Update: Scenic Hill Assails Entergy Plan as Job Killer; Utility Says Halter Can't Compete


Update: Scenic Hill Assails Entergy Plan as Job Killer; Utility Says Halter Can't Compete

With the state poised to issue crucial new rules on renewable energy policy, a former lieutenant governor who now leads a solar development company is pleading for regulators to reject a plan by the state’s biggest electric utility, Entergy Arkansas, that he says would kill jobs in the midst of the greatest unemployment crisis in American history.

Bill Halter, the former lieutenant governor and now CEO of Scenic Hill Solar of North Little Rock, said in an April 13 filing before the state Public Service Commission that Entergy’s proposal is “guaranteed to eliminate jobs in Arkansas” amid an unforseen COVID-19 crisis that has put the nation in a state of emergency, shut down millions of businesses and restricted the movement of 300 million Americans.

The “unprecedented and previously unimaginable threats” to health and commerce has spurred 17 million unemployment claims in just three weeks, including 150,000 by Arkansans, or 10% of the state workforce.

David Palmer, Entergy Arkansas' director of regulatory affairs, replied Wednesday evening that SEPO Option B was a follow-up to an original solar purchase option Entergy first proposed with no opposition in 2018. The PSC approved that option in March 2019. He said Halter considers Option B a job killer only because Scenic Hill cannot compete with it economically.

Palmer also took exception to framing the SEPO offering in light of the COVID crisis, stressing that it was formulated far before the pandemic.

Scenic Hill argues that Entergy’s Rate Schedule 62 Solar Energy Purchase Option, which would sell solar power to towns, counties and other nontaxed entities at a special rate, would “kill jobs in the middle of a pandemic and unemployment crisis.”

Cities, counties, schools and nonprofits have started solar projects under Act 464, a 2019 change to the Arkansas Renewable Energy Development Act that lets nontaxed entities enter solar partnerships. Scenic Hill has $125 million worth or projects on its schedule alone, and Halter predicts that Entergy’s ability to offer low-cost solar power with no risk — since regulated utilities are guaranteed a rate of return — could essentially wreck business for “solar developers, electrical contractors, mechanical installers, civil contractors and their suppliers.

“Existing contracts, future opportunities and the jobs that go with them” would be undermined, said the document, filed through Scenic Hill attorney Jason B. Keyes of San Francisco. “SEPO-B does not create a single new job or pump a single cent into the Arkansas economy,” Scenic Hill’s filing said. “EAL has already built the first solar project that would be used for the program and merely allocating that production will not increase solar development or jobs, but will eliminate potential new net-metering facilities and the job creation they would provide.”

Net metering is the accounting system by which utility customers with their own solar panels are compensated for the power they supply to the electric grid.

Palmer, rebutting Scenic Hill's allegations, called Entergy's proposed tariff a job preserver. "It is a more economic option and is less impactful on non-participating customers," he said. "Over 130 of our customers have submitted letters indicating their interest and desire for this additional option. Their main feedback to Entergy Arkansas is that this optional solar rate schedule will help these customers manage their costs, maintain financial health, and preserve jobs without taking on the undue risk and financial obligations of a long-term contract."

The Scenic Hill testimony said Entergy proposes “to use their monopoly power to crush a fledgling private industry.”

Arkansas Commerce Secretary Mike Preston has praised Act 464 as an economic development tool, noting that it allows governments, schools, churches and others to tap favorable net-metering rates and incentives that add up to an attractive ROI. At the same time, the nontaxed entities’ solar power partners reap the solar investment tax benefits that can’t be claimed by groups that pay no taxes.

But Palmer said its offering doesn't impede clients from doing business with Halter or other private developers. "To be clear, SEPO Option B is simply a proposal to the APSC to create an additional solar option for eligible customers and does not preclude customers that choose to pursue a 20-30-year agreement with a 3rd-party solar developer, like Mr. Halter, from doing so. The choices are not mutually exclusive. The very classification of an additional option as a 'job-killer' is evidence that Mr. Halter knows the option he’s offering cannot compete with the economics of Entergy Arkansas’ offering, even with the current level of subsidization for which he continues to advocate." 

Halter’s filing says Entergy’s proposal in this case, officially Docket No. 19-042-TF, is nonsensical in a time when national joblessness figures are predicted to match or surpass those of the Great Depression.

“During and after this pandemic … the most important questions in this docket are: 1. What public policy will generate the most jobs for Arkansas, and 2. Why would anyone even consider a program that is guaranteed to eliminate jobs in Arkansas?”

The filing says that in the very least, the three members of the Public Service Commission should put off a decision on Entergy’s plan until enough net-metering projects are built to determine the impact on Entergy. Halter commissioned an analysis showing that if the solar market grew enough to serve 3% of Entergy’s power load, the cost-shift effect would be “just one penny on a hundred-dollar electricity bill.”

Palmer disputed Scenic Hill's calculations on cost shifts. "For Entergy Arkansas customers alone, this [the current net-metering structure] represents over $15 million per year for over 20 years, just based on existing and announced projects to date," Palmer said. "It is very unfortunate that Mr. Halter is using a global crisis as a platform to continue to advocate for ongoing subsidies for his business."

Utilities have long argued that giving full credit for solar power returned to the grid allows solar customers to shift the burden of paying for grid infrastructure to other customers without solar panels. The private solar industry argues that’s untrue, and points to studies that suggest utilities and their customers all benefit from a reduction in peak demand supplied by solar.

Entergy Arkansas, which has 700,000 meters on its power lines across Arkansas, would like to let nontaxed customers buy lower-cost power from an 81-megawatt solar farm in Stuttgart and eventually from a 100-megawatt array near Lake Village. Both sun farms were built by NextEra Energy Resources of Juno Beach, Florida, which sells the power to Entergy. Customers would buy the blocks of power year to year, avoiding a long commitment while still getting some of the same cost savings.

UPDATE: Entergy Arkansas' Full Response

David Palmer, Entergy's director of regulatory affairs, replied Wednesday night with this response to Halter's allegations:

"Entergy Arkansas filed its initial optional Solar Energy Purchase Option (SEPO) tariff in 2018 before the adoption of Act 464, and the Arkansas Public Service Commission (APSC) approved that optional rate schedule in March of 2019. Although solar subscriptions are prevalent across the utility industry, SEPO Option A represented the first solar subscription rate schedule approved in Arkansas. No solar developers offered any objection to the optional SEPO solar subscription tariff when it was filed and approved by the APSC.

Then, in response to Act 464, Entergy Arkansas filed its proposed Option B revision to SEPO in August of 2019. In November of 2019, the APSC established the schedule to review Entergy Arkansas’ proposed revision to its approved optional solar rate schedule, setting the request for a hearing in April of 2020. Your article and Mr. Halter are wrong in leaving readers with the impression that the rate schedule was developed with the backdrop of the COVID-19 pandemic. Mr. Halter has been involved in the APSC proceeding, and you have written previous articles addressing Entergy Arkansas’ proposed revision to the optional solar rate schedule. 

To be clear, SEPO Option B is simply a proposal to the APSC to create an additional solar option for eligible customers and does not preclude customers that choose to pursue a 20-30-year agreement with a 3rd-party solar developer, like Mr. Halter, from doing so. The choices are not mutually exclusive. The very classification of an additional option as a “job-killer” is evidence that Mr. Halter knows the option he’s offering cannot compete with the economics of Entergy Arkansas’ offering, even with the current level of subsidization for which he continues to advocate. 

As a reminder, the utilities, the attorney general, industrial customers, and now the business community at large (by virtue of Ray Dillon) have pointed out how Scenic Hill Solar’s proposals, under the current net-metering structure, will result in significant cost increases for all other customers. For Entergy Arkansas customers alone, this represents over $15 million per year for over twenty years, just based on existing and announced projects to date. It is very unfortunate that Mr. Halter is using a global crisis as a platform to continue to advocate for on-going subsidies for his business. 

Contrary to the allegations, Entergy Arkansas’ proposed tariff is a job preserver for the eligible customers. It is a more economic option and is less impactful on non-participating customers. Over 130 of our customers have submitted letters indicating their interest and desire for this additional option. Their main feedback to Entergy Arkansas is that this optional solar rate schedule will help these customers manage their costs, maintain financial health, and preserve jobs without taking on the undue risk and financial obligations of a long-term contract with a 3rd-party developer. 

 Entergy Arkansas is deeply committed to the economic development of our state and is building large-scale economical solar infrastructure that creates short-term economic impacts associated with construction and local tax revenue, but more importantly, these investments support lower electric rates for all customers, which is critically important to employers and to our state and local economies. In total, the existing Stuttgart facility, the Chicot facility that is under construction, and the proposed Searcy Solar facility will generate over $1.5 million dollars per year in local tax revenue while providing valuable renewable energy resources for all customers. Each facility employs hundreds of temporary construction workers and is staffed with full-time employees for operations. On the contrary, although for over a year he has touted his multi-million-dollar agreements, none of Scenic Hill Solar’s announced projects have been brought to the APSC for approval.

 The recent Conway Corp. announcement of a 132 MWDC project (about the size of Chicot and Searcy) is further evidence that large-scale solar is ultimately the most cost-effective for everyone, and we are planning more large projects through additional competitive solicitations."