Dive Brief:

• The Kansas Corporation Commission has approved a $66 million rate cut for electric customers of Westar, but the order also includes a controversial, mandatory demand charge for solar customers that could lead some to see their bills go up. The average residential customer will see bills decline approximately $3.80/month.
• The order approves implementation of a three-part rate plan for distributed generation customers, with a $3/kW demand charge in the winter and a $9/kW summer charge. Environmental groups Sierra Club, Vote Solar and Clean Energy Project did not sign on to the settlement, which included the new charge.
• Demand charges are common for industrial and larger commercial customers, but utilities have been trying to get regulators to approve them for residential customers as well. Massachusetts regulators approved new mandatory demand charges in January, but less than a year later the state's legislature voted to eliminate them.

Dive Insight:

Utilities are increasingly considering demand charges, particularly for solar customers they believe are being subsidized by those without distributed generation. But the charges are a blunt instrument that can reduce a customers' ability to control their bill, and potentially eliminate any incentive to install solar panels in the first place.

According to Westar, the new rates still allow customers to save money by installing solar panels — but for some, the new rates will result in higher bills.

"While solar customers are likely to pay more under the new rates, there is still potential for saving by installing solar," Westar spokesperson Gina Penzig told Utility Dive in an email.

The utility said it is difficult to show how the new rates will impact customer bills due to the number of variables, from the size of the home to the size of the solar system, and gave a few examples to illustrate the range.

A residential customer with a peak monthly demand of 5 kW and consumption of 750 kWh would see a bill increase in the summer months, but overall would pay about $13 less per year. On the other hand, a customer with a monthly peak demand of 6 kW and the same total consumption would also see bills decline in the cooler months but would pay $73 more per year.

Maddy Yozwiak, Vote Solar's regulatory research manager, pointed to the situation in Massachusetts where lawmakers stepped in, and Gov. Charlie Baker, R, signed legislation, to protect solar customers by limiting what types of demand charges could be instituted.

"Kansas regulators are now setting their own state down that same path," Yozwiak said in a statement. "Today's misguided decision is a major setback."

Yozwiak did point to a data collection provision in the order that could help customers, requiring Westar to report annually on how the rate changes impact solar customers' bills. "We hope, going forward, this shines a light on the financial impact that Westar's discriminatory rates can have on solar customers," Yozwiak said.

The Kansas Corporation Commission's order also includes more than $70 million in bill credits related to the merger of Westar and Kansas City Power and Light, which regulators approved earlier this year.