Utility Company Excess PV Power Payment: 1099?

seems like you're reducing your costs thru investment so depreciation, but we do need the money so, thank you!

 

Hill,

It may be hard for you to believe this, but some of us
are not burdened with the problem you describe. :-O

 

LOL

Would that I were so burdened.

Hill,

Would it change things tax-wise if your array was declared to be an
"Energy Farm?"

What if you structured things so the array and associated equipment was
a self-sufficient entity that as conditions permitted/required sold energy
to two users, you and the utility company?

 

"Let's say we leave $2,000 worth of Kwh energy on the books down at the local utility company, at the end of our calander year."

A couple of things: 1.) You are assuming a huge system. My 5.14 Kwh system (which is considered large) will produce around $1200 per year, most of which we will consume. 2.) I don't believe that utility companies are required to send out 1099s on any overage. 3.) Whether they do or don't, under tax law, you are required to declare the income. 4.) Most of us won't declare the income, which might total $50-100.

 

Just a wild guess here -- since I cannot depreciate the asset, I should not have to declare income from it. I agree though that if the elec company sends a 1099 our hand may be forced.

 

$2000 is a lot of excess. Here in Jersey, systems that are designed to produce a surplus are not allowed. My system, 9.72kW, is right about at the break even point. Any excess is paid at wholesale so it would take an awful lot to reach $2000.

 

Here in CA we start to get paid for our surpluses next year, reimbursement amount per kwH TBD. WooHoo! Up until now, all the utility did is say "Thank you very much!" and zero out the credit. Actually, I don't even think they said "Thank you very much!".

 

Since you are receiving income from your PV sytem, go get a business license and write off the PV system as depreciating assets.

 

Link? Previously, net-metering was just a way to reduce your utility bill, not receive a revenue stream for the excess production.

 

"Net-metering" is usually just a billing system agreement that lets you generate electricity and feed it back on to the grid.

It typically has nothing to do with reducing utility bills and often many of the net-metering plans can end up costing you more if you are not careful.

 

Thanks for the link. I had researched Net Metering back in 2008 and at that time, there was no mechanism for compensation for excess electricity generation. I was holding off putting a solar system on the roof until I decided which EV to get, since under the pre-AB920 regime, I wouldn't get any benefit from generation that was in excess of consumption.

I will have to re-visit my research into solar systems....

 

I realize you are located in the SF Bay Area, but note that Southern California Edison has put on hold any applications for "California Solar Initiative" incentive funds, received after July 9. This applies to Pacific Gas & Electric as well since the SCE announcement indicates this is a statewide hold. Looks like the current incentives will be diminished when the hold is removed.
SCE - CSI Incentive Update

It also looks like the current PG&E incentive is so small that it is almost an insult: $0.65 per watt, if I am reading the chart correctly. The SCE incentive is $1.90 per watt, somewhat better but barely enough to write home about.
Statewide Trigger Point Tracker

A system installed in northern CA will be less productive (compared to southern CA) due to less solar energy reaching the array on an annual basis. So if the financial incentive is barely there, why bother unless you have money burning a hole in your pocket.

Regarding the OP's question, it seems likely that the utility company payment for excess power production would be taxable income. I don't know that a 1099 would be issued because this is not interest or dividend income.

 

Leave it to the utility companies to fu*k you....

I would agree with your belief that any payment received from the utility companies would be taxable income. A 1099 is not exclusive to dividend or interest income. My company has used contractors for short-term projects and at the end of the calendar year, the contractors are issued 1099s. I don't recall the specific form number, but it was indeed a Form 1099.

Given the latest iteration on ripping off the electricity consumer by PG&E, it looks like my earlier decision to defer solarization until I decide which EV to purchase continues to be the prudent course of action. Thank you for your link.

 

I've got to believe that they will want you on a TOU plan if you want to get more than baseline rates... Of course, if you are generating that much excess electricity, you will probably want to be on a TOU plan, anyway.

The utilities have a history of fighting anything that encourages production outside of their control... I would expect to only get paid actual electricity rates - so subtract about 10c/kWh from full retail rates. I also would not be surprised to see you have to work through the current minimum billing amount.

For example, I currently have to pay SDG&E a minimum 17c/day or a bit more than $5/month, even though over the past 3 months I've generated 316 more kWh than I've used (though I expect to fully use that extra energy in the winter when the PV generates less).

That hold only applies to government/non-profit applications. Residential/business applications are not affected.

I am not sure how the CSI funds were divvied up (probably based on # of households or something), but the Bay Area is known to be liberal and wealthy - it's no wonder they went through their CSI rebate money faster.

See data here: California Solar Statistics

Residential installed PV for the 3 different regions in MW:
PG&E: 118.9
SCE: 54.3
CCSE: 25.7

See above comment about Bay Area being wealthy in general.

A 1099-MISC would very likely be applicable for this situation - that's the tax form often filed when one performs contract work, for example.

 

With PV systems costing under $6/watt (current 1BOG program in San Francisco is $5.39/watt, Los Angeles is $5.75/watt) you may have a point with the PG&E rebate, but the SCE rebate is huge, knocking a third off the price of your system! Combined with the Fed tax credit that can cut the price in half.

(Note that the CA rebates are designed to reflect actual system output as installed, while the prices I quoted are for nameplate values - actual system output is typically about 75-80% nameplate rating. For example, my system's nameplate rating is 3.24 DC kW, but the CEC-AC rating is 2.7 kW.)

 

Thanks for the clarification. I went back to the website and saw this:
"Q1. What applications are not impacted by this CPUC ruling?
A. This CPUC ruling does not impact any residential or commercial EPBB incentive Applications received after July 9, 2010, nor any applications at all received on or before the date of July 9, 2010..."

Also, thanks for the comment regarding 1099-MISC. I don't recall whether I disclosed my social security # as a new customer of Tucson Electric Power last year. The utility company would need your SSN, to complete that form.