Update: In summer 2018, the Massachusetts Legislature approved an energy bill that made some changes to this situation. However, those changes are not crystal clear. It appears Eversource’s MMRC, as approved by the DPU, will not go into effect as planned. However, the utility can re-submit a new MMRC to the DPU. More information will be posted as it becomes available.
The Massachusetts Department of Public Utilities (DPU) recently approved some mind-boggling changes in how Eversource charges electricity customers, in particular customers who own solar. The changes go into effect on December 31 this year.
The fact that some of the changes are unprecedented in the country is not a sign of ground-breaking progress. It’s a sign that these changes are outside the realm of what’s considered acceptable by most utility regulators.
It’s hard to know where to start explaining this nightmare combination of higher electricity costs for all consumers, increased revenue for Eversource, and penalties for people installing solar. Let me begin with the impact on Eversource customers looking to shift their electricity budgets into solar. If that’s you, prepare to be shocked. And mad.
Impact on Consumers
Governor Baker and his administration say they are pro-solar, but these approved rates are an outrageous hit on citizens who want to install their own clean, cost-effective solar energy systems.
The DPU approved a new, mandatory, “minimum monthly reliability contribution” (MMRC) for Eversource’s residential customers. The MMRC includes:
- A new demand charge for customers with solar (or other distributed generation)
- An increase in the fixed monthly fee known as the customer charge on your bill. This applies to all customers, not just those with solar.
The customer charge goes up to $7 per month for all Eversource customers. That may not sound like much but it’s nearly double what South Shore and Cape Cod customers pay now. And if you get solar after December 31, your customer charge will be more than $10 per month. Yes, you’re going to be penalized for making your own clean electricity even though it helps the environment and public health, and it helps keep rates low for all utility customers.
(For more on how solar lowers rates for everyone, please read my earlier post – Ironically, Consumers Losing as Net Metering Hits the Big Time. In particular, note the links to studies by eight states affirming that solar provides a net benefit to all.)
The higher customer charge translates into an even bigger hit for people who use less electricity than average–for example those with small households or who are good at energy conservation–because it puts more of your bill into the fixed charge which you can’t reduce by turning the A/C down or turning out a few lights.
Consumer Demand?
Back to the demand charge which is a bit harder to explain: In addition to paying for the power you use, plus the customer charge, if you install solar next year, you’ll pay another fee based on the maximum amount of electricity you draw from the grid at some point in time, in the course of each month.
Demand charges have applied to large commercial customers for ages. But as a paper from the Acadia Center says, “No large investor-owned utilities in the U.S. have mandatory demand charges for residential consumers.” Until now.
My two cents: Demand charges have no place in a residential electric bill, since you most likely have no way of knowing what your demand is at any point in time. How can you control something you can’t measure? It’s a bit like getting a speeding ticket if your car wasn’t required to have a speedometer.
And it’s completely unfair to apply a demand charge only to people who are trying to do right by the planet and future generations by installing clean distributed generation systems like solar.
The Silver Lining
There is a silver lining, but only for a few months: Eversource customers installing solar before the end of this year can avoid the new solar-related charges. But it takes some months to go solar, so if you’ve been thinking this is your year to go solar, please don’t wait.
The Attorney General’s Office and solar advocacy organization Vote Solar are appealing the Eversource case, but it’s impossible to predict if they’ll succeed. It’s safest to assume these changes will go into effect as planned on December 31, 2018.
Big Picture
There is more to get angry about in this regulatory order, including the approval of a Return on Equity of 10% for Eversource, which is far higher than the regional average and will cost ratepayers about $15-20 million per year. Then there’s the approval of automatic annual revenue increases worth roughly $360 million over five years to Eversource. Those are among the reasons the Attorney General is appealing this case to the Massachusetts Supreme Judicial Court.
I’m not going down that investor returns rabbit hole today, but the Acadia Center provides a good explanation of those aspects here if you feel like getting madder.
Many thanks to the Acadia Center for their excellent analysis of this rate case and its impact on consumers; and to VoteSolar for continuing the fight to advance solar.
If you liked this article, you might also enjoy:
- How to Pre-Buy 25 Years of Electricity at 40% Off
- Ironically, Customers Losing as Net Metering Hits the Big Time
- How Electric Utilities Make Money