If the Montana Public Service Commission approves NorthWestern Energy’s request to charge new net-metering customers (NEMs) an additional monthly demand fee, the effects could be devastating on the state's fledgling solar industry, according to the head of the Montana Renewable Energy Association.
“This new rate structure could make it impossible to save money on energy bills by investing in solar,” Andrew Valainis, executive director of the association, recently told the Northeast Montana News.
Out of NorthWestern Energy's 369,000 customers, 3,000 generate their own electricity with solar panels. They can give surplus energy back to the electric grid and receive a credit on their accounts. NEMs, however, only pay for approximately 65 percent of the costs associated with using the energy grid, NorthWestern’s website states. The demand fee would make up for what they're not paying.
Just how much the proposed demand fees would add to NEM customers' bills would be calculated using the single hour of the household’s highest use during the month. NorthWestern is proposing to bill customers $8.64 for each kilowatt used during that customer’s single highest-use hour of the month. If the demand fee is approved, Valainis estimated NEM customers will wind up paying 28 percent more for their electricity or an increase of about $50 to $70 more per month.
“Some solar customers could potentially wind up paying more for their electricity than their neighbors who do not have solar systems,” Valainis said.
Arizona is one of the most robust residential solar markets in the country. One Arizona utility implemented a similar demand charge on their NEM customers. The impact hit the local solar businesses hard.
“One solar installer reported a 96 percent decline in sales immediately,” Valainis said.
In Montana, there are approximately 40 to 45 solar installers. Most have four to five employees. Some are electrician shops with a sideline in solar installation. Valainis said all of them are worried about what NorthWestern’s proposed rate design for residential solar customers will mean for their businesses.
“Installation businesses have held off from hiring additional employees because they just don’t know what the future is going to hold,” he said.
Car dealers who sell electric vehicles are also crossing their fingers as they wait to hear what the Public Service Commission will decide. The demand charges could have a drastic effect on electric car sales because electric vehicles typically pull a large amount of energy from the grid.
“A level 2 charger for the Nissan LEAF draws 6.6 kW from the grid in a 4- to 8-hour charge. That means a minimum $57 a month, just for plugging in the car, in addition to the charges for the kilowatt-hours used,” Valainis said.
The Public Service Commission is expected to rule on NorthWestern’s proposal in early December. Valainis said he has no idea what they will decide. Just the filing and working through the docket this year has had a chilling effect on solar growth in Montana, he said.
“If NorthWestern gets the proposal through as-is, it would definitely devastate the industry."