Regulators halt attempt to hit solar customers with big fees
DOVER, Del. (AP) — Thanks to solar panels at his Millsboro early learning center, businessman Richard Spinks frequently provides more energy to the regional power grid than he uses. That’s why he was shocked recently to learn that he still faced potentially costly monthly bills from Delmarva Power.
Spinks had invested in the panels in 2017 to save on energy costs. But in 2018, Delmarva told him his rate classification for billing purposes was based not on his net consumption of energy from the grid, but on his monthly "draw" from Delmarva Power — a term not included on his electric bill and not mentioned in Delmarva's energy tariff.
As Spinks explained, his business might draw electricity from the grid at night to power exit signs and refrigerators, but his solar panels can more than make up for whatever power was supplied from the grid. So even though he routinely uses less energy than his solar panels generate, Spinks was confronted with the possibility of steep "demand charges" from Delmarva Power.
"For me, it means an extra roughly $500 a month," says Spinks, who got a reprieve from the fees after filing a formal complaint against Delmarva Power last year.
Under Delmarva's tariff, a solar energy user with Spinks' "small" rate classification pays only for actual kilowatt usage plus a nominal monthly service fee. But a "small" customer is automatically moved to a more expensive "medium" classification if it consumes 3,500 kilowatt hours or more for two consecutive months.
With that classification comes a monthly "demand" charge that can amount to several hundred dollars or more based on a customer's peak usage that month.
After reviewing Spinks' complaint , Delaware's Public Service Commission sided with the businessman on Dec. 12, adopting a hearing e xaminer's finding that Delmarva Power violated the law.
The report also clarifies that the word "usage" in Delmarva's tariff for small business customers who use solar energy means "net usage," not “gross usage.” The distinction is important for business owners who have invested in, or might want to invest in, the environmentally friendly panels.
"If you're going to have a demand charge and have solar on, it affects the business model and the financial outcome of whether or not to put solar on the roof," said Delaware Public Advocate Drew Slater, whose office represents consumer interests in utility cases and supported Spinks' arguments.
Spinks was also supported by Clean Energy USA, a Rehoboth Beach-based company that provides solar energy systems and installed the more than 200 solar panels that Spinks is leasing.
"Delmarva's tariff should not be a moving target for customers, particularly those investing in renewable energy facilities in furtherance of Delaware policy goals," an attorney for Clean Energy wrote in response to the hearing examiner's report.
Spinks acknowledges that he has not suffered any financial harm from Delmarva's interpretation of the tariff, but costly demand charges nevertheless loom over him and other business owners who have invested in solar panels.
"I'm not the only one that's in this predicament," he said. "It makes no economic sense whatsoever for me to put solar panels on my business ... if I'm going to be on a medium general tariff."
In accepting the hearing examiner's report, utility regulators said that if Delmarva wants to revise its current tariffs in a manner inconsistent with the commission's interpretation of the term "usage," it must file a separate application, allowing solar energy users on the Delmarva system to weigh in.
"If they change the tariff, then a lot of solar customers are going to be potentially knocked into medium service and not going to be able to reliably control their bills," said John Sertich, president of Clean Energy USA.
Timothy Stokes, a spokesman for Delmarva Power, said in an email that the utility is reviewing the commission's decision and assessing the revenue impacts it will have and how it might affect all customers.
"Delmarva Power has traditionally classified customers based on peak demand," added Stokes, who said regulators had adopted a new interpretation of the word “usage" in the tariff as it applies to rate classifications.