A previous version of this article incorrectly stated that all sides agreed that Pepco has the legal right to charge potential solar customers upgrade fees. Some solar customers and installers do not believe this is the case. The article has been corrected.
The letter from Pepco said the couple would need to pay a fee of $19,797 to upgrade the electric distribution system in their neighborhood before installing solar panels. Otherwise, the system would be unable to handle the extra power generated by their solar panels, which themselves cost about as much as Pepco’s fee.
“It was just really strange,” Hillbrand recalled. “I was not planning — and am not planning — to pay nearly $20,000.”
The Washington Post interviewed six Pepco customers in D.C., including Hillbrand, who say that significant electrical upgrade costs from Pepco are thwarting their plans to go solar — even as the District tries to combat climate change through promoting solar energy.
Under climate legislation signed by Mayor Muriel E. Bowser (D) in 2019, 100 percent of the District’s electricity must come from renewable sources by 2032. And by 2041, 10 percent of that energy must come from solar power.
The upgrade fees from Pepco — which the utility says it has a legal right to charge — have affected about 15 percent of District residents who apply for a permit to install rooftop solar panels, according to a study commissioned by the Chesapeake Solar and Storage Association, which advocates for solar energy in D.C., Maryland and Virginia.
The study, which was conducted by the consultancy CleanGrid Advisors, looked at hundreds of solar systems in the District proposed by five different installers. It found that Pepco imposed upgrade costs on 45 of the projects, with an average fee of $9,560 per project. The utility company also required 36 of the projects to downsize, meaning they would provide less solar energy to homeowners and the electric grid.
“Charging individuals these ludicrous upgrade fees, which appears to be pervasive in the District of Columbia, disincentivizes solar adoption,” said Sean Gallagher, vice president of state and regulatory affairs at the Solar Energy Industries Association, a national trade group. “That diminishes the District’s efforts to reduce greenhouse gas emissions, hurts grid reliability and adds air pollution.”
Jamie Caswell, a spokeswoman for Exelon, the parent company of Pepco, said the fees for solar customers are permitted under regulations set forth by the D.C. Public Service Commission, adding that the upgrades are necessary for safety reasons.
“In some cases, the solar installation could place too much electricity … onto Pepco’s system, which could cause damage to the system or other Pepco customer appliances and devices,” Caswell said in an email. “In these cases, work is necessary to upgrade the local distribution system to safely connect the solar system to the grid.”
In an interview, David Schatz, Pepco’s director of strategy, said that the utility company is “actively participating in conversations with stakeholders” about policies to speed up the deployment of solar energy across the District.
Schatz added that Pepco’s five-year climate action plan proposes 62 programs aimed at reducing planet-warming emissions and boosting clean energy in D.C., including two programs that would streamline the approval process for residential solar projects.
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Frustrated by the fees, some D.C. residents, such as Hillbrand, are pushing back. On Jan. 3, Hillbrand filed a formal complaint with the D.C. Public Service Commission to compel Pepco to lower the upgrade cost it was charging. The Office of the People’s Counsel, which advocates on behalf of D.C. customers in disputes with the commission, is representing him in the proceedings.
Cary Hinton, a spokesman for the Public Service Commission, declined to comment on Hillbrand’s complaint. But he noted that the commission on Jan. 28 issued a notice of proposed rulemaking to consider whether to require that utility companies pay 50 percent of the costs, up to $5,000 per project.
Caswell said Pepco is “engaged in open, public discussion with DCPSC Staff and solar developers to help advance interconnection processes and reduce costs for customers when system upgrades are required. We support the current move toward cost sharing.”
For JD Elkurd, the chief executive of Solar Solution, the largest solar installer in the District, the proposed rulemaking is a good start — but it’s not enough. He estimated that about half of customers who are informed of upgrade fees decide not to move forward with their installations.
“This is really hurting our business substantially,” Elkurd said. “As a solar company, we have to spend about $1,000 to $1,200 on a project before it even gets to the Pepco application part. And if the project is canceled, we're never getting that back.”
Under a policy known as net metering, solar system owners can send the excess electricity that they generate back to the grid and receive credits on their energy bills, chipping away at utility companies' profits. As solar energy becomes more widespread, this policy is drawing increased scrutiny from utilities across the country.
In California, Gov. Gavin Newsom (D) has faced pressure to gut the program from utilities including Pacific Gas and Electric. The state Public Utilities Commission in December proposed major changes to the program that critics said would halt the growth of solar statewide.
After pushback from solar advocates and celebrities, including former governor Arnold Schwarzenegger (R), the commission postponed a vote on the proposal. A new date has not been set.
“At the bottom of a lot of what's happening with net metering, I think utilities are concerned that their generation is going to be replaced by self-generation. And as the price of solar panels drops, the rate of installation will go up,” said Dan Reicher, who led the Energy Department's energy efficiency and renewable energy office under President Bill Clinton.
Reicher added that when he and his wife became the first people in the D.C. area to install legally grid-connected, net-metered solar panels more than two decades ago, Pepco was “very, very supportive.”
Today, however, even fees from Pepco on the lower end of the spectrum can stifle solar adoption.
Kendra Kinnaird, 40, an attorney who lives in a rowhouse in Crestwood, said that Pepco told her and her husband it would impose a fee of about $5,300 — an amount that she called “significant and cost-prohibitive.” The couple have paused their plans to go solar for the time being.
“Solar energy and other types of sustainable energy are important for the environment. We want to support that,” Kinnaird said. “So it’s been very frustrating, and I hope that there’s a positive resolution.”