California Dolphin: statewide California news

Solar-power mandate will hurt California utilities. Or it won’t!

Always interesting to see the wide-ranging opinions from the so-called gurus on any news event.
Take California plans to mandate most new housing will have solar power installed. There’s plenty of worry/debate about who will pay for the loss of revenue utilities suffer when customers produce their own power.
Here’s what two Wall Street credit-rating agencies had to say recently about how this initiatives may impact the financial health of electricity providers.

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Moody’s warning
“The shift toward solar-powered homes creates a cost structure challenge for California utilities and their customers. Because of the way utilities recover transmission and distribution costs, customers who self-generate power contribute less to the utility’s fixed costs, shifting those costs to customers who do not self-generate. New homes make up less than 1 percent of California’s total housing stock, but increased solar rooftop penetration rates will raise prices for non-solar customers so that utilities can maintain revenue. Continually shifting costs to balance out revenue is ultimately unsustainable for utilities’ business models. We expect that utilities will rely on regulators to monitor the credit customers receive through net energy metering and continue to modify that policy to help utilities navigate the energy shift. California is set to revisit its current net metering policy in 2019.”
Fitch’s assurance
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“We do not expect the building requirement to have a material effect on public power issuer ratings. The requirements are consistent with the ongoing trend toward greater energy efficiency and reduced per capita electricity consumption in the state. Public power utilities have been planning for, and adapting their long-term supply strategies to, responding to this trend. Furthermore, many Fitch-rated public power issuers are in built-out communities with modest levels of new home growth. Those in higher growth areas, such as Roseville, already factored the much greater energy efficiency of new homes into their load forecasts.”

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