In Win for Solar, PSC Allows Grandfathering for Net Metering Customers

by Kyle Massey  on Wednesday, Mar. 15, 2017 11:50 am  

David Hillman

In a significant decision for solar energy, Arkansans who now get credit on their utility bills for electricity they generate at their homes and businesses will be able to continue at current rates for 20 years.

The Arkansas Public Service Commission decided to "grandfather in" existing customers last week in its first of two rulings on net metering, the accounting process that gives utility customers the ability to get credit for the amount of energy they contribute to the grid. The commission has been assigned by the state Legislature to revise the state's rules on net metering, which lets consumers offset up to 100 percent of their electric bills.

The ruling came after months of filings and testimony by the state's utilities, electric cooperatives, interest groups and the public, and was the first of two PSC decisions on on-site generation. The second, expected in September at the earliest, will tackle potential rate changes after an examination of the costs and benefits of on-site electricity generation.

Ken Smith, policy director of the Arkansas Advanced Energy Association, called the ruling a generally good one for electricity consumers. 

"The grandfathering provision allows existing net metering customers to continue on the existing rate," Smith said, and it allows people who want to be net metering customers to join under the current rate up to when the PSC issues any new rate order later.

"There may or may not be a new rate, or tariff, coming," Smith said. "But if you want to be a net metering customer and have a standard interconnection agreement with your utility signed by you by the date the new rate order is signed by the PSC, then you're grandfathered under the old rate for up to 20 years."

As part of the core decision, Smith said, the PSC ruled that the grandfathered rate stays with the net metering facility — the term for the solar array or other generation equipment installed in a home or business — not with the utility customers themselves. This was crucial to giving the generation equipment a more stable value as an asset.

"If you're selling your house and generation equipment, the buyer will know what his net metering rates will be for the remainder of the 20-year period," Smith said. "Otherwise ownership of the system would have less value, and that could hurt the spread of solar power. Many of the utilities had argued that the sale of the net metering facility should qualify as a triggering event for setting new rates. The PSC ruling disagreed."

One part of the ruling that went against solar power advocates was a confirmation that customers must own the generation equipment to qualify for net metering. Lawyers for Pulaski County and other intervenors had argued that those who lease solar equipment should be able to qualify. The ruling, however, pointed to statutory language requiring net metering customers to be "an owner."

But another section of the ruling found that net metering facilities can have more than one owner. 

"If a property owners association or community solar group wants to sell shares in a generation facility, they can," Smith said, noting that customers would reap net-metering benefits in proportion to the shares they own in the system. "It helps clarify the concept of a community solar project."

The PSC also declined to set a limit on the size of a net metering facility, something that some utilities had argued for. 



Please read our comments policy before commenting.