Another demand charge bites the dust: El Paso Electric settlement approved

Texas solar demand charges

The Texas Public Utilities Commission approved a settlement supported by El Paso Electric, the Office of Public Utility Counsel, Energy Freedom Coalition of America, SEIA, Eco El Paso, and Sunrun to drop a demand charge targeted at customers who invest in rooftop solar.

El Paso Electric, which serves 300,000 customers in Texas, had proposed adding a demand charge and a $15 monthly customer charge for customers with rooftop solar. The settlement rejects both the solar demand charge and the solar fixed charge.

Demand charges are based off of the single period during a month when customers use the most energy. It is impossible for customers to predict when they will trigger these charges, and once a peak demand has been hit, a customer has no ability to lower that charge with behavior changes throughout the rest of the month. In addition, these confusing and unpredictable charges prohibit solar growth.

The settlement with El Paso Electric to drop the solar-specific demand charge is part of a growing trend across the country. In the past two years and across 10 states, all proposals by investor-owned utilities to implement mandatory demand charges on residential or solar customers have failed. Recently, local and national solar groups and ratepayer advocates worked with AEP utility subsidiaries in Tennessee and Oklahoma to dismiss or withdraw proposed demand charges. And earlier this week, over 20 stakeholders in Colorado collaborated to file a settlement that removes a confusing grid usage charge, which would have been a precursor to demand charges, in Xcel’s general rate case. Instead, parties agreed to test consumer-friendly time-of-use rates for homeowners.

In one of the few places where a municipal utility board outside the purview of a state utility commission has enacted residential demand charges, state leaders are now seeking to undo them. In Kentucky, the Attorney General is seeking to involve three U.S. congressmen and Tennessee Valley Authority in an effort to revise residential demand charges adopted by Glasgow Electric Plant Board. The Attorney General’s office stated they are intervening in order to “help alleviate the unfair burden imposed upon the Glasgow residents,” local media reported.

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