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A group of venture capital investors, led by early SolarCity Corp. investor Nancy Pfund, haved asked Republican Nevada Gov. Brian Sandoval to step in and reverse new fees on solar homes that state utility regulators made effective on Jan. 1.
“This is already creating a chilling effect within the investor community and will force us to reconsider future commitments of capital in the state,” Pfund, managing partner of San Francisco-based DBL Partners, wrote in a one-page letter to David Noble, a commissioner at the Nevada Public Utilities Commission.
The letter was also shared with the governor and senior lawmakers in the state Assembly and Senate.
Pfund told KNPR’s State of Nevada she hasn’t received a response from Gov. Sandoval’s office, but has received support from lawmakers from both sides of the political aisle. The letter was signed by Pfund and seventeen other venture capital investors, including John Fisher, managing partner of Draper Fisher Jurvetson.
“In other states the governor has gotten involved to find a solution,” Pfund said. “I’ve had personal experience with this in California, Colorado, New York and even Arizona and if it’s important enough for these states’ leaders to get involved, it’s important enough for Nevada.”
Pfund had some friendly advice for how Gov. Sandoval could fix the situation.
“If I was the governor, I would bring the various parties together and facilitate a meeting that resulted in a plan that all stake holders could live with,” Pfund said. “This is not rocket science. This is not my SpaceX investment. This is something we all can do.”
DBL Partners was an original investor in SolarCity in 2008. Pfund’s venture capital firm was also an early investor in Elon Musk’s’ Tesla Motors and Space X companies.
“It’s very disturbing,” Pfund told KNPR. “Basically, the tariff makes solar more expensive for the customer, so it doesn’t pencil out like it did without a tariff. If you make something more expensive, and charge those margins it just won’t work.”
The commission voted in late December to increase a fixed monthly fee for solar customers by about 40 percent from $12.75 to $38.51 and reduce the amount customers get paid for excess power they sell to the power grid.
“This isn’t a case of business as usual, the state made an effort to create incentives for solar folks to come into the state … there really is a feeling that the rules have been changed midstream,” Pfund told KNPR in a phone interview from her San Francisco office.
Pfund said these changes were made without “factoring in some of the very well documented benefits of roof top solar in creating a more cost effective and clean electricity grid.” She said utility companies, including NV Energy Inc., spend billions of dollars in transmission and distribution investments.
NV Energy lobbied for the changes to offset revenue lost as solar-powered customers buy less power. As of Jan. 1, there were 17,000 existing solar customers in Nevada.
Pfund’s letter asked Noble and the governor to reconsider the decision, especially in light of the requirement … in the (net metering) statute to encourage private investment in renewable resources.”
“Failure to do so would quickly curtail solar development in Nevada by unnecessarily disrupting customer and investor expectations and send the message that Nevada is not willing to partner with the investor community … and may even discourage broader private investment in the state,” Pfund and her colleagues warned.
The solar industry responded to the new rates by laying off employees, pulling operations out of Nevada and appealing for reconsideration.
SolarCity said it has eliminated 550 employees, while Sunrun Inc. announced it has cut “hundreds” of jobs. Go Solar, a Las Vegas-based energy company, eliminated 17 jobs and reduced the hours of 10 other employees.
“This is a young industry and the margins are thin,” Pfund told KNPR. “It takes a lot of investment … to make these companies pencil.”
She said it wasn’t as easy as lowering the price of solar to attract new clients. “As with a lot of growth companies that we invest in, it takes time to develop the kind of structure that can withstand dramatic reductions in price,” she said.
Nancy Pfund, managing partner, DBL Parnters