The Alliance for Solar Choice (TASC) via Sunrun and Keep Our Utilities Locally Owned and Locally Operated (KULOLO) via Sunrun's Director of Public Policy, Robert Harris are showing their true colors, trying to protect their self-interest in a recent filing with the Hawaii Public Utilities Commission (PUC). SolarCity is probably being kept off the motion because it has several utility scale projects with KIUC but should Sunrun prevail it will benefit SolarCity and other installers offering the third part ownership (TPO) model. But, first of all, let me disclose that I am a Kauai Island Utility Cooperative (KIUC) member and I do not own a rooftop photovoltaic (PV) system.
The 2013 stipulated settlement proposed an initial Schedule Q rate of $150/megawatt-hour which would remain in effect from the date of Commission approval until January 31, 2015. Since the PUC has not acted on the stipulated settlement yet, the PUC asked KIUC to update its financial modeling. In KIUC's reply to the PUC, KIUC stated the following:
The updated Schedule Q rate that would be suitable to remain in effect from the date of Commission approval, if granted, through January 31, 2017 is $100.8/megawatt-hour ("MWh"). This rate is based on current market date for utility-scale solar photovoltaic ("PV) projects that could be feasibly built on Kauai, and was determined using the Settlement's Exhibit 1 financial model, as explained further in the response to PUC-IR-1(b) below.The significance of KIUC's response is its paradigm shift from historically calculating its avoided cost based primarily on fossil fuel generators to now factoring in its lowest cost generators, its usage of utility scale PV projects.
Sunrun is now asking the PUC to take the extraordinary step to grant its motion to intervene in a seven year old docket that has had a stipulated settlement on the table for almost two years. The deadline for a motion to intervene for this docket was May 8, 2008. One has to wonder why Sunrun did not intervene two years ago when the settlement (publicly available) was filed with the PUC if this issue was so important to them?
Sunrun, like most rooftop PV sales pitches, was probably betting on electric utility generation costs to steadily increase rather than go down. Sunrun and Robert Harris can try to spin their story but here's what they are really asking for; Sunrun, a for-profit corporation, wants KIUC, a non-profit, member-owned electric cooperative, to pay a subsidized rate to rooftop PV customers so Sunrun, and other solar installers who support this motion, can continue to make their net margins rather than deal with competitive pricing and market forces which ultimately benefits consumers. Simply put, it will be harder to convince potential rooftop solar PV customers to lock in their electricity rates for the next 20 years when your rates are higher than the incumbent, non-profit, member owned electric utility. This revelation probably makes the TPO business model shaky and Sunrun investors very nervous.
In my August 5 post I had the following excerpt from a GreenTech Media article regarding Sunrun's initial public offering:
Sunrun is the second-largest residential solar company in the U.S. with approximately 79,000 solar customers across 13 states. SolarCity, the largest U.S. residential solar installer, has about 250,000 customers and a market cap of $5.67 billion. [Note: Hawaiian Electric Industries, which includes both the Hawaiian Electric Companies and American Savings Bank, market cap was at $3.304 billion today]
So stay tuned to see if Robert Harris, the Policy Director for Sunrun and spokesperson for KULOLO can serve two masters and reconcile his hypocrisy of advocating for an electric cooperative ownership model while dissing electric cooperative KIUC methodology to calculate Schedule Q in order to protect Sunrun's profitability at the expense of KIUC members who do not own rooftop PV systems. I guess KULOLO's "good kine" electric cooperative is the "kine" that keeps his bosses happy.Credit Suisse, Goldman Sachs & Co. and Morgan Stanley are acting as the lead underwriters of the IPO, which was first announced in June. Sunrun’s revenue nearly quadrupled last year to $198.5 million, but the company also reported a doubling in losses, totaling $162.5 million. Sunrun has raised roughly $681 million since it was founded in 2007. VC investors with significant ownership of Sunrun pre-IPO include Foundation Capital, Accel Partners, Canyon Partners, Sequoia Capital and Madrone Partners.