POWER May 2014 - 61

DISTRIBUTED GENERATION
paid to stranded costs in the discussions on
airline deregulation, trucking deregulation,
and most oddly, the breakup of AT&T. " Yet
analysts looking at the potential of distributed
electric generation are also citing the
experience of the airlines and the telecommunications
business.
The Clemson article continues: " What are
stranded costs, and why have they received
such scant treatment in the economics literature?
A general definition is that they are any
investment that will be less valuable under
competition than under regulation. Two of the
academic writers on this topic say that stranded
costs are 'those costs that the utilities are
currently permitted to recover through their
rates but whose recovery may be impeded or
prevented by the advent of competition.' "
Based on its January 2013 " Disruptive
Challenges " report, the EEI and its member
utilities last year launched a major
political campaign with this somewhatveiled
call to action: " Revising utility tariff
structures, particularly in states with potential
for high DER adoption, to mitigate
(or eliminate) cross subsidies and provide
proper customer price signals will support
economic implementation of DER while
limiting stress on non-DER participants
and utility finances. This is a near-term,
must-consider action by all policy setting
industry stakeholders. "
Disputes over DER
In mid-year 2013, the Wall Street Journal
reported, " Legislatures in half the states that
require electric utilities to buy renewable energy
are considering proposals to roll back
those mandates. " While most of that activity
focused on altering or eliminating state
renewable energy purchase mandates, challenges
also arose to state net metering programs
encouraging rooftop solar and other
distributed technologies. Among the states
where attacks on net metering occurred: Arizona,
California, Colorado, Kansas, North
Carolina, and Utah.
The biggest battle came in Arizona. The
dominant investor-owned utility, Arizona
Public Service, asked the Arizona Corporation
Commission (ACC), the state's utility
regulatory agency, to eliminate Arizona's
generous net metering requirement in a state
that gets a lot of sunshine year round. The
utility said the program was shifting costs to
conventional customers, representing a subsidy
to well-off rooftop solar customers. The
solar industry responded that the utility was
juggling its numbers because it feared losing
captive customers.
In the middle of the dispute, the Rocky
Mountain Institute (RMI) in Colorado
weighed in with a useful study, " A Review
of Solar PV Benefit & Cost Studies " (http://
bit.ly/OuoRuy). The RMI report found a
decided lack of data to support either side
of the dispute over the effects of net metering.
" No study comprehensively evaluated
the benefits and costs of distributed photovoltaics,
or DPV, " the authors reported,
" although many acknowledge additional
sources of benefit or cost and many agree
on the broad categories of benefit and cost.
There is broad recognition that some benefits
and costs may be difficult or impossible
to quantify, and that some accrue to different
stakeholders. "
Ultimately, the Arizona regulators adopted
a Solomonic, " split the baby, " solution. By a
3-2 vote, the ACC commissioners imposed a
modest 70¢/kW monthly fee on new rooftop
solar installations to offset the putative costs
to the utility. That amounts to about $4.20/
month for the average new installation. The
state's existing 18,000 PV installations would
not be affected.
Last year's skirmishing over the impact
2014
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May 2014 | POWER
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POWER May 2014

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