At a packed public meeting Thursday, the Arkansas Public Service Commission heard testimony in advance of a major decision on net metering that could shape the future of renewable energy in the state for years to come.
If the PSC elects to change net metering rules to be more favorable to utilities, Arkansas’s fledgling solar industry will suffer, advocates say. The rule change could squash the growth of “distributed generation,” which refers to electricity produced by small-scale sources such as rooftop solar panels rather than power plants.
The hearing pitted environmental groups and green energy companies against Entergy, Arkansas Electric Cooperative
One unexpected speaker was Rep. Stephen Meeks (R-Greenbrier), who effectively sided with solar advocates when he told the PSC that a key piece of legislation he sponsored in 2015 was intended to “encourage Arkansas to embrace distributed solar.”
Net metering is the practice of allowing power customers with on-site generation capacity — typically, rooftop solar panels — to feed electricity back into the grid when they generate more power than they can use at a given moment. Homeowners and businesses that generate excess power receive credit from their utility company at a rate equivalent to the retail rate the company charges for power.
The meter functions similar to a balance sheet. When a household consumes more power than it can generate on-site, it draws power from the grid and racks up costs like any other consumer, comparable to debits. When the household produces more power than it can consume on-site, the extra energy flows into the grid and the household is credited.
Language in Meeks’ Act 827 of 2015 was cited by the utilities as evidence that the PSC should create new rules for net metering that would create a “two-channel billing” system instead. Under the utilities’ proposed change,
Power companies say this system is fairer because their retail rates factor in the enormous amount of overhead required to run a power grid. Sandra Byrd of the Arkansas Electric Cooperative Corp explained the rationale for two-channel billing:
“The first channel is exactly what’s happening today: All of the solar owners are able to offset 100 percent of their energy usage by virtue of their solar installation. And then, the [second] channel is the price at which utilities have to buy excess generation back.
The price of retail electricity includes all sorts of things, not just the energy charge. It includes the generation plants, the transmission system, the distribution system, labor, services — a multitude of things. So that retail rate is very comprehensive.”
Currently, she said, “on that second channel all we’re getting back from the customer is the energy itself — the electricity. The proposal by [the utilities] is that we compensate them not just for the energy but for a little bit more than that … We feel that’s actually more than fair. If you compensate them for more than we’re actually receiving, then what we’re doing is subsidizing their excess capacity situation, and then that subsidized cost gets spread throughout there rest of our customer base with the people who don’t have solar.”
In written comments submitted to the commission, the utilities said the PSC should make changes to net metering rules based on language contained in Act 827. The law “required that the Commission ensure that ‘the rates charged to each net-metering customer recover the electric utility’s entire cost of providing service to each net-metering customer,'” the comments said.
But in his remarks to the PSC, Meeks said this interpretation was not correct. “Let me be very clear that the intent of the language is not two-channel billing,” he said. “There should be no two-channel billing whatsoever interpreted in this language. … The state of Nevada tried it; it devastated their solar industry. … I encourage this commission to not make the mistake of going to two-channel billing here.”
“We know that Arkansas is lagging behind in this area, and my purpose in promoting this legislation was … to find a way to encourage the growth of distributed energy in Arkansas but do it in a fair, free market manner,” he said.
Solar advocates say two-channel billing would be disastrous for small-scale renewables. Jason Keys of Scenic Hills Solar told the PSC that the proposal “would decimate the residential market. … [It’s] not a minor inconvenience that can be overcome with consumer education. It is a fundamental, intractable barrier to customers’ ability to determine whether solar is a good deal or not, and therefore it will bring the market for residential rooftop solar to a halt.”
Net metering proponents also argue that power companies are ignoring the immediate positives of a more distributed system, which may offset their additional costs.
“Utilities are not accounting for the benefits of
Like many who offered comment Thursday, Denise Marion, a justice of the peace in Garland County, spoke of the autonomy that comes with distributed generation, and the need to shift away from carbon-based fuels.
“People in Garland County and all over Arkansas … are fiercely independent and want to be able to capture the free energy that’s falling on their property. They definitely do not want the electric monopolies in Arkansas monopolize solar power,” Marion said.
“Their business model was a good one when our fuel source came from concentrated sources — coal mines, oil wells, gas fields — that require large capital to extract, transport and refine,” she said, referring to the power companies. “That is no longer the business model that we are going to see in the future. … The future is distributed power. The only thing that would hold that future back for Arkansas are regulations that would stifle the growth of solar energy.”
M. Shawn McMurray, an attorney with the AG’s office, said the issue was “not a referendum on renewable energy or solar power” but rather about fairness to all ratepayers.
Like Byrd, he framed the issue in terms of the cost allegedly borne by utilities when they absorb net metering customers’ excess power. “If the bill credit is too large, electric utilities will not recover their costs of serving the few customers who have installed rooftop solar and wind systems and other ratepayers will pay higher rates to pick up the costs of serving the net-metering customers.”
“The Attorney General does not oppose renewable energy sources in general or solar energy in particular,” he added later.
The PSC is not expected to reach a decision on the proposed rule change before the end of the year.