All over the country, utilities and their customers who want to use rooftop solar have collided over the issue of what kind of payments are fair for the electricity exported to the grid by distributed solar panels. Nowhere is that conflict clearer than in the case of DTE Electric, the largest electric utility by customer base in Michigan. DTE has proposed what has been called one of the worst tariffs for rooftop solar in the country. As we will explain, those criticisms are not hyperbole. As Michigan regulators get closer to a decision on the DTE rate case where the tariff has been proposed, the conflict has heated up and is one that the solar industry should be watching closely.
Rooftop solar has been growing swiftly across Michigan, including in the service territory of DTE Electric, the largest electric utility in the state. That has strained the relationship between DTE’s distributed generation (DG) customers—who want to add DG like rooftop solar and batteries to their homes and businesses to generate their own power—and DTE itself, which has a financial interest in customers buying their power from the utility instead.
The tension between customer and utility was clear at an Aug. 22 public hearing of the Michigan Public Service Commission in Detroit that was focused on DTE’s pending rate increase request. The many customers who showed up at the hearing were not happy. A frequent complaint was that DTE was proposing what essentially amounted to a new tax on the solar panels that some customers were installing on their roofs. A big motivation for going solar for many of these customers is to have an alternative source of power to the outage-plagued electric service they receive from DTE.
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While it is not a literal tax, DTE’s rooftop solar proposal is worthy of the uproar. It brings the entire future of customer-sited renewable energy sited at homes and businesses in Southeast Michigan into question.
This year, in its rate case, DTE proposed a new tariff to determine rates for rooftop solar and other distributed generation customers. Groups intervening in the case like the Michigan Energy Innovation Business Council (Michigan EIBC) have analyzed the tariff in detail. Michigan EIBC’s expert witness, Justin Barnes, director of research at EQ Research, described the tariff in his testimony as “the most thoroughly unsound rate design proposal that I have ever seen.”
The tariff, if approved, would apply to all distributed generation customers—including people trying to add new rooftop solar arrays to their homes and businesses and those who already have rooftop solar in DTE’s service territory. It subjects these customers to a very different charge than what would appear on the bills of other customers. Specifically, DTE would take the average of the three hours a month that the customer uses the most power and add a charge to the customer’s bill based on those times of high power use. This doesn’t take into account whether or not those times when the customer uses the most power are actually times when the grid is stressed.
That charge is high enough to wipe out any savings from the customer’s solar panels. Our expert witness describes it as a “100% demand ratchet rate.” Just three hours of high electricity use would be the most important driver of your monthly electricity bill, eliminating the incentive to save energy for 99% of the month. A rooftop solar user who does his or her laundry and runs the dishwasher while heavy cloud cover blocks the sun could be ratcheting up his or her electric bill just because the solar panels happen to not be producing at that time.Photo courtesy: Vivint Solar
Why would DTE try to impose something so punitive on their customers? This makes more sense when one considers the history of DTE’s adversarial relationship with rooftop solar. DTE sees customers who try to generate more of their own electricity as lost revenue, and that appears to be unacceptable to the utility. That’s why we have seen DTE fight so hard against any fairness for rooftop solar users, including using its political influence in Lansing to block a commonsense bill to eliminate the current limit on how many customers can have rooftop solar.
But that fight is still going. The legislation remains alive. Since there is still a good chance that the cap will be eliminated, with this rate case, we are seeing DTE try to kill rooftop solar in a different way.
It is not just the renewable energy industry that notices what DTE is trying to do. Other voices are criticizing the proposal, like the Staff of the Michigan Public Service Commission (MPSC). The Commission will determine what to approve or deny from DTE’s rate case proposal, including the distributed generation tariff. “The Company is clearly proposing to take optionality away from [distributed generation] customers,” an expert witness for the MPSC staff said in testimony about DTE’s rate case.
The utility presents, as an attempt at a compromise, the approval of this tariff in exchange for a two-fold increase in the cap on distributed generation. Customers, renewable energy advocates and Michiganders in general should not accept this compromise or any similar compromise that would institute this terrible proposal and harm rooftop solar customers as a result.