Syria’s conflict is often called a proxy war in that it is an indirect confrontation between superpowers via substitute actors. To understand Obama’s proxy war in the desert, you have to understand the intentionally confusing term: net metering.
Simply, net metering is the process through which homeowners with rooftop solar panels are paid by the local utility company for the excess power they produce. In its report on net metering, the Institute for Energy Research defines it this way: Net metering “allows people who generate electricity on their homes and businesses to sell electricity back to the grid when their generation exceeds their usage.”
Net metering has been around since the early 80s when solar panels were expensive and few people had them. But the dynamics changed drastically when states began passing renewable portfolio standards (RPS) that required predetermined percentages of electricity be generated from renewable sources—some even specified which sources are part the mix and how much of the resource was required. To meet the mandates, utility companies agreed to pay, what essentially amounts to, full retail rates for the excess electricity being generated by the solar panels. Often the combination of the electricity the homeowner buys from the utility (at night) and what they sell back (during the day) gives them a utility bill of nearly zero.
Yet they are still using power from the electric company; they are still plugged into the grid. Grid maintenance, transmission lines and transformers, customer service, and other costs that are part of providing consistent, steady electricity to homes and businesses have historically been borne by everyone using it. Most people don’t think about it; it is just part of the bill.
Anyone who has ever owned a business, knows that you won’t survive for long when you are buying your product at retail and selling it for retail, as there are many additional costs between wholesale and retail. Yet, this is what utility companies are being forced to do through the net metering agreements that were made back when solar was in its infancy and customers needed to be incentivized to install solar panels so that the utility could purchase the power to meet the mandates.
Anyone who has ever owned a business, knows that you won’t survive for long when you are buying your product at retail and selling it for retail, as there are many additional costs between wholesale and retail. Yet, this is what utility companies are being forced to do through the net metering agreements that were made back when solar was in its infancy and customers needed to be incentivized to install solar panels so that the utility could purchase the power to meet the mandates.
When there were only a few solar installations, the loss to the utility had a very small impact. But now, with the numbers increasing, the loss is larger. That loss is being carried by the entire rate base and taking money from family budgets. Read full column
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