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Pedernales Electric Co-op Attack on Solar

In December 2020, the Pedernales Electric Cooperative (PEC) Board of Directors voted unanimously to adopt several regressive policies that apply only to members who choose to use solar at their homes. The result will be massive rate increases for those who already have solar and discouraging other co-op members from getting solar going forward. Not only will bills increase, they will be much more confusing for members to understand, with two new demand charges and time-of-use rates.


Time-of-Use Rates (effective January 1, 2022)

  • All residential members with solar will be forced to onto time-of-use (TOU) rates. This more complex rate structure will charge members more for using energy at certain times of the day and less at other times.
  • Solar energy production will be devalued because of the TOU rates, extending payback times and reducing return on investment for members with solar.
  • While TOU structure has the same rate for energy delivered and energy received, it is far more complex than the current simple flat rate setup, making it more difficult to calculate the return on investment for potential solar members. Making an informed choice to go solar will become much more difficult.
  • While TOU rates can be a useful tool, they should be optional because not all members have the flexibility to control the timing of their energy use. For those who can’t control when they use energy (elderly retired people, families with kids at home, people with certain medical needs, people who work from home), bills will likely increase. PEC staff say that increased bills are the intended purpose of this rate change.
  • TOU rates reflect that electricity is more expensive when demand is high – generally during the late afternoon and evening. Solar customers shouldn’t be singled out for mandatory TOU rates. TOU rates should be optional for all co-op members.

Demand Charges (effective January 1, 2022)

  • All residential members with solar (current and future) will be subject to two different demand charges:
    • One based on peak usage each month.
    • One based on their usage during the ERCOT electric grid Four Coincident Peak (4CP) periods – the highest energy usage hours for the whole grid peak for each of the four summer months in the prior year; and
  • Demand charges are based on maximum power demand (KW), not energy used (KWh). They are normally only applied to commercial accounts, in part because they are confusing for residential customers.
  • Demand charges can also be difficult to control. Reducing them isn’t just about reducing overall energy usage. If a member’s usage happens to spike when one of the 4CP events occurs, they will have higher bill for the following the year.
  • Staff says these demand charges are supposed to cover the cost of the grid system. All customers drive those costs, not just solar customers, but other customers are paying for those costs based on how much energy they use over the course of a month. A demand charge only for solar customers is unfair.

Upfront Fees (effective now)

  • Members who wish to install solar at their homes will have to pay $650 in upfront fees to PEC.
  • Members will pay $250 even if their application for solar is denied.
  • For comparison, Austin Energy customers currently pay $301 in permitting fees for a residential solar installation.


A consultant conducted a cost of service study, which claims that co-op members with solar are, on average, paying 17% less than it costs to provide them electric service. The rate changes are intended to eliminate that gap.


Shallow Analysis

The cost of service study that has been made available doesn’t show any of the data or assumptions used to reach that conclusion. Cost of service studies are usually large documents (well over 100 pages) that detail everything that at utility spends money on and all sources of revenue. PEC’s cost of service study is 23 pages. It’s shows the conclusions, but not the data and methodology, which are critical for evaluating the legitimacy of the claim that members with solar aren’t paying their fair share.

Unfairly Targeting Those with Solar

PEC is treating members with solar as a distinct rate class, which isn’t fair. Rate classes are generally defined by how the customer uses the electricity (for residential, commercial or industrial purposes) and/or the voltage required. Residential customers with solar use electricity for the same purposes as those without solar and have the same voltage requirements. They may use less energy from the grid than the average residential customer, but the same is true for those with small homes and very energy efficient homes. PEC has not demonstrated that solar customers are unique; therefore these changes are discriminatory.

The Solution

A comprehensive value of solar analysis is needed to evaluate the full costs and benefits of distributed solar at homes and businesses. Without this analysis, we don’t know if there’s even a problem to be solved. This analysis is different from a standard cost of service study and should be conducted by someone with experience doing this work. The data and assumptions used in this study must be transparent to all co-op members and should be available free of charge to members who wishes to audit the report.

Dozens of value of solar studies that have been conducted for states, cities and electric utilities around the country. These cost-benefit studies reveal that customer-sited solar provides savings to the utility and society at large, in addition to the direct benefits to the host site. Utilities that fear the rise of solar claim that those without solar are subsidizing those with solar, but the evidence doesn’t support this rhetoric.

In addition to quantifying all of the financial benefits of solar, the value of solar study should account for environmental, health and local economic development benefits that solar brings to the whole PEC community and beyond. We all know that solar is clean energy. It is one of the vital tools to fight climate change. It’s also a significant and growing source of good paying jobs. “Concern for community” is one of the 7 cooperative principles. Local solar is good for local communities and PEC should therefore encourage – not discourage – its use.

While a value of solar study is being conducted, the PEC board should reverse its decision to implement special rates for members with solar.

Take Action

These changes were made without any outreach to PEC members and with no real discussion by the board. Now, PEC members are pushing back on these discriminatory anti-solar policies. You can join the effort.

Sign up to get involved.

Send an email to the board of directors.

Sign up to attend a forum for PEC members to get information about these changes.