Why Nevada Brought Back Favorable Rates for Existing Solar Customers

September 16, 2016, 6:39 PM UTC
Fortune, Katie Fehrenbacher

Nevada regulators approved a stipulation on Friday morning that will bring back more favorable rates to residents that already own a rooftop solar system in the state.

The move reverses a highly controversial decision by the Nevada Public Utility Commission last December to tack on fees and lower compensation paid to owners of home and commercial solar systems. The decision last year faced fierce opposition from local solar customers, politicians, and even some celebrities.

However, the Commission did not reverse its decision on changing the rates for future solar customers. Currently anyone who wants to buy rooftop panels in Nevada will still face the new rates that were changed in December.

The Commission’s decision this morning, which was delivered after the testimony of half a dozen upset solar owners, follows the decision by a Nevada district court earlier this week that found that the commission had violated existing solar customers’ Constitutional due process rights by switching them to a new tariff without adequate notice.

In conjunction with the court decision, solar installer SolarCity (SCTY), which has led the charge against trying to challenge the new solar rates, and local utility NV Energy, a unit of Warren Buffett’s Berkshire Hathaway, agreed on a settlement.

Critics of the Commission’s original rate change have accused the regulators of being in bed with NV Energy. The Commission has denied such accusations. Originally, NV Energy supported the decision to change rates for existing solar customers, but earlier this year asked regulators to implement the grandfather clause.

The Commission’s reversal on Friday re-establishes the prior more favorable rates for about 32,000 customers that already own rooftop solar panels in Nevada. While solar rates around the U.S. are being reexamined by state agencies, few regulators have actually changed the rates for existing solar customers. That was the cause for much of the ire that even caused Senator Bernie Sanders and former Secretary of State Hillary Clinton to briefly weigh in via social media at one point.

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Sean Gallagher, vice president of state affairs for industry group Solar Energy Industries Association (SEIA), described the decision as “an important step to establish regulatory certainty in Nevada for customers who have had quite a roller coaster ride this year.”

But many in the solar industry say the future rate changes are still a major problem. Gallagher said, “We now must put policies in place that support new solar customers in Nevada so that solar jobs can once again increase, and the robust economic activity associated with solar development can resume.”

Following the commission’s decision last December, SolarCity, and other solar installers decided to stop doing business in the state, saying selling rooftop solar in Nevada was no longer economic.

For more on why Wall Street isn’t a fan of the SolarCity deal, watch:

Nevada regulators changed the rates last year after the Nevada legislator made the decision to start moving away from the solar subsidy called “net metering,” whereby rooftop solar customers are paid a certain rate for the solar power they produce. The Nevada regulators used data that found that non-rooftop solar customers were being charged unfairly on their monthly bills to make up for added costs and incentives for the solar customers.

But SolarCity and others say that data is flawed and that rooftop solar in Nevada provides a net benefit of between $7 million to $14 million per year to Nevadans (both solar customers and non-solar residents).

SolarCity plans to challenge the changed rates for future customers in an upcoming rate case.

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