in News Departments > New & Noteworthy
print the content item

Two state utility regulators' decisions highlight the growing controversy generated by increasing power production from distributed generation - particularly rooftop solar panels - and challenges in rate designs for U.S. utilities, Fitch Ratings says.

While distributed generation currently represents a very small fraction of total power generation in the U.S., Fitch expects it to grow substantially due to continuing improved efficiency, lower cost, and federal and state energy policies. The financial ratings firm says the trend will lead it to garner an increasing share of total system power sources.

Net metering allows customers to buy and sell supply to and from the utility. Fitch says this can create pricing incentives to benefit one utility customer class over the majority of the customer base. As a result, integrating renewable and energy efficiency policies into an equitable customer rate design remains among the largest challenges facing the U.S. utility industry.

Fitch draws on two recent events to inform its analysis: Idaho Power's proposal to raise service charges for residential and business net metering customers to more fully reflect their use of the company's distribution system was rejected by the Idaho Public Utilities Commission last week. Last month, the Louisiana Public Service Commission voted against a similar proposal by Entergy.

According to Fitch, the Idaho decision recognized the potential "overbuild" of systems that net metering incentives could create and provided credits for any excess generation rather than cash payments to net metering customers under a feed-in tariff. The ratings firm considers credits for excess supply and caps on total net metering production with higher fixed demand charges as essential components of rate design as net metering programs grow.

Fitch believes a similar net metering scheme that led to the destabilization of the power markets in Spain in late 2008 is a cautionary tale. It was directly tied to incentives given to owners of small solar generation systems under feed-in tariffs that were introduced in 2004, the ratings firm concludes.



Hybrid Energy Innovations

Hybrid Energy Innovations 2015
Latest Top Stories

Smart Grid Interest Continues To Spread Among U.S. Rural Utilities

A new survey gauges rural smart grid efforts across the country and offers key findings, one of which is that nearly all utilities polled are doing something to modernize their systems.


Global Smart Grid Tech Revenue Slated For Solid Growth

According to a report from Navigant Research, annual revenue for smart grid technologies will reach over $70 billion within the next 10 years.


Utilities Partner With Energy Storage To Harness Renewables

As utilities struggle to incorporate the increased use of intermittent renewable energy resources, such as solar and wind power, onto the grid, the power providers are looking to energy storage.


Smart Meter Fire Probe Points To Sensus Design 'Shortcomings'

There has been more fallout in Saskatchewan: An investigation into SaskPower's halted smart meter program says Sensus Generation 3.3 units "have a tendency to leak" and the utility mishandled the rollout.


Two Years After Superstorm Sandy, Utilities Highlight Grid Efforts

As the U.S. reflects on the monster hurricane that struck in October 2012, utilities note what they have done to help protect against future severe weather.

S&C Electric_id176
edf_id180