There are four primary components to your electricity bill: Generation, Transmission, Distribution, and Retail*.
When the wealthy greens among us install a solar panel system on their roofs, this power production represents only one of four components of your electricity bill: Generation.
Under “net-metering” billing regimes, solar power producers can sell their excess electricity (i.e., that which exceeds their demand) back to the utility, for which they [the rooftop solar owners] usually are credited the full-retail rate of electricity. So the value of the credit received by the solar panel owner is based on:
However, the owner of the solar panel only contributed one of the four components of your electricity bill (Generation). Remember:
Because they are credited for far more than they contribute, the solar panel owners, in practice, are receiving three major components of your electricity bill (Transmission, Distribution, and Retail) for free.
Of course, there’s no such thing as a free lunch. So who pays for the free ride afforded solar panel owners by unfair net-metering policies? Of course:
*Three of the four components are self-explanatory. “Generation” is the power plants. “Transmission” are the big metal lattices with a bunch of wires that you see periodically on the highway. “Distribution” entails the wooden poles in your neighborhood. “Retail” is the only one that might not be familiar to the reader. The “retail” component of your electricity bill is primarily administrative. Someone has to read your meter, create your bill, and cash your check. That’s “retail.”