A proposed rate structure change from the Tennessee Valley Authority is causing uncertainty in Tennessee’s solar business, an industry hit by import duties in 2017 and now facing steel and aluminum tariffs.
Chris Koczaja, president of LightWave Solar in Nashville, says TVA’s proposed rate change will further disrupt the industry and discourage people from making investments in renewable energy.
“What they’re introducing is, what they’re calling a grid-access charge, which is a fixed fee that they want to put into your bill,” Koczaja explains. “But what that does, even if you use nothing this month, you’re going to pay more on your bill.
“And if you’ve made energy-efficiency investments in lighting, geo-thermal, Energy Star appliances or solar, it’s going to devalue the savings that you get out of that. So it’s moving in a direction that I see counter to where, really, where a lot of the rest of the world is going, and it’s putting basically another tax on our utility bills.”
Jim Hopson, manager of public relations for the TVA, says the current pricing structure for power means all of the costs associated with supplying power are involved in a variable rate. The problem is the rate does not provide the correct pricing signal for the actual cost of an individual’s power. So, a fixed cost has to be maintained to ensure reliable power 24/7.
“It’s not a rate increase,” Hopson explains. “I think that’s a very common misconception. It’s just the difference in how the rate is structured, so you have a little bit more of a real picture of how much your access to power costs you.”
Hopson adds the pricing proposal that TVA has put forth is to move a portion of the variable charge into a fixed charge, and then lower the variable charge by that same amount.
“In terms of individuals, I can’t say there will be no impact, but some people may see a dollar or two less per month, some people may see a dollar or two more per month, but this is not going to be a significant change to anyone’s power bill,” Hopson points out. “It’s just a different way of billing, such that you have a clearer idea of the true cost of reliable power.”
Koczaja disagrees and explains this is a way to take the ability to control energy bills out of the hands of the consumers and discourages making energy-efficient upgrades.
“Basically, if you use a lot of energy, and you know you’re a high-energy user, you’re going to pay less under this scheme,” he continues. “I don’t care necessarily where you are in the political spectrum.
“If you’re on the greener side, well, that doesn’t sound good. If you’re on the more conservative side, that doesn’t sound good either because it sounds like basically everyone is subsidizing each other’s bills.”
Hopson says the rate structure change has no bearing on energy conservation.
“There is no part of this that prevents anyone from making personal choices,” he says.
“This simply points out that there is a cost associated with ensuring that you have the power that you need, when you need it. It’s only fair that everyone who benefits from that pays an equal share of it.”
And that is regardless if you are a consumer contributing generated solar to the grid or not.
“You are still using the grid to cover your power needs when you don’t have solar,” Hopson points out. “That’s 16 hours out of the day when solar is not generating anything. They’re paying the exact same rate as someone who is. We purchase the solar power that they generate.”
Koczaja adds they are looking outside the TVA region to do more projects, as well as getting into solar storage and battery systems so the company can add value for the customer and offer them more control over their energy usage and costs.
‘We constantly have to figure out which game we’re playing, and then figure out the best way to play it,” Koczaja says.
On an average day Hopson says it takes 22,000 megawatts, or 22 gigawatts, of power to supply the entire Tennessee Valley.
Of that, Hopson notes the TVA has 500 megawatts of solar under contract, which he says is “fairly good” in comparison with nearby states. By comparison, the TVA has about 1,200 megawatts of wind under contract, and nearly 5,000 megawatts of hydro.
According to a recent report by the Southern Alliance for Clean Energy, in terms of watts of solar power provided to each customer, Tennessee ranked six out of seven states in the region last year. By 2021 Tennessee is projected to be last.
“Obviously, we’re adding more, other states are adding more,” Hopson says. “There’s 24 hours a day. Solar is only generating on average about 23 percent of that. So, you have to have something to make up the other 77 percent.”
Still, Hopson maintains the rate structure change is not a done deal, and it will be considered by the board of directors at their next meeting, May 10. Any changes made would be applied beginning October 1, 2018, the beginning of a new fiscal year for TVA.
“If you look at your power bill, what changes from month to month is not really the rate,” Hopson says. “What changes from month to month is the amount of power you’re using. So, when you get these really extended cold snaps, like we had in January or February, everyone is using a lot more power.
“Well, just like if you go to the grocery store and you buy 10 cans of peas as opposed to three cans of peas, guess what? Your bill’s going to go up,” Hopson adds. “The cost of each can hasn’t changed, but the number of cans that you purchased has. It’s exactly the same way with power.”