?"

The equity issue became more important after the "CA Public Utilities Commission decided last month to effectively double the amount of solar power capacity eligible for net metering."

Representing residential utility consumers, a lawyer for the Utility Reform Network suggested a position that could please both utilities and solar power advocates.

"The goal of net metering should not be to give the shortest possible payback period; we're not trying to shower people with free money," said Matthew Freedman. "We want to make it a reasonable investment while protecting the interests of all the other customers on the system who have to pay for it."

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Published on Tuesday, June 5, 2012 in The New York Times - Business Day
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