New, ‘Exciting' AECC Boss: Solar Power Must Compete Evenly

New, ‘Exciting' AECC Boss: Solar Power Must Compete Evenly
Buddy Hasten (Arkansas Electric Cooperative Corp.)

Buddy Hasten likes to think of himself as an exciting guy, energetic in word and deed, but he’s most enduringly exciting to electrons. 

“I have excited electrons for 30-some years all over the world,” the new CEO of Arkansas Electric Cooperative Corp. said, describing his job history of generating electricity. “I’ve excited electrons at the North Pole on a submarine; I've excited electrons in the Panama Canal; now I’m exciting them in Arkansas.”

Hasten wasn’t bragging or hosting an episode of “Science Friday,” but instead offering a spirited argument on Arkansas solar power policy while preaching a friendly, funny sermon on his devotion to keeping power reliable and cheap for Arkansas electric co-op members while avoiding what he called “jockeying for political advantage” during a global health emergency.

“I'm getting old and I may have lost a step, but I'm pretty exciting still,” Hasten said, getting to the point of his power generation parable. “SPP [Southwest Power Pool] and MISO [Midcontinent Independent System Operator], unfortunately, give me a reality check. And they say, Buddy, you’re not THAT exciting.”

A price for the power the cooperatives generate for those regional transmission organizations is set every five minutes, Hasten said, arguing that solar customers who put their home- or business-generated electricity onto the grid should be compensated at about the same rate.

A rate ruling expected any day by the Arkansas Public Service Commission should decide how much “net-metering” customers will be compensated by utilities for the power their solar arrays contribute to the grid — the full retail rate prescribed by today’s rules or perhaps far less, closer to the cost to the utility if it had generated or otherwise purchased the energy. In essence, Hasten says the rate that net-metering customers get now is far out of whack with market pricing and with the basic economic tenet of supply and demand.

“I'm going to say on average I'm getting paid 2 to 3 cents a kilowatt-hour to excite those electrons,” he said, reminding listeners on a conference call with Arkansas Business that solar energy is intermittent, which cuts the value of its power stream. 

“The average consumer in the state is paying somewhere between 8 and 10 cents, so why does somebody have to pay 8 or 10 cents to get it? There’s a lot of cost and infrastructure that gets that excited electron to work in a home or a business,” said Hasten, who took the reins six months ago at AECC. The generation and transmission cooperative provides power to the state’s 17 distribution cooperatives and has assets of about $1.8 billion, with annual energy sales of about $727 million.

“So a solar panel is nothing more than another way to excite electrons; It doesn't do it any better than me. It doesn't do it any worse than me. It can't do it 24 hours a day. So I can outwork a solar panel, but it’s a fine form of technology,” Hasten says, circling in for the kill. “But my question is this, it needs that other 8 cents of value to be worth anything itself … paying the same retail price just does not make sense. Solar providers should be paid the same amount of money for exciting electrons.”

Forceful Argument

Arkansas’ solar companies have been arguing forcefully to keep the one-to-one rate, which enhances the payoff time for private solar systems increasingly being built for cities, counties, farms and schools. Former Lt. Gov. Bill Halter of Scenic Hill Solar and former Deltic Timber CEO Ray DIllon have been sparring in newspaper op-eds and letters to the editor on whether changing the net-metering rate will cripple solar development or rectify unfair pricing that shifts costs from some ratepayers (net-metering facilities) to others (utility customers without solar panels). The state is stuck in the middle, with a law declaring its support for Arkansas solar development while the staff of the PSC, the state’s utility regulator, remains sensitive to pleas from utilities.

But Hasten, a former natural gas and coal plant manager touting his own wholesale power system’s diversified resource mix, is clearly in camp with Dillon, who boiled his position down to this:

Arkansas is one of the top states in the nation for cheap energy, and should preserve the economic potential of those savings by rejecting the notion of utilities paying three times the price for solar energy, a tiny but growing segment of their mix.

“Losing your power is very stressful,” Hasten said, underlining the need for stability in power generation, something that must necessarily be sacrificed in solar generation, when the resource goes away at night and on cloudy days. “Losing your power while you also may be losing your job and you're losing the food in your freezer, I can only imagine. So it really got a little bit under my skin that everybody was jockeying for economic advantage.”

Halter filed testimony last week in a separate PSC case arguing against hobbling private solar development during the unemployment crisis unleashed by the coronavirus pandemic.

Hasten’s ‘Truth Serum’

The suggestion that utilities might hold a position poised to hurt the economic recovery was considered incendiary by some in the utility industry, and while he wouldn’t call anybody a liar, Hasten said the argument needed some “truth serum.”

“When resources produce power when it's not needed, it causes negative price spikes [in the electric power markets]. With the net-metering rule, they’re producing a product when nobody wants it, requiring the utility to take it, then putting it on the books at full retail. And then this summer when it’s really hot and everybody wants that power, you get to claim it. The best analogy would be the Halloween costumes that are worth a fortune on Oct. 28, with people going in to pay $100 for a bunch of silk junk. Then, on Nov. 1, they’re 10 cents on the dollar in a shopping cart. These things are only valuable when they’re needed.”

As the leader of a not-for-profit cooperative, Hasten has enviable flexibility, but the cooperative way is always his guide and core. “My focus is on our member-owners. I'm a co-op. I'm not for profit, and I work every day with three words tattooed on my forehead: Reliable, affordable and responsible. If anyone on my team comes to me and proposes something that doesn't fit those three words, my answer is easy. No.”

In the net-metering dispute, he said, “I see one industry needing to bash another industry to get ahead, and I don't think that's a good model. If you bring a technology to the table, and you bring a solution to the table, and it's truly amazing, it'll sell itself.”

The electric cooperatives are installing solar technology around the state, he noted. “We formed a subsidiary, Today’s Power Inc., and we help member-owners and others in the state with solar, but we do it in a way that’s fully informative to them on their costs.”

Solar advocates insist that utilities routinely underestimate the social and environmental value of renewable energy, and that the bipartisan Solar Access Act of 2019 was passed to promote renewable energy development, enabling third-party financing of solar arrays and increasing the size limit on commercial arrays to 1 megawatt.

‘Net Benefit’

“Act 464 took effect in July of 2019 and already has spurred greater adoption of advanced energy solutions, particularly with a wave of cities, counties and school districts seeking to deploy solar and energy efficiency technologies,” said Katie Niebaum, executive director of the Arkansas Advanced Energy Association.  

“Under current law, Arkansas net-metering customers may generate their own power and receive a 1:1 retail credit for any unused power sent back to their local utility. AAEA has argued that customer-financed solar systems are a net benefit for utility systems and all ratepayers through long-term avoided costs (e.g. alleviating the need to build new transmission lines and power plants),” she said.

Her group presented an analysis during the PSC’s net-metering proceeding showing that benefits provided by Arkansas solar customers exceed costs imposed on a utility or other ratepayers. “In other words, there is no evidence of a cost shift to non-solar customers,” she said.  

Hasten, previously vice president of engineering and construction at Associated Electric Cooperative Inc. in Springfield, Mo., said Arkansas’ cooperatives are independent and flexible. Some are fine with the current net-metering policy, he said. Others aren't. Ouachita Electric Cooperative Corp. in Camden announced a rate reduction last year that General Manager Mark Cayce attributed to solar power development.

But Hasten, whose own father told him to put his faith in physics and mathematics, said being a parent and grandparent gives him a perspective on finding the truth in a contentious argument.

“I’ve got three kids and two grandkids and another grandkid on the way, and I'm smart enough to know that the first kid that gets to me and tells me their side of the story, I’m not getting the whole thing. When the second kid gets there, I get the other side of the coin. Once I've heard both stories, I can generally get to the truth. And that's kind of what I'm trying to do, to shine some light on the other side of the coin, as viewed through the cooperative perspective, where member-owners are first and foremost priority.”