Snohomish County PUD, Increase in Electric Rates, & Effect on Solar

In March, Herald Net reported, “the Snohomish County Public Utility District’s Board of Commissioners approved a 5.8% rate increase to make up for higher costs and financial challenges in the energy industry.” The PUD suggests this will result in an extra $6.00 per month for the average residential customer. Meanwhile Puget Sound Energy proposed a rate hike of 17% for electric over the next 2 years. That is an 8.5% annual increase.

As a solar installer, these numbers are important to me. If I were psychic, I would know the exact future rate changes that will occur and could provide a perfect assessment of what homeowners can expect. Unfortunately, I cannot see the future. I can say we have seen historic increases along the west coast of 5% per year or greater. So, I build a 5% year over year utility rate increase into my cost savings analysis for customers that choose solar.

If I use a number that is too low, I am not helping them understand if the numbers pencil out. If I use one that is too high, it could be seen as exaggeration with all the peril that goes with it. Still, I cannot be sure if Snohomish County PUD or Puget Sound Energy reflect the overall west coast trend. Are we in a pocket that experiences a different annual change than other utilities?

Well, the SNOPUD 5.8% rate increase suggests slightly higher, while the PSE proposal, if approved, would be much higher than my 5% figure at 8.5%. These trends bolster solar installers’ claims that solar is a hedge against future increases in utility rates.

Yet, there is another development to consider, which is flat fees. SNOPUD has done something I find particularly disturbing. In fact, if it continues, it could entirely upset cost savings for solar making it less relevant. The flat fee daily base rate has recently increased from .35 cents per day to .59 cents for medium service residential customers and .84 cents per day for large services ($25.20/month). Are we moving to a subscription based electric service?

Here is how this effects solar. The net metering program allows a residential-rate credit for each KWH of solar sent back to the grid. This is a dollar-for-dollar credit. Let us say I have enough solar to be net neutral meaning I produce as much solar as I use leaving me with no electric bill. Except I am still responsible for the minimum monthly fee. Such base fee was assumed to cover the cost every customer would have related to sending a person out to read the meter once a month, generate,
and mail a bill. That all sounds very reasonable even for customers that did not use electricity such as some solar users.

Still at my house the mechanical meter was replaced by a digital meter read remotely. No-one comes to my house to read my meter although I do like a paper copy mailed to me. But $25.00? That is high for a billing fee. Now, my service is a 400A service as opposed to a standard 200A service and triggers the highest monthly base flat rate charge of .84 cents per day. I chose a higher amp service for the custom home I live in so I could feed more solar to the grid if I chose and installed thirty solar panels on my roof which does not actually require the 400A service. If I choose to add more later, I can. For the last 2 months, I banked more solar than I used, about 650 KWH in July and 300 KWH in August. So, I would have had no bill in either of those months except the .84 cents per day charge.

So, how do I feel about being charged $25.00 when I produced more electricity than I used? Well, not good. I’m fine with $10, but $25.00 means they’ve padded their billing fee with other charges that should have been offset by the solar. Now, $25.00 is not a big deal. But what stops the utility tomorrow from making it $35.00, $60.00, or $100.00? If so, it means I never got credit for the solar I produced. Or, if I did, it was at a much lower rate.

Consider the savings on solar is maybe $100.00 a month. If SNOPUD sends a bill for $25.00 a month regardless of your solar output, it means they just took at least 15% of your savings ($15.00 ) right out of your expected solar net meter credit. Thus, if I spent $30,000 to install solar, just to have the Utility provide a vastly limited credit, was it worth it financially?

There are other reasons for solar than financial, but as a solar provider I can tell you people are keenly interested in the savings on electricity. When I do my calculations, I would expect to use a true
figure of say twelve cents per KWH of electricity, rather than the artificially low rate of 10.2 cents per KWH that does not factor in the monthly base fee. Thus, the customer payback period to break even on solar is longer than it would be in a system where there is a lower minimum utility charge. This amounts to years of difference in the payback calculation.

It is noteworthy that I find a high rate of 400A services (as opposed to standard 200A services) among my solar installs. These people tend to adopt solar at a much higher rate than others. There are a lot of reasons. 400A services suggest homeowners that have custom homes and prefer customized options, availability of funds that can afford the investment, an understanding of the value of reliable electricity, and those that treat their home like a child that needs to be loved, nourished, and given every advantage. It is, after all, our homes that provide a large degree of comfort to our lives since we spend much of our time there. So that makes sense. Happy families are important to our sense of selves and identity.

So how did the utility justify proposing a flat rate charge rather than the metered
amount on a 400A service? The report I saw suggested 2 reasons. The first suggested the utility had to pay more to hook up a 400A service than a 200A service. This is false. I know this because I was billed by the utility for the 400A hookup at the power pole at my custom home. I dug the underground trench myself from the pole to the side of my house, put the conduit in the ground where necessary, ran the wire through the conduit, and mounted the meter base on the side of my home. All Snohomish County PUD did was show up with a crew, run wire down the pole from a box up high, and made a connection at the base of the pole. It took maybe 2 hours. The bill was $4,916.00.

The second reason given to justify a flat rate charge was that 400A services use more electricity than 200A services. While possibly true, all homes have meters that measure the exact amount of electricity used. There is not any need to group every 400A meter into a basket of privileged homeowners susceptible to higher charges. The 400A services I have seen are owned by normal people, often retired, on fixed incomes, just trying to live their lives in whatever form of comfort they can manage.

Moreover, I have a commercial customer who owns an office building. He is a dentist and has seven meters on his building, 3 of which serve just his own dental practice. One of them is for just the house lights. At some point years ago, they wanted to separate out the lights to isolate them from the other charges. This trick costs them an extra $25.00+ per month. Other than the flat fee, the electricity used on that bill is negligible.

There are some other possible justifications that could be raised for flat utility billing fees. It is said that solar costs utilities money to transmit and maintain electrical lines with electricity flowing through many transformers and switches from the source of generation to the end user. So, it is not just the cost of the current itself, it’s also maintenance of the wires, poles, and equipment. This is absolutely the case
for large commercial solar plants.

However, rooftop solar is a different animal. Where you have 1 or 2 homes in a neighborhood with solar on the roof, that electricity is mostly used by the home before back feeding to the utility grid. When it does back feed to the grid, it is most likely used entirely by the next-door neighbor and never travels any significant distance through the grid. If anything, instead of destabilizing the grid, it adds to grid stability and reduces the likelihood that transmission lines need to be upsized since electricity is being produced locally. The truth is rooftop solar is a significant benefit and cost savings for utilities.

What about time of use? Isn’t it true that solar is produced during daylight hours, not during peak hours when electricity is most needed? This may be the case in California and the sunbelt. In Washington State we seem to have a different situation.

Snohomish County PUD is charging some non-residential customers on a Time of Use Basis, which it defines as between 7:00 AM and 11:00 AM. This suggests that in our area peak use is in the morning when solar is working.

At the end of the day, I have to say that flat monthly minimum billing rates over a token amount make no sense, are prejudicial to solar, unfair, and probably illegal as it means solar customers are not getting an actual dollar for dollar residential credit on their utility bills as state law provides.

Of course, there are other reasons for going solar than mere dollars and cents. Homeowners come to me with concerns about sustainability, the environment, personal energy independence, national reliance on foreign oil, and other reasons. Thus, there will always be reasons to go solar other than actual cost savings.

Steve Anderson of Solx Corp – Copywrite 2024