California Regulators stiff arm utilities on solar for the public

[kristopher]

3. They really aren't paying any incentives

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.