Clean Power

Published on February 22nd, 2016 | by Guest Contributor

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Warren Buffett’s Quiet Bid To Kill Solar In The Western US

February 22nd, 2016 by  

Originally published on DeSmogBlog.
By Ben Jervey

There are solar battles blazing all across the west right now, as utilities anchored to fossil fuel power plants strain to avoid the inevitable spread of solar across their areas of operation.

Not a month goes by without a story of some assault on solar-friendly policies by utilities, or by the Utility Commissions that are often in their pocket.

During the holidays at the end of 2015, it was Nevada’s utter dismembering of its net metering policy. Nevada is—or was—one of 42 states that offered net metering, a program through which customers with solar arrays are compensated for the energy they produce on their rooftops or in small installations connected to the electric grid.

NV Energy Inc. unleashed this full frontal attack on the program that—in one quick vote of three unelected commissioners—pulled the rug out from under 17,000 solar customers and eviscerated at least 8,000 solar jobs. And the Public Utilities Commission of Nevada (PUCN) was happy to oblige.

Nevada has the highest number of solar jobs per capita in the United States, but for how long?

As Nevada’s PUCN invited this “solar black hole” over one of the nation’s sunniest states, many pointed out how NV Energy fought tooth and nail against the successful net metering plan, and ultimately secured its demise.

NV Energy, the state’s largest utility, is a subsidiary of Warren Buffett’s Berkshire Hathaway Energy. This net metering battle was high profile.

Many have pitched it as a Buffett versus Musk showdown, as NV Energy’s demands would prove to cripple Solar City’s business in the state, which was dependent on a consistent net metering program.

But this is far from the only move Buffett is making against solar. In Utah, Rocky Mountain Power—a division of PacifiCorp, which is a fully-owned subsidiary of… you guessed it… Berkshire Hathaway Energy—proposed a charge for solar net metering customers similar to that which passed in Nevada. The Utah Public Service Commission voted that proposal down.

There’s a decent bit of spotlight on the net metering battles, but Buffett’s holdings are actively engaged in a quieter war on another solar front.

Yet just last year, Berkshire Hathaway Energy signed President Obama’s Climate Commitment, pledging to “lead on climate action.”

PURPA: “The Backdoor Solar Answer Out West”

At issue is a relatively little known federal statute that has been a huge boon to solar development around the country, and especially in the big Western states. It’s called PURPA, or the Public Utility Regulatory Policies Act, and it basically ensures that renewable generating facilities of a certain size (up to 80 megawatts; the projects that fit these conditions are called Qualifying Facilities, or QFs) can sell their power to utilities for a certain fair price. That price is called the “avoided cost rate” in utility-speak, and is basically what the utility would have had to pay for the same amount of power from another source or to generate it itself.

Problem is, utilities would rather generate the power themselves because they get a better return on those power plants that they own. Utilities don’t want to be told they have to enter into long term contracts with outside developers, even if the cost of the power is the same as what they would pay to generate it themselves.

But that’s what PURPA does. By mandating that the utilities approve these long term contracts with medium-scale solar and wind projects, the Act has historically allowed a renewable energy developer to lock in a 15 to 20-year contract, providing the stability that secures the financing.

This security has helped hundreds of solar and wind projects plug into the grid. PURPA helped usher in the mini wind power boom in the early 1980s and, over the past decade, it has helped bring thousands of megawatts of wind online all across the west. Lately, solar is lining up in the queue to plug into PURPA contracts.

The Union of Concerned Scientists has gone so far as to call PURPA “the most effective single measure in promoting renewable energy,” and a UBS Securities report recently called PURPA, “The Backdoor Solar Answer Out West.”

Look no further than Utah: a state that is dominated by coal-fired generation and that has no renewable portfolio standard. And a state where one company alone, SunEdison, has quickly built over 700 megawatts of solar in a few short years.

And that’s why Warren Buffett’s utilities want to crush it. Berkshire Hathaway Energy’s holdings are still intractably dependent on coal—relying on it for well over half of electricity generation in its four major regional utilities. And the fact that Buffett’s BNSF Railways hauls a whole lot of coal is a subject often covered here on DeSmogBlog.

The various Berkshire Hathaway subsidiaries are executing a multipronged PURPA attack targetting the state level utility commissions, while also lobbying for federal reform on Capitol Hill. Here’s the current state of play.

berkshire-hathaway-energy_large

Idaho

Last August, PacifiCorp, operating in Idaho as Rocky Mountain Power, started the state-level siege on PURPA. Joining forces with Idaho Power, the utilities argued to the Public Utility Commission that too many solar and wind projects were seeking grid connection through PURPA. To bolster its argument, PacifiCorp claimed that with existing and proposed PURPA contracts, enough power would be generated to supply 108-percent of the utility’s average load. (As if that were a bad thing.)

The Commission basically agreed with the companies, granting the request to reduce the length of contracts to just two years. “The utilities all have ample amounts of PURPA on their systems and additional renewable generation is in the queue,” the PUC said.

The policy change will have an immediate impact on solar development in the state, as it forces big developers like SunEdison to pull out. “We’d like to invest further in Idaho, but we’re not going to be able to build a project on a two-year contract,” said Ben Fairbanks, SunEdison’s development manager for the Northwest.

Oregon

Across the border in Oregon, Pacific Power, another subsidiary of PacifiCorp, asked the Public Utility Commission to shorten PURPA contract lengths from fifteen to three years.

PacifiCorp, in particular, has a giant fossil fuel fleet and they’ve shown very little interest in developing a renewable energy portfolio,” said Travis Ritchie, an attorney with the Sierra Club.

David Brown, owner of Obsidian Renewables in Lake Oswego, described the chilling effect that the shortened term has on developers, said: “Nobody is going to loan you money on a 15-year loan if you only have a three-year purchase agreement. I think it would be an end to PURPA projects.”

A final order from the Oregon Public Utility Commission is expected in March.

Wyoming

In August, Rocky Mountain Power requested that the Wyoming Public Service Commission reduce PURPA contracts from twenty to three years.

In its filings to the Commission, Rocky Mountain Power said it is facing 713 megawatts in proposed PURPA projects, in addition to 413 megawatts in existing PURPA development, which together would account for a full 96-percent of its average load. This in a state where traditionally 90-percent of electricity generation has been coal-fired.

The Wyoming PSC will hold a hearing in March, and a decision is expected soon thereafter.

Utah

Rocky Mountain Power made the very same request last year in Utah: asking that the purchase agreements from PURPA qualified facilities be shortened from twenty years to just three years.

The Utah Public Service Commission, however, offered a solar-friendly compromise, shortening the term to 15 years, a move that was generally applauded by the solar industry.

In its decision, the Commission stated that “a term of 3-5yrs would not sufficiently compensate a QF (qualifying facility) for generation.“

Federal Showdown

The patchwork of state rulings might well be leading to some federal intervention. No surprise, then, that Berkshire Hathaway has been actively engaged in lobbying for PURPA reform in Washington D.C.

Back in April and May 2015, there was a flurry of legislation introduced, with at least five Senate bills proposed that dealt with PURPA in some shape or form.

As the Senate was debating Senator Murkowski’s broad energy bill, Berkshire Hathaway Energy lobbyist Jonathan Weisgall testified before a hearing that many Western utilities should be exempt from their requirements to buy power from a PURPA-qualified facility.

Senator Maria Cantwell of Washington, the top ranking Democrat in the Energy and Natural Resources Committee, noted the many coal holdings in the Berkshire Hathaway portfolio—from coal generation power plants to BNSF Railway, which makes a good deal of its business now from coal shipments—and essentially called the company out for lobbying to stifle competition.

She asked: “Isn’t it the case that obviously getting rid of this PURPA requirement would just greatly benefit the company financially on your profit margin by reducing competition for central station generation?”

Not long after, Weisgall was back at the Capitol, this time in the lower chamber, making similar testimony to the House.

The current version of Senator Murkowski’s bill, however, doesn’t include any significant changes to PURPA.

Which isn’t to say that Berkshire Hathaway’s interests have been ignored by leaders in Congress. Senator Murkowski and her counterparts in the House —  Energy and Commerce Committee Chairman Fred Upton and House Energy and Power Subcommittee Chairman Ed Whitfield — have requested that the Federal Energy Regulatory Commission (FERC) conduct an official technical conference to review PURPA. This week, FERC agreed, and the conference will be held on June 29.

Berkshire Hathaway’s endorsement of President Obama’s Climate Commitment seems difficult to square with the company’s quest to kill “the most effective single measure in promoting renewable energy.”

Image: Berkshire Hathaway Energy

Reprinted with permission.





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  • Mike Shurtleff

    My comment below copied from here:
    http://www.pv-tech.org/news/warren-buffett-discusses-renewable-energy-climate-change-in-annual-letter-t

    Buffet is well argued. He’s right that net metering at full retail (end-of-grid) rate will not be viable as residential/business Solar PV penetration levels get higher.

    He’s leaving out a few things:

    1. 17,000 with Solar PV out of 1,000,000 without (his numbers) is only 1.7% of total customers. The effect on the rates in still negligible. They should at least grandfather in those Solar PV owners who have already installed under the original net metering agreement.

    2. He (NV Energy) and other NV utilities are only going to pay Solar PV owners the lowest possible wholesale (source-of-grid) rate for power supplied. Solar PV electricity corresponds to peak daytime demand for electricity demand in Nevada. It can help pick up a great deal of the electricity demand for AC in sunny Nevada. He and other NV utilities will be selling that same wholesale electricity from Solar PV homes to nearby neighbors for retail prices at nearly zero impact to their grid.

    [Are they going to use the extra revenues to make their grid bidirectional? No, just like HECO in Hawaii, they are going to whine about how hard that is and then charge even more when they are forced to do it. What a scam!]

    3. They going to charge (already charging?) Solar PV owners fixed monthly fees for their connection to the grid. Why? They’re already going to be making money by buying their Solar PV electricity at wholesale rates.

    A non-retroactive reform to net metering rates would be fair. Very obviously, doing 1, 2, and 3 in concert is unfairly punishing to residential and business Solar PV owners. It is a very transparent move to kill distributed Solar PV that will obviously take electricity demand away from utilities. Not fair or reasonable at all. Buffet and his NV Energy are playing the monopoly exploitation game.

    The silver lining!
    I agree with vensonata’s comment here:
    http://cleantechnica.com/2016/
    I am grateful to Buffet (NV Energy) and other utilities in Nevada, on Oahu (HECO), and others for improving the market of Storage. This will enable very high penetration of Solar PV in many areas: remote areas or areas with good solar and poor wind resources. I have to thank them for their contribution to the Storage market. If I lived in NV? Comments from a few already with Solar PV that do? “up your’s Warren!” It is a great testament to corruption in the PUC that they are backing this. Same for the courts if they uphold it. They are all constructing their own demise.

  • Steve

    Thank you for the insightful information. It seems bizarre and sad that BHE would want to manipulate the market this much to the detriment of the common man/woman and future generations. They need to be called out in public forums everywhere. This nonsense has to stop.

  • neroden

    Thanks for the detail on how the criminal attacks on the climate by criminal utility companies are being carried out.

  • Uncle B

    Only country on earth that Shiites on progress rather than embracing it . . . America: your soldiers dies in foreign lands fighting for freedom? Freedom for these Uber rich , well established monsters to hold back progress in your land ? To destroy Energy Sources that enrichen all American people?
    The very essence of the Capitalism your nation fought for, the right to fair competition, has been erased from your law books by Corporatists and their lobbyist , who in fact, have more power than the Patriot’s vote? no wonder this new amoral, ethic cannot be sold to other nations even at gunpoint . . .
    Sad days for America as their Empire, their Free Capitalism, their ethic of fairness and love for competition dies, killed by the sunk money, stopping all progress towards the 21st century Sciences and technologies. A nation stagnated by its own. Sorrowful.

  • Larry

    I am totally disgusted with Warren Buffet for promoting this type of dirty energy policy in the name of greed. I would expect this from the Koch Bros. but I have always held the hope that Warren Buffet had a conscience and some semblance of concern for his fellow man. Money equals power, and “Absolute power corrupts absolutely”.

  • sjc_1

    Net metering has a large effect on solar, we can see that. Fossil fuels are finite, we can see that as well.

    • Mike Dill

      Unfortunately, they are trying to burn all they can find.

  • Bob Vittengl

    Great article . as We all know the utilities of the future can either embrace change like certain Telecoms or fight the change and fall by the wayside like the rotary phone :). Lead, follow, or get out of the way , change is happening now

  • Easton Jackson

    I’m one of those Utah rooftop solar owners. 6.75 KW on my roof. My bill was around $2100/year before. Now, about $350/year. Rocky Mountain Power has been trying for the last few years to increase the fixed portion of our rates (and they still raise the per kWh rate every year as well).

    When the Powerwalls (or Enphase battery or whoever else comes along) become widely available, I’ll be installing them in my basement. If I can find the sweet spot where all my needs are met, I’ll consider going off grid.

    BHE can’t stop solar. It’s popping up everywhere in the Salt Lake Valley. And Utah isn’t exactly a hippie commune. It’s a very conservative area. But our pollution is horrible all winter. Just recently, we were as bad as Beijing.

  • Frank

    I remember when Berkshire Hathaway bought some railroad, and part of the logic has to do with shipping coal. Need to stop the monopoly part from owning or selling generation so they aren’t getting in the way of competition.

    • neroden

      The railroad (BNSF) knows perfectly well that the coal market is dead, dead, dead; its managers have admitted it. They actually thought they would be shipping oil out of the Bakken in North Dakota. That’s dead too. So they’re back to their bread and butter, which is intermodal container traffic.

  • Mike Dill

    BHE is not anti-solar. They LIKE the solar that they OWN. They do not like paying anyone else as they cannot rate base (and make a long term profit on) energy provided by anyone else. Standard monopoly practice.

  • Shiggity

    Any individual on the Forbes 400 list is a ROBBERBARON.

    These men and women would happily stall humanity for 100’s of years if it meant they could keep their spot at the top.

    I GOT MINE, I WILL KEEP IT TO THE DETRIMENT OF BILLIONS. ***BILLIONS*** of lives.

    Probably one of the most selfish human beings in the history of the world. Congrats Buffet. A true Baron.

  • Matthew Uddenberg

    Great article, I am in the energy industry and was seeing the damage done to IPP’s by BHE a while back. This is the most comprehensive article that I have seen on the issue. It seems crazy to me that everyone rallies around fighting the Koch brothers when BHE is really the one dismantling the future of renewable energy by trying to kill distributed generation and IPP’s so they can make their monopolies stronger. They need to be called out as a problem and the environmental movement needs to not give them a pass. They are more effective achieving policy goals, and therefore worse for renewable energy, than the Koch brothers.

  • wattleberry

    Yet more ammunition to the opponents of so- called ‘Western Civilisation’. Our glass houses are looking very fragile.

  • Anti Lord Kelvin

    I think US needs a similar “general washing operation” like the one in Brazil to killed the tides between greedy utilities and PUC members, not to speak about congress men addicted to dirty coal money.

  • Fighting Net Metering will result in a strong market for small, say 6kWh, battery systems that will help many solar owners shift their solar production to better match their loads. Such a system including inverter will only be a couple thousand dollars within a few years. Going offgrid is likely not wise as you will not be able to take advantage of the value your assets can provide others on the grid.

    • Anti Lord Kelvin

      Wait until Koch Brothers and Warren Buffet will ask to PUCs to prohibit someone to go out of the grid! The corrupts PUCs members will not stop until they have done all the dirty job to their masters.

      • SeaCorey

        Many if not most municipalities already require connection to certain services (electricity, water, sewage) to issue Certificates of Occupancy for a structure to be legally occupied.
        Electrical utilities, at least here in Florida, charge a monthly user fee or connection charge whether any power is consumed (or generated) that month or not – several co-ops increase that fee (tax solar…) for interconnected customers.

        • neroden

          I don’t know about that. Here in upstate NY, it looks like you don’t have to have any service connections to get certificates of occupancy. None, nada, nil. Lots of people have their own septic systems and there’s no law requiring people to have electricity. (It wouldn’t be enforceable anyway.)

          • Dylan Wentworth

            Here in my state you do and you also need an HVAC system capable of maintaining 68 degree temps which is asinine.

          • neroden

            What crazy state do you live in? Here in NY, we have a lot of houses heated by *wood stoves* — which are not guaranteed to maintain any particular temperature — and nobody’s going to outlaw that.

          • Dylan Wentworth

            I might have been wrong about the cooling part but what I do know I had plans to build a passive solar home a few years ago. The loan mgr, who was a douche, said a lot of what I wanted to do wouldn’t be up to code and wouldn’t be able to get a c.o. Well, he made me call up an inspector and verify a number of things. Since the design was optimized for cooling using whole house fans and had enough thermal mass to radiate heat for a week after an hour of sun, (slight exaggeration) I had planned on using a wood or pellet stove for supplemental heat. That wasn’t going to fly here in the peach state. The guy I spoke with didn’t say a wood stove wouldn’t be adequate just that it had to heat to 68 degrees in every room as measured from (i think it was) 3′ off the ground and probably wouldn’t and there might have needed to be an automatic component to it also. They also didn’t like how little sheetrock there was and wanted me to enclose my attic. Strangely, the things the loan manager said were a problem weren’t.

          • SeaCorey

            Here in Florida that’s the case, with the exception of land classified as agricultural, and in several other states as well. Approved, permitted septic systems are permissible.
            I know of cases where bringing the grid to the center of a 10 acre plot was more costly than a whole-house battery system and half of the PV to be completely off-grid.

          • neroden

            I’ve heard of the insane Florida “connection requirement” law. I just assumed it was more Florida-specific insanity, becuase Florida is particularly crazy in so many ways.

          • SeaCorey

            Not to defend them, but these requirements are supposed to establish a baseline minimum quality of life standard so that nobody lives in squalor, and they’re not at all limited to Florida.
            My guess is that they’re a result of people selling/renting/operating homes and businesses without adequate services
            The inflexibility of their interpretation and their use by the utilities to maintain their monopoly is insane and repulsive.

      • That level of prohibition would not be possible as what you do on your side of the meter is on your private property and much more difficult to defend in court.

  • craig hutcheson

    Perhaps Warren will piss off enough people that they will start to buy there own solar panels and get off the grid, thereby rendering his utilities as less profitable, and down-gradable. A word to the wise man trying to control the market, don’t get your fingers cut off while your hand is in the cookie jar.

    • Maxwell Erickson

      That happened in Nevada, so the utilities gave the governor some money and asked him to do something about it. Now solar users there have to pay money every month to the utilities, even though they don’t use them whatsoever.

      • neroden

        I suspect we’ll see a lot of Nevadans going off the grid, as soon as the Powerwalls start being mass produced in large enough numbers.

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