A bill that would curtail Arkansas’s booming solar industry passed the Senate on Tuesday.
Senate Bill 295, sponsored by Sen. Jonathan Dismang (R-Searcy), would end Arkansas’s one-to-one net-metering policy, where customers who generate electricity, usually with solar arrays, get credited at the full retail rate for any excess power they generate. Instead, solar customers would only get credited for the wholesale rate. Today, the difference would amount to about 5 cents per kilowatt hour.
The bill also prevents customers who benefit from net-metering from entering into interruptible power agreements with utilities, whereby the customer agrees to shut off or reduce its power usage when there’s high demand on the grid in exchange for pricing considerations. This would affect larger customers, including hospitals and Central Arkansas Water.
After negotiations with the Arkansas Advanced Energy Association, the bill was amended to grandfather solar projects into existing net-metering policy until Sept. 30, 2024. It also caps the project size at 5 megawatts and allows the solar array to be located within 100 miles of the location of the business that owns the array (Little Rock-based Central Arkansas Water’s solar system, for instance, is located in Cabot).
Dismang said that in 2019, when the legislature passed a law that allowed net metering, then Public Service Commission Chairman Ted Thomas admitted that net metering would lead to what’s known as cost shifting, where the costs of utilities having to pay the retail rate for excess solar generation gets passed along to customers without solar. He said Thomas promised lawmakers that within six months the PSC would evaluate the cost shifting, but failed to follow through.
Thomas, in fiery testimony in House and Senate committees, acknowledged that promise, but said that Entergy and the electric co-ops had never demonstrated that cost-shifting amounted to anything significant. Later, the Arkansas Court of Appeals upheld the net-metering rate structure.
Dismang acknowledged that the bill would hurt the solar industry, but said that the rate change wouldn’t make Arkansas an outlier among other states. The solar industry operates in many other states in a more constrictive environment, he said.
Sen. Stephanie Flowers (D-Pine Bluff) spoke lengthily in opposition, reading through the Court of Appeals ruling and noting the solar economic development in Jefferson County.
Sen. Mark Johnson (D-Ferndale) said this bill would be yet another example of Arkansas showing a lack of vision, citing Little Rock losing out on FedEx as one past instance where the state missed the boat. He said the system was working and promoting competition and that this legislation was merely favoring the utility monopolies.
The bill passed with 24 in support, 9 against and one voting present.
A similar bill is in the House, though Dismang said it may be amended further on the House side.