Utilities Collect DLC Charges for CHP in California

utilities-chp-charges net metering

Reverse Net-Metering? California Penalizes Certain Types Of Energy Efficiency

Forbes, January 13, 2015

Can you imagine paying your local utility for electricity you did not consume? This seems absurd. We don’t pay taxes for income we never earn. In most places and most industries, this kind of scheme would be considered outrageous. But then California is not like most places and investor-owned utilities are not like most industries.

That may help explain why a subsection of utility customers in California are legally required to pay a fee for electricity they do not use. The fee is called a “departing load charge” (DLC) and utilities collect it from customers who self-generate with pretty much anything other than solar panels.

Energy efficiency is supposed to be exempt from DLC charges. Who would pay extra for energy-efficient light bulbs if they knew they would be charged a fee for every kilowatt-hour of electricity they saved? Nobody or almost nobody. That is why regulation in California utilities claims not to collect DLC charges from customers who invest in energy efficiency. In reality, only some types of energy efficiency investments are granted an exemption from the DLC charges. Combined heat and power (CHP) is not one of them. CHP is not a single technology, but rather a suite of technologies combined in various ways to recover heat that is normally wasted as useful energy.

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