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Austin Energy Rate Increase re:Solar
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Hellojustice
Mueller Community

Posts: 52
Joined on August 16th, 2008
Austin Energy Rate Increase re:Solar
by Hellojustice on October 8th, 2012

I was asked to try to attach my rate worksheet. I had to make assumptions as to how the rates would be applied if net metering survived, so the method in the 3rd column is not per AE.
 
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Luke D.
Mueller Community

Posts: 7
Joined on September 11th, 2009
Austin Energy Rate Increase re:Solar
by Luke D. on October 8th, 2012

Thank you for attaching your spreadsheet to a post. I have been able to download it and taken a look at it. It is a very handy way to see the impact of the rate change for solar users in the community. Thanks again!
 
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ineoeni
Mueller Community

Posts: 103
Joined on May 18th, 2008
Austin Energy Rate Increase re:Solar
by ineoeni on October 9th, 2012

Hi everyone,

I'm sorry it's taken a while to get this out to everyone, but I hope the analysis below helps.

First, let me address some of the concerns brought up in earlier comments.

1) Resetting "solar balances annually is pretty common and makes sense for the utility because they don't want to incentivize people to build larger than necessary systems. Smittyhoo - Changing the reset date really doesn't change anything - for one, the vast majority of the neighborhood (90% or so) doesn't produce more electricity in the winter than they consume). It's probably worth looking at some more data, but I'm 95% sure that with the increased fixed charge and rates, it's highly unlikely that a lot of people are offsetting in winter months when you take into account the fixed charge.

2) When we get rebates from Austin Energy - we agreed to play by their rules. AE isn't charging you for electricity you produced - they are charging you for electricity you use from the "system" and paying you for sending electricity into the "system". It's obviously semantics, but this is the way they look at it.

Alright, it's late, so I'm not going to say this elegantly. It is important to note that there are TWO changes that occurring at the same time, making it harder to evaluate the change. (1) Rates are going up across the board and (2) AE is changing how they compensate solar owners.

As far as (1) goes, rates are going up - that sucks, but they are going up for everyone, so regardless of whether you have solar or not, the rate increase will cause our bills to go up.

So, in order to get a handle on whether the change to gross metering is helping us, OR if we'd rather have net metering on the new rate structure, I've done two analyses (attached). The first is a modified version of HelloJustice's spreadsheet. I took the liberty to add another scenario (old rates w/ gross metering) and also added some scenario analysis which will show you the "benefit of solar in dollars" in each difference scenario. Only change the cells at the top highlighted yellow.

This analysis makes it apparent that your preference for gross vs. net metering has a great deal to do with whether you consume a lot, or a little electricity. Based on the average system size in Mueller, and about an average of 1,000 of excess consumption, you essentially don't care (it's the breakeven).

Said another way, the spreadsheet shows that the AE changes make ALL OF OUR investments in solar better (increases ROI & Payback), but depending on how much electricity we use above our solar, we may or may not have benefitted MORE with net metering.

Conclusion, having gone solar was the right financial decision and got even better due the changes.

The second sheet is an update to my original analysis from 2011.This should make it pretty clear that the recent rate changes make solar more attractive. We can argue about whether or not AE should have kept net metering, but the reasoning (as I understand it) is sound. For solar to be sustainably structured, the fixed costs in the system need to be paid for by everyone - this change makes AE better incentivized solar projects because they'll always be compensated for the infrastructure they provide. Changes like these make it easier for AE to increase the solar budget without concern about the stability of the entire system (they just increased the total budget to $7.5mm from about $4mm, so maybe these types of changes matter).

Anyway, it's late, so I apologize for the verbosity.

Please let me know if this is helpful or if you have additional questions.

Aman amankj ...at...gmail.com
 
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Mueller Payback Analysis - October 2012.pdf (435,323 bytes)
Mueller Payback Analysis - October 2012.pdf (Page 1 / 6) Mueller Payback Analysis - October 2012.pdf (Page 2 / 6) Mueller Payback Analysis - October 2012.pdf (Page 3 / 6) Mueller Payback Analysis - October 2012.pdf (Page 4 / 6) Mueller Payback Analysis - October 2012.pdf (Page 5 / 6) Mueller Payback Analysis - October 2012.pdf (Page 6 / 6)  
 
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CJ Barker
Mueller Community

Posts: 11
Joined on July 20th, 2012
Austin Energy Rate Increase re:Solar
by CJ Barker on October 9th, 2012

Nicely done, ineoeni (Aman)! This is excellent.

I have been meaning to actually work out the numbers to determine the financial breakdown. Thanks for saving me the time.

This is very helpful verification and much appreciated.

Cheers,
CJ
 
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smittyhoo
Mueller Community

Posts: 445
Joined on November 4th, 2008
Austin Energy Rate Increase re:Solar
by smittyhoo on October 9th, 2012

Quote:

1) Resetting "solar balances annually is pretty common and makes sense for the utility because they don't want to incentivize people to build larger than necessary systems. Smittyhoo - Changing the reset date really doesn't change anything - for one, the vast majority of the neighborhood (90% or so) doesn't produce more electricity in the winter than they consume). It's probably worth looking at some more data, but I'm 95% sure that with the increased fixed charge and rates, it's highly unlikely that a lot of people are offsetting in winter months when you take into account the fixed charge.


They should reset it to Oct 1 for me and Joe then. No difference to anyone else :)

Thanks for posting everything.
 
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langhugh
Mueller Community

Posts: 1149
Joined on August 18th, 2007
Austin Energy Rate Increase re:Solar
by langhugh on October 9th, 2012

Quote:

The new Solar rate structure is detailed here: http://goo.gl/fJw5P [PDF], on page 4.

There is an important additional consideration as well. The last paragraph of the PDF I mentioned above talks about the Solar credit carry over: "Any amount of solar credit in excess of the customer's total charges for electric service under the residential rate schedule shall be carried forward and applied to the customer's next electric bill. The customer's carry-over credit, if any, shall be reset to zero in the first billing month of each calendar year."


I just called to confirm that the new rate policy described above is, in fact, going to be implemented as stated. Previously, as pictured in the attachment, carryover credits were applied to the current month's general utility bill.

Michael and Aman pointed out above that households with larger arrays are more likely to have carry-over credits that would zero out in January. The same scenario applies to those of us with the standard 5-6 kW array who also conserve heavily. In my case, it doesn't matter if the reset date in January 1st or October 1st. I am likely to forfeit a $200-$300 credit each year under the new policy.

While we solar owners are net beneficiaries of the new rate structure and I should thank my lucky stars, I can't help look at that forfeiture as a potential loss. That loss is essentially "free" energy to me, and can now waste a little more energy to compensate. I've certainly lost the incentive to conserve past a certain level.

Unfortunately, they probably can't solve for my case without creating trouble for other solar owners and ratepayers in general. Maybe it's a little reverse psychology... maybe I'll just go get an EV and a solar water heater with an electric backup to shift more fossil fuel use to electricity.

Dusty


 
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Hellojustice
Mueller Community

Posts: 52
Joined on August 16th, 2008
Austin Energy Rate Increase re:Solar
by Hellojustice on October 9th, 2012

One important change in the new rate structure was to drop the winter rate on the first 500 kwh to $.018 from $.0355 (50% decrease) and to expand winter rates to eight months - October to May instead of November to April. I have a tab for winter rates on the worksheet that I posted. The effect of this is if you use (gross) approx 500 kwh during the winter (which I do) then you are being charged about .065 cents per kwh and credited .128 cents. You make .063 cents for every solar kwh generated as long as you stay at 500 kwh gross usage. This will create more than enough credit to offset the $10 fixed charge. My system was turned on at the end of October last year so I don't have October data, but I think I will lose about $40 in December. I think they ought to reset at September which is AE's fiscal year end. What better time to close the books.
 
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Bobby Gierisch
Mueller Community

Posts: 37
Joined on June 25th, 2010
Austin Energy Rate Increase re:Solar
by Bobby Gierisch on October 9th, 2012

I'm just curious ... AE recently got a rate increase and re-structuring approved by city council. I don't recall any mention in that process of changing the rate structure for solar customers. Was there? And if not, why are they able to change the rate structure for one class of customers with approval through the rate-setting process?

That said, we all have a good thing going with the solar and I'm thankful for it.
 
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Alexey Korygin
Greater Austin Creative Alliance

Posts: 1
Joined on October 9th, 2012
 
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ineoeni
Mueller Community

Posts: 103
Joined on May 18th, 2008
Austin Energy Rate Increase re:Solar
by ineoeni on October 10th, 2012

Hellojustice,

I totally missed the Winter tab (obviously), in my late night stupor. An alternative way of managing the credit has been on a rolling 12 month period. To the extent you generate a credit in a given month, it expires a year later, regardless of what month it was generated. If it's easily administrated, maybe that'd be a simple solution.

This solution doesn't help people like Dusty, however. That being said, Dusty's point was, while he's "losing" $300 annually, he's still better off than he was under the old plan in it's entirety (net metering on lower rates).

THAT BEING SAID, my guess is that when Dusty (and I know, me) underwrote our investment in solar, we assumed there would be some amount of energy inflation, so this rate increase would be in line with that expectation. The difference is the change from net to gross metering - if he had known we would be moving to this system, he probably would have opted for a smaller system - although, he might have wanted to go ahead and max out the system size given special incentives and unknown future energy consumption (what if his daughter picks up pottery and buys a kiln?!).

My point is, we could cut this 100 different ways, but in the end, I personally believe that the move to gross metering is a positive for the AE rebate program. Even though it does improve the "payback" or "ROI" for most Muellerites, it certainly would have been nice to have known at the time of purchase.

I'm going to run some more numbers on the "solar credit". To the extent we think a certain type of customer X consumption & X production is getting the shaft, it might be worth lobbying AE through Solar Austin or even as a neighborhood. They are trying to figure this out just like we are, so I'm sure they'll be receptive to feedback.
 
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