Solar Energy, Utilities, and Fairness

This Article analyzes the primary fairness arguments that utilities are leveling against net metering programs and electricity rate designs as rooftop solar energy expands across the country. By categorizing and more thoroughly evaluating these arguments, this Article seeks to enhance the dialogue between utilities, legislators, state regulators, and the solar energy industry over how to best orchestrate the nation’s shift toward more sustainable electricity strategies. Part II of this Article describes how net metering programs and other factors are spurring dramatic growth in distributed solar energy generation in the United States and how utilities are increasingly lobbying for policy changes that would slow this trend. Part III highlights the conspicuous role that simple fairness arguments are playing in utilities’ campaigns against distributed energy-friendly policies. Part III also describes research by Professor Steven Shavell and Professor Louis Kaplow that questions the propriety of fairness arguments in policy analysis. Shavell and Kaplow argue that claims of unfairness can be counterproductive distractions in the formulation of policy and thus recommend that decision-makers thoroughly examine fairness-based arguments before allowing them to shape legislative, regulatory, or judicial decisions. Part IV of this Article seeks to apply these scholars’ approach, analyzing fairness-based arguments against net metering and existing rate designs as they relate to three distinct groups: (i) utility customers who have no solar panels, (ii) utility customers with low incomes, and (iii) utilities themselves. This Article ultimately argues that general appeals to fairness are detrimental in policy debates involving distributed solar energy. Shunning fairness arguments in favor of clearer, more specific arguments would benefit decision-makers as they search for solutions to the complex policy challenges associated with transitioning to a more sustainable electricity system