ERIC WESTERVELT, HOST:
Solar energy had a banner year in 2014. As more and more U.S. households make their own electricity with solar panels, they're paying less to electric utilities, and that's making the utilities a little nervous. In some states, those companies are fighting back. Lauren Sommer of member station KQED and Dan Boyce of member station KUNC tell us how sunny California and Colorado are handling the rise of solar.
DAN BOYCE, BYLINE: There's a quiet war going on, a slow simmering battle between electric utilities and solar companies.
LAUREN SOMMER, BYLINE: You probably haven't noticed this clash because it's happening one house at a time.
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SOMMER: Example? Barb Gifford and her husband Don Dugger are standing out in front of their place in Boulder, Colorado.
BOYCE: And they're watching the installation of their new rooftop solar system.
BARB GIFFORD: These are the kind of the days in Colorado you go, oh, my gosh, we should have solar (laughter) because it's sunny, it's bright, it's blue.
SOMMER: For Don and Barb, the time feels right because solar has gotten a lot cheaper in the last few years.
DON DUGGER: Definitely cut our dependency on Xcel down dramatically by doing it that way.
SOMMER: Xcel Energy is their utility. Dugger thinks these panels could provide 80 percent of the power they use. That's power they won't have to buy from Xcel.
BOYCE: In fact, Xcel has to buy excess power from them.
FRANK PRAGER: That's a concern.
BOYCE: Xcel VP of Policy and Strategy, Frank Prager.
PRAGER: That's why we're trying to address it today, before it gets to be too big a concern.
BOYCE: Let's explain for a second. If you put solar panels on your roof, most likely, you're still going to be hooked up to the traditional electric grid. So you can still turn on the TV if the sun isn't shining.
SOMMER: But if the sun is shining, most state laws require your utility to pay you for any extra power you're feeding back onto the grid. And in California, it's starting to add up.
JONATHAN MARSHALL: We have, far and away, the most customers solar.
SOMMER: That's Jonathan Marshall, a spokesman for Pacific Gas and Electric, which is the major utility in northern California. It's home to a quarter of all the rooftop solar systems in the country.
BOYCE: And Marshall says with such low bills, solar customers aren't paying their share of keeping up the electric grid.
MARSHALL: In fact, they use the grid more than almost anyone because they're selling power back into it.
BOYCE: So PG&E and California's two other major utilities are proposing a big change to make up lost revenue.
SOMMER: A fixed monthly charge that everyone would pay, 10 bucks a month, $120 a year. The fee may not sound like much, but to solar companies, it's a direct attack.
SANJAY RANCHOD: Investor-owned utilities across the country are fighting rooftop solar.
BOYCE: That's Sanjay Ranchod of SolarCity, the largest solar company in both California and Colorado.
SOMMER: He says the extra fee would make solar a harder sell for his company.
RANCHOD: For a company that has depended on a monopoly, competition from SolarCity or any other solar company is scary.
SOMMER: He says it also makes solar less attractive at a time when states are trying to encourage renewable energy.
BOYCE: UC Berkeley economist Severin Borenstein says this whole debate shows solar is a disruptive technology, kind of like cell phones were to land lines.
SEVERIN BORENSTEIN: I think there's a big question in the electricity industry right now about what will happen to utilities and what their business model will be 10, or 20, or 30 years from now.
BOYCE: There's actually a name for the way solar is cutting into the utility business model.
SOMMER: The death spiral.
BOYCE: The more customers go solar, the more revenue utilities lose, so they have to raise prices to make it up.
SOMMER: But higher prices entice even more customers to go solar.
BOYCE: Which creates a cycle...
SOMMER: Spiraling out of control. Borenstein says that's why utilities may need to consider a new business model. Instead of being power companies, they could become electric grid companies...
BORENSTEIN: Where they don't actually bring electricity in, they just shuffle it around between one house and another.
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BOYCE: At Don Dugger and Barb Gifford's house in Colorado, they actually feel defiant about it, like, the writing's on the wall.
DUGGER: Xcel either changes to match technology, or they're going to get left behind.
SOMMER: In states with a lot of solar, that struggle is already playing out. For NPR News, I'm Lauren Sommer in San Francisco.
BOYCE: And I'm Dan Boyce in Denver.
WESTERVELT: That story came to us with help from Inside Energy, a public media collaboration focusing on America's energy issues. Transcript provided by NPR, Copyright NPR.
