On September 16th, Appalachian Power Company will ask the State Corporation Commission for permission to tax residential customers whose solar systems exceed 10kw in size. Some of you might be wondering how many APCo customers would be affected by the new tax. The answer? Two. That’s right, there are TWO people in APCo’s service territory who have solar systems larger than 10kw on their homes and the utility wants them to pay.
Prepare yourself as you try to follow their train of thought:

  • Solar customers lower their utility bills by powering their homes with the sun
  • However, these customers are still using the utility’s services when the sun isn’t shining and the solar panels aren’t generating electricity
  • The burden to provide power to these customers on a part-time basis is onerous and forces them to pass costs to other customers
  • The rest of APCo’s customers are unfairly subsidizing the “free-riders” who rely on the utility for power
  • Thus, to be fair to everyone else, APCo must tax the “free-riders” to recover the costs

To put it another way: APCo is trying to make the argument that the only two customers with significant solar installations in their Virginia service territory are increasing the utility bills of APCo’s other 447,426 Virginia residential customers so much that the utility has no choice but to slap a tax on these two moochers in order to cover the cost.
Allow me to share a few facts. APCo’s rates have more than doubled since 2005 and it has nothing to do with solar energy. In fact, solar owners actually provide a benefit to utilities by providing excess grid power during times of high demand. And speaking of benefits, the CEO of APCo’s parent company, American Electric Power, earned more than $10 million in salary and benefits in 2013. And yet, APCo is spending an untold amount of money in staff time and legal fees to petition the SCC for the right to tax their two customers who have solar panels in excess of 10kw in size.
Head-scratching for sure.
Let’s take a dive into a few details of APCo’s request.

  • The standby charges would apply to residential customers with solar installations between 10kw and 20kw in size (state law restricts residential customers from installing solar systems larger than 20kw)
  • According to the filing, APCo will ask for distribution standby charges of $1.94/kw and transmission standby charges of $1.83/kw, totaling $3.77/kw
  • Thus, homeowners with solar systems of 10kw would be taxed $37.70/mo in new standby charges, or $452.40/yr, with the potential for homeowners with the maximum-allowed 20kw solar systems of being taxed $75.40/mo or $904.80/yr

It goes without saying that taxing the sun is a silly idea. However, APCo is simply following the playbook first-written by Virginia’s utility behemoth Dominion Virginia Power. They’ve already successfully convinced the SCC to apply distribution and transmission standby charges to its customers who have similar-sized systems. Seeing this opportunity, APCo is seizing its moment to take advantage of its climate-conscious customers by imposing punishing taxes upon them.
Standby charges aren’t just a matter of economic fairness. They set a dangerous precedent that have the intention of suppressing the solar market. The state of Virginia is creating an environment that encourages the development of only the smallest of customer-owned solar systems. Homeowners who may wish to install large systems on their homes or property may think twice about crossing the 10kw threshold out of fear of being hit with taxes.
Standby charges send the wrong message during a time when the state needs to aggressively ramp up its solar energy mix. Solar prices are falling dramatically across the nation and as more citizens are educated about the benefits of solar, they are more encouraged than ever to make the switch from fossil-fuels to clean energy. Utilities everywhere are in a full-blown panic about the growth of customer-owned solar and are pulling out all the stops in order to stagnate its growth as much as possible.
The public comment deadline for APCo’s rate case is September 9th and the hearing is September 16th. Hopefully you will join CCAN in urging the SCC to not tax the sun and reject APCo’s proposed new standby charges.

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