The Utility Companies and the Solar Surcharge Controversy

The controversy surrounding solar surcharges is really heating up in the United States right now. Electric utility providers, as government-regulated services, are essentially federally sanctioned monopolies. Prior attempts to open up competition between utility providers have failed across the country. Today, power providers know that their heyday is potentially coming to an end. Meanwhile, they’re holding on by slapping solar users with surcharges to compensate for their antiquated business model.

Surcharges and the Old Model of Utility Delivery

Today, utility providers are private for-profit corporations or cooperatives, either publicly owned or municipal. Electricity is generated in a controlled market environment, where the government regulates supply and demand as well who can and can’t compete in the market. The industry design was based on a one-way delivery system in which the utility generates power and delivers it to its customers. The viability of the utility depends on a minimum level of consumption and the fees that accompany that use. If the minimum consumption drops, the utility must raise its rates to stay afloat. Or, in the case of those people generating their own power (and thus lowering demand), they endeavor to collect a surcharge.

How Solar and Renewable Energy are Changing Things

Customers who install their own power generating systems (wind or solar, for example) require less utility power and thus pay significantly reduced usage fees. The utility can raise everyone else’s rates or they can put the burden on those people who have taken proactive steps to reduce their own dependence on the utility. Some utilities have even attempted to halt solar project installations, claiming they unfairly compete with the monopolies granted to the utility providers by the government. It’s estimated that a new solar power generating system goes online in the United States every three to four minutes, so the problem is not going away for the electricity providers any time soon.

The Future of Solar Surcharges

At the heart of this debate is the energy banking that solar power allows. If your system generates more power than you can use, it’s returned to the utility for their distribution, and they in turn issue you credit for future power consumption, a process known as net metering. Utility companies complain because issued credits are at full value, which supposedly includes the cost of power grid infrastructure (wires, poles, meters). This issue has become more of a political debate these days and the future is difficult to predict. The increase in solar power’s popularity (and its dramatic drop in cost) is providing a larger, more powerful voice for solar customers, however, and little by little surcharges are likely to disappear or become more in line with reality and fairness to solar customers.

Intermountain Wind and Solar serves the intermountain west region, designing and installing renewable energy systems for residential and commercial customers. Contact them to learn more about the advantages of solar power and how to fight any proposed surcharges.