Some worry SMUD’s solar rates proposal could hinder clean energy goals

Local News

SACRAMENTO, Calif. (KTXL) — Some local homeowners are concerned over the Sacramento Municipal Utility District’s latest proposal to increase energy rates and reduce the credits they receive for the excess energy from their solar panels that gets sent back to the grid.

Fatima Malik is all about saving energy, whether that’s growing her own fruit, driving an electric car or being a SMUD solar customer for the last five years. 

“I knew that this was something that would really be able to help me save money and promote a clean living environment,” she told FOX40. 

So when she discovered SMUD’s latest proposal would increase energy rates by 1.5% to 2% in the years 2022 and 2023, she became concerned.

According to a SMUD spokesperson, the reason for the general rate increases are due to wildfire mitigation, an aging infrastructure, and increased labor and material costs.

SMUD added the new solar and storage rate is “to fairly compensate solar rooftop owners for their power at the current value to provide equity amongst solar and non solar customers.”

“The solution after working with solar stakeholders is the comprehensive solar and storage rate that provides benefits for the entire community while still providing fair compensation,” SMUD spokesperson Lindsay VanLaningham said in a statement to FOX40.

The proposed rate increase of 1.5% is still below inflation, the utility said.

SMUD also told FOX40 ​this is a comprehensive rate proposal and many utility companies across the U.S. are considering making the same adjustments to their rates, especially after the pandemic. 

“To focus only on the solar rate is shortsighted,” VanLaningham wrote. “If we want to build a zero carbon economy, improve health outcomes, decrease asthma rates and decrease pollution then we must find a comprehensive approach that benefits everyone. Our solar and storage rate does that by closing gas-fired power plants, expanding solar to lower-income customers, provides a new storage market and clean jobs, and more.”   

For SMUD customers like Malik, they get a credit of 12 cents per kilowatt-hour. The new proposal would cut their credit nearly in half to 7.4 cents per kilowatt-hour. 

“So if you’re paying hundreds of dollars, up to $400 dollars a month in just a SMUD bill, that’s not affordable,” Malik explained. 

But VanLaningham said the proposed rates are “quite generous.”

“We are paying customers 12 cents per kwh, when we can buy it on the open market for much less. A recent study by E3 valued solar in our service territory between 3-7 cents per kwh,” VanLaningham wrote. “Our new rate proposal errs on the side of solar and is quite generous when you compare it to other utility solar compensation rates.”

“Because of this we are over subsidizing rooftop solar folks at the expense of those who don’t have it. It’s an equity issue. It’s not fair to non-solar solar customers and its uneconomical,” she continued.

Groups like the California Solar and Storage Association also opposed SMUD’s proposal, saying in order to reach California’s goal of sustaining clean energy by 2030, reducing solar panel system incentives will only come at a major cost. 

“The break-even point for when a solar system pays for itself is generally around 12 to 15 years,” said Ben Davis. “SMUD’s proposal would push that break-even point past the lifetime of a solar system, rendering solar uneconomical for homes and businesses.”

“It’s really going to affect the way in which I’m trying to live a sustainable, resilient, clean life,” Malik said.

VanLaningham said SMUD’s final proposal will be released June 17 and will be followed by “a very thorough public process.”

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