Outcome of the evidentiary hearing held in Little Rock by the Arkansas Public Service Commission last week on net metering rates could determine whether there is a future for affordable residential solar power in Arkansas.
Clean energy advocates are asking the commission to keep the net metering rate as it is: solar power generated at homes and small businesses, and exported to the grid, has the same value as the retail rate each utility charges its customers. The utilities, commission staff and the Arkansas Attorney General argue that residential solar power is worth only about half as much as the utilities’ retail rates for grid power because of their costs related to producing and delivering the power. The utilities and their allies call their proposal to devalue residential solar power “2-channel billing.”
“The commission’s decision will determine whether residential solar in Arkansas grows or dies,” Pat Costner, who served as a witness at last week’s hearing, said. “We hope the commissioners will make the decision that is best for Arkansas and best supported by the evidence.”
Solar proponents said valuing electricity produced by solar at half the current rate would discourage investments in residential solar by increasing the payback period. Costner said one of the strongest arguments for staying with the state’s current retail net metering program is Crossborder Energy’s study. This study relied on Entergy’s data to determine a value of solar power ranging from 12 to 18 cents per kilowatt hour (kWh) in comparison to Entergy’s retail rate of 10 cents per kWh.
“In Arkansas, solar energy has a greater value than grid energy,” Costner, a former senior scientist for Greenpeace, explained. “It brings certain economic advantages for the utilities that are selling power. Residential solar reduces their expenditures for new generation facilities, transmission and distribution lines, and pollution control. It also reduces public money spent on mitigating the health and environmental effects of fossil fuel generation.”
Costner said the issue comes down to this: Do you want to encourage renewable energy in Arkansas or discourage it?
“2-channel billing will discourage residential solar in Arkansas,” she said. “I compared the 2016 annual energy costs for five net metering customers in Carroll County under retail net metering with what the costs would have been under 2-channel billing. On average, their annual net energy costs would be 2.3 times higher under the proposed 2-channel billing. Also, the payback time for a solar power system large enough to offset all or most of an average family’s power consumption will be increased by fifty percent under 2-channel billing.”
Arkansas Public Service Commission Executive Director John Bethel said the proposed 2-channel billing would not kill residential solar power generation in Arkansas, but merely recover the full cost for utilities servicing solar power generating customers. He said the changes would be reasonable with the average Entergy Arkansas solar producers seeing an increase in their bill of only about $8 per month.
“It appears the effect would be a reasonable change in the level of credit,” Bethel said. “The position is not intended to be detrimental to net metering and seems to be consistent with the law’s purpose to one, promote renewable resources through net metering and two, recover the cost of serving the net metering customers.”
Eureka Springs resident Gary Milczarek, who spoke at the hearing, said that the proposed new regulations would make it much more expensive for homeowners.
“Four years ago, I installed a 6 kW system designed to generate the energy we use based on the previous four years,” Milczarek said. “I now have four full years of net metering data that provides a good case study for comparing the consequences of net metering versus 2-channel billing. Using the Carroll Electric energy price of eight cents a kW hour, the system has generated energy worth thirty-five percent of the net cost of the system. Extrapolating from this data gives an estimate of 11.4 years to break even, which is within the 15-year warranty period of the inverters.”
Milczarek said in contrast, if the energy they returned to the utility was valued using 2-channel billing of 3.7 cents a kW hour, its value drops from 35 percent to 23 percent of the cost of the system and increases the years to break even from 11.4 to 17.3, which is beyond the 15-year warranty period. The cost of energy increases $1,155 over the four years, or $289 per year, $4,329 over the 15-year life of the system, and results in a 10 percent increase in the cost of their energy.
“Why would anyone choose all the risks, troubles and costs of solar only to pay more for energy?” Milczarek said. “Under 2-channel billing, we would never have installed our system. Valuing customer generated energy at wholesale or avoided cost rates seems to me to reflect the market value of the energy to the utility, not the utility’s cost of providing the service.”
Faith and Michael Shah have installed 48 solar panels at their home south of Eureka Springs, and said no one has adequately explained the reason for 2-channel billing.
“No one can tell me that my peak hour, no maintenance kilowatts sent to the grid are worth less than half of the ones that I purchase from the grid,” Faith said. “It was discouraging to hear the Attorney General’s office describe people who have solar as a burden to other ratepayers. Meantime, the enormous cost for legal fees and studies by the opponent of residential solar are being billed to ratepayers. All these hearings before APSC, all of the studies and all of the high-paid corporate lawyers and consultants, guess who is paying for that?”
Shah asked commissioners to carefully considering if they were willing to enact a policy that would put people out of work. “I implored the commissioners to continuing net metering that way it is, which is a win-win,” she said. “2-channel billing would have grave consequences for small businesses all over Arkansas involved in installing solar.”
Shah urged citizens who support clean energy to put in public comments on the issue. Go to www.arkansas.gov/psc/ and click on the public comment link on the right of the page and scroll down to APSC # 16-027-R.
Nancy Plagge, director of corporate communications for CECC, said that they believe 2-channel billing is a rational approach.
“The APSC has had an open process and methodical approach and we have confidence they will reach the right decision after they evaluate the complete work of all parties,” Plagge said.
Plagge said CECC supported the successful effort to grandfather in existing solar power producing customers that has been approved by the APSC.