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How should net metering affect your electric bill?

climateer.substack.com

31–40 of 332 posts

Re: How should net metering affect your electric bill?

#31
post #19
post #16

The author here would do well to and understand and use terms like "fixed costs" and "variable costs". There are large fixed costs in the power grid and the author is complaining that the retail price of electricity doesn't reflect the variable costs, leading to distortions and perverse incentives. But this doesn't make prices "lies". > The current net metering system in California is pretty favorable to customers wi…

> It's quite an overt and deliberate subsidy to foster solar power technology I'd say that the issue the author is addressing is that it is not so overt. Sure, if you meditate on it it becomes clear it's a subsidy, but I think the vast majority of the people who take advantage of it simply think "I produce as much as a use, so of course my bill should be zero."

Well, if my net usage from the grid were to drop to zero, without solar (say because I used a gas generator or whatnot), I’d basically be paying the utility zero too (modulo some small connection fees). The utility still wouldn’t save on any of its fixed costs though. What net metering with solar does is simply make this option much more practical.

The straightforward solution would be to fund major infrastructure costs using something other than volumetric pricing. But it’s easier to just impose fees on solar.

Re: How should net metering affect your electric bill?

#32
post #5

OP hints at this - but the problem seems to be net metering lumps capacity payments in with the cost of power. Some markets run a separate capacity market that rewards power generators explicitly for their capacity - independently of whether they actually generate any electricity. (California's market (CAISO) doesn't do this) A long time ago I was involved in setting capacity market prices if y'all have follow up que…

Speaking of CAISO they have a cool website with electric prices for much of the western US http://www.caiso.com/TodaysOutlook/Pages/prices.aspx

Re: How should net metering affect your electric bill?

#33
This article carries way too much water for PG&E. Sad, but I guess since we're gearing up for a net-metering 3.0[1] fight we'll see more and more articles like this one.

Here's the places where I think it misses the mark:

* The energy generation costs listed by the author actually includes rooftop solar. PG&E paid exactly $0 for you to spend $30k installing the panels, so that number is low for PG&E for a reason.

* PG&E turns around and sells your solar power to people enrolled in "Solar Choice" plans who will pay 50% more for electricity than what PG&E net metered you.

* California has a green energy mandate and rooftop solar is one of the ways PG&E can meet the mandate while offloading the entire cost of the system onto the homeowners.

* Net metering last for 1 year and after that PG&E "credits" you the wholesale value of your excess electricity, which they value at approximately 1c/kWh even though they charged other people $0.40/kWh during peak time for that power you exported.

* The CA legislator mandated all new homes are installed with solar panels. Kind of makes sense why PG&E was favorable of this bill. PG&E again has offloaded the cost of installing green energy generation on someone else.

* The monthly non-bypassable fee that the author describes as "pretty low" is actually closer to $10/month and expected to rise with NEM 3.0 to $50 a month or more. Keep in mind that PG&E has 5.5 million customers, so this number is significant.

* Grid defection is illegal in most municipalities so even if someone wanted to install a battery and go off-grid they still have to pay the $10 a month non-bypassable PG&E fees.

Net Metering 3.0[1] "fixes" the problem the author attempts to describe, but really it's a rug-pull on everyone in CA who spent tens of thousands of dollars to install rooftop solar.

Customers installing solar panels at their expense is a subsidy FOR PG&E, not the other way around despite what this spin attempts to portray.

1. https://www.solarreviews.com/blog/california-net-metering-ch...

Re: How should net metering affect your electric bill?

#34

It seems to me if it's true that the cost of distribution is something like 77%, then it really argues in favor of more houses being off grid -- For the cost it may have been better to build self sufficiency, and/or micro community grids rather than a giant regional one. The economy of scale in generation is lost in the costs of distribution.

In practice local generation and storage has fewer possible customers. The grid has limits on how much can be exported from a residential substation. A generator connected to a big substation can send electricity to millions of potential customers. And a battery can receive energy from all over the grid. The local intermittency is easier to iron out when you can benefit from geographical separation, different modes of generation and different weather conditions.

Re: How should net metering affect your electric bill?

#35
About this part:

"Maybe Some Lies Are Necessary?"

In his book "10% Less Democracy" the economist Garret Jones pointed out that politicians make terrible decisions during election years, therefore, if we had longer terms in office, and therefore fewer elections, we'd have better government.

https://www.amazon.com/10-Less-Democracy-Should-Elites/dp/15...

Likewise, in 1787, Alexander Hamilton insisted that the USA President should be elected "for life, on good behavior." He imagined that having a leader commit to a country for life should lead to good governance, so long as the person could be easily removed if they behaved badly.

"Democracy For Realists" rounds up some of this thinking. While Achen and Bartels don't explicitly endorse longer terms in office, they do quote a lot of people who feel longer terms in office would lead to better government, and also more honest government.

I've been studying this issue and using a Substack as the dumping ground for my research notes. If you're interested, here is an excerpt where they talk about the struggle to add fluoride to municipal water, and the pushback the political leaders got:

https://demodexio.substack.com/p/democracy-for-realists-part...

Here is an excerpt about the damage done by referendums, of the type that dominate in California:

https://demodexio.substack.com/p/democracy-for-realists-part...

"La Follette was eventually the 1924 Progressive candidate for president, but the anti-party spirit of that movement is already apparent in these remarks two dozen years earlier. As Key (1942, 373-374) put is, “The advocates of the direct primary had a simple faith in democracy; they thought that if the people, the rank and file of the party membership, only were given an opportunity to express their will through some such mechanism as the direct primary, candidates would be selected who would be devoted to the interests of the people as a whole.”

Some canny political scientists were immediately skeptical. For example, Henry Jones Ford (1909, 2) noted that

“One continually hears the declaration that the direct primary will take power from the politicians and give it to the people. This is pure nonsense. Politics has been, is, and always will be carried on by politicians, just as art is carried on by artists, engineering by engineers, business by businessmen. All that the direct primary, or any other political reform, can do is to affect the character of the politicians by altering the conditions that govern political activity, thus determining its extent and quality. The direct primary may take advantage and opportunity from one set of politicians and confer them upon another set, but politicians there will always be so long as there is politics.”

I include my own opinion in the Substack, which is that longer terms would help make for most honest government.

Achen and Bartels also offer a detailed look at a region of Illinois in which the public was invited to vote on the budget for the fire department. The public voted for the cheapest, least expensive budget they were offered. The public saved themselves a total of just $0.43 cents per family a year, while having to suffer from very slow response times from the fire department. This seems to be a clear example of the public sabotaging its own interests, when invited to vote on issues directly:

https://demodexio.substack.com/p/democracy-for-realists-part...

Finally, here is the part where Achen and Bartels come close to suggesting that longer terms would allow politicians to be a bit more honest. They make the point that it was the politicians close to an election who were most likely to pander:

https://demodexio.substack.com/p/democracy-for-realists-part...

"For lower-level offices, however, a good deal of variation in term lengths remains, and it seems to have just the sort of consequences suggested by Hamilton and by Canes-Wrone, Herron, and Shotts’s analysis. For example, elected officials facing the issue of fluoridating drinking water in the 1950s and 1960s were significantly less likely to pander to their constituents’ ungrounded fears when longer terms gave them some protection from the “sudden breezes of passion” that Hamilton associated with public opinion. Figure 4.3 shows the dramatic difference that longer terms made to mayoral support for fluoridation. Many political leaders, not caring deeply about the topic, ducked; but those with longer terms had more political leeway to do what was right, and a significant fraction of them used it."

It seems likely we could get a more honest kind of government if politicians were elected for a single very long term, of perhaps 15 or 20 years. The top judges in Britain are appointed for 18 years, so perhaps that is the ideal number when you want to ensure someone's independence, while still allowing the regular churn of generational change.

Re: How should net metering affect your electric bill?

#36

Earlier quoted context omitted.

The delivery fee being artificially low was a political decision to subsidize utility prices for the poor. Every single utility has step function of pricing for usage fees that works to capture the cost of providing the infrastructure. This is why net metering never made sense to utilities and why they were trying to reject it despite states and politicians seeking to force it on them. The utilities who did go all-in…

This is why all subsidies should be in the form of cash. Give poor people cash rather than obfuscate prices, which then results in hampering of market mechanisms and results in inefficient allocation of resources.

Aside from the obvious problem (which poor people) it is a very interesting idea to remove all subsidies (explicit and implicit). Terrifying but interesting

Re: How should net metering affect your electric bill?

#37
Honestly, this feels like a bit of a red herring. The net metering issue is getting more airtime lately, but it isn't nearly as big of an issue as the proposed connectivity fee that is only targeted at solar customers and based on the nameplate capacity of solar.

That fee is directly designed to capture the benefits of solar for the utility and has little to do with real costs to the grid.

Re: How should net metering affect your electric bill?

#38

Earlier quoted context omitted.

This is why all subsidies should be in the form of cash. Give poor people cash rather than obfuscate prices, which then results in hampering of market mechanisms and results in inefficient allocation of resources.

Aside from the obvious problem (which poor people) it is a very interesting idea to remove all subsidies (explicit and implicit). Terrifying but interesting

The obvious problem is solved by making it universal. You do not need to choose which poor people, just make it everyone, and then collect a marginal income tax. Although, I would prefer marginal sales taxes, but that seems technically impossible with current technology.

The reason why it is not done is because it would lay bare all the inequities in the system, as well as require higher taxes due to not being able to hide the inequities in various forms of price discrimination/segmentation.

Keeping prices obfuscated means costs can be distributed across the population in an unfair manner / benefits reaped in an unfair manner, as well as ability to punt costs into the future.

Re: How should net metering affect your electric bill?

#39
>> Greenhouse gas emissions are a classic instance: polluters don’t pay for the carbon they emit. This is the ultimate distorted price: emissions have a high cost, but the price we charge polluters is $0. That price is a colossal lie.

I always say if you want to make someone pay for carbon emissions, the easiest way is to tax its extraction from the ground. Tax coal, oil, and gas extraction (or import) and call it a day. No sense creating artificial markets for carbon credits or other such nonsense that just encourages gaming a system and feeding middlemen.

The author IMHO totally blew it by digressing from the net-metering thing. Its a really good example of how pricing doesn't match costs, but he offers absolutely nothing as a fix for that situation. Charging people a base rate for the infrastructure plus usage sounds nice, but that causes problems for poor people and kind of subsidizes large users. The current pricing scheme which increases costs with usage (progressive pricing?) seems more fair. Or what about splitting the bill into infra and usage portions, then solar installations would pay infra for power flowing in either direction. I'm sure there are plenty more ideas out there, but the author offers none.

Re: How should net metering affect your electric bill?

#40
post #37

Honestly, this feels like a bit of a red herring. The net metering issue is getting more airtime lately, but it isn't nearly as big of an issue as the proposed connectivity fee that is only targeted at solar customers and based on the nameplate capacity of solar. That fee is directly designed to capture the benefits of solar for the utility and has little to do with real costs to the grid.

This is exactly right. Now that PG&E has built a sizable solar installation base, the NEM3.0 move is to make sure they can capture more profit. Their plan for passing NEM3.0 seems to be to cry and moan about how they're being taken advantage of by individuals who paid $30k to install solar panels on their homes.
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