Public Citizen Testimony Against HB 912 — Ending Net Metering at El Paso Electric
Public Citizen Testimony Against HB 912 -- Ending Net Metering at El Paso Electric
To: Chairman Ken King and the Members of the House Committee on State Affairs
CC: Rep. Ana Hernandez, Rep. Rafael Anchia, Rep. Drew Darby, Rep. Yvonne Davis, Rep. Charlie Geren, Rep. Ryan Guillen, Rep. Lacey Hull, Rep. John W. McQueeney, Rep. Will Metcalf, Rep. Dade Phelan, Rep. Richard Pena Raymond, Rep. John T. Smithee, Rep. Senfronia Thompson, Sen. Chris Turner
Via hand delivery and by email.
From: Kamil Cook, Public Citizen, kcook@citizen.org, and Kaiba White, Public Citizen, kwhite@citizen.org, 512-477-1155
Re: HB 912, Distributed Energy Generation Compensation – Public Citizen testimony in opposition
Dear Chairman King and Members of the Committee:
Public Citizen appreciates the opportunity to testify on HB 912, relating to the compensation of a distributed renewable generation owner in certain areas outside of ERCOT. We are opposed to this bill as written because it allows El Paso Electric to propose an alternative approach to compensate for solar generation instead of net metering, without establishing a standard for ensuring fair compensation for solar owners.
Texas Utilities Implement Anti-Solar Rates and Fees in the Absence of Regulation
In 2024, Public Citizen published a study of solar compensation rates and fees at 127 of the 141 non-competitive electric utilities in Texas. The results show that when utilities move away from net metering, they nearly always adopt an avoided cost rate to compensate customers for solar energy sent to the distribution grid that is substantially lower than the retail rate for electricity consumed from the grid (as low as 14% and averaging just 43%). And at least 35 of the utilities have an additional monthly fee that is charged only to customers with solar. Those solar fees range from $3 to $40 per month.1
El Paso Electric Already Has Discriminatory Fees for Customers with Solar
Even with net metering, El Paso Electric is discouraging customer-sited solar adoption. The utility has implemented a $30.25 per month minimum bill for residential customers with solar. And with its recent rate case filing, the utility is seeking to swap the fixed minimum bill for a substantial demand charge for residential customers with solar. Demand charges are common for commercial customers, who are generally more sophisticated, but are uncommon and ill-advised for residential customers, who are likely to find them confusing and difficult to respond to. Given this pattern of proposing and implementing anti-solar rates and fees, we don’t believe that El Paso Electric would replace net-metering with an alternative that is fair to customers.
Unfair Solar Rates and Fees Discourage Solar Adoption
Excessive fees and low compensation rates for electricity sent to the distribution grid from customer-sited solar can make it economically impossible for the average Texan to afford rooftop solar. Fair compensation for energy sent to the grid is essential for enabling a reasonable payback timeline for most customer-sited solar installations. Currently, unfair rates and fees push paybacks past 10 years – and sometimes even past the 25-year equipment warranty. Any policy change that allows for more latitude in setting solar rates and fees is likely to exacerbate this problem because compensating customers less for the electricity they send to the grid will make it even harder for customers to recover investments in rooftop solar.
Distributed Customer-Sited Solar is Valuable
Numerous studies done around the country demonstrate that the full value of customer-sited solar to utilities is above 10 cents per kilowatt-hour and often above 15 cents per kilowatt-hour. A recent study shows that the avoided cost alone in ERCOT is 15 cents per kilowatt-hour and with environmental and health benefits accounted for, the value is 27 cents per kilowatt-hour.2 Net metering is a good deal for utilities and their customers who don’t have solar because utilities are generally avoiding more cost than they are incurring. Benefits to the utility include avoided energy costs, avoided transmission fees, and local market price suppression. Avoiding the need for transmission is especially relevant, as expanding transmission to meet demand is a challenge across the country, including in Texas. There are also community benefits to customer-sited solar, including avoided health effects from air pollution and job creation.
Sound Methodology Should Underpin Rates
The National Standard Practice Manual for Benefit-Cost Analysis of Distributed Energy Resources provides a comprehensive framework for cost-effectiveness assessment of distributed energy resources.3 Stakeholders have requested that El Paso Electric conduct a study utilizing this framework, but the utility has insisted on using its customers as guinea pigs for solar rate and fee experiments, instead of doing this research and developing a fact-based proposal. Any alternative to net metering should be based on a thorough analysis of the value of solar to the local utility and community.
Request
We ask you not to vote HB 912 out of committee because there is a strong likelihood that the bill would negatively affect El Paso Electric customers, especially since there is no language that ensures that their interests are considered. El Paso already has some of the most rooftop solar in any city in the country. Rolling back net metering could greatly slow the expansion of rooftop solar and ultimately harm the utility and customers with and without solar.