David Palmer, director of regulatory affairs for Entergy Arkansas, provided these answers to Arkansas Business' questions about last week's net-metering ruling by the Arkansas Public Service Commission.
Arkansas Business: What is Entergy Arkansas' initial reaction to the PSC's net-metering ruling, considering that it rejected two-channel options and kept the credit rate at 1:1?
David Palmer: It’s important to remember that this entire effort recognizes the importance of everyone having access to clean and environmentally friendly power generation – something that is important to Entergy Arkansas and that we have been working toward for years now. At the same time, this effort is about getting that balance right in a manner that is consistent with this state’s commitment to affordable and reliable electricity for all customers.
Respectfully, your characterization of the ruling is not accurate and misses the fundamental changes it provides. To begin, the Commission opted to retain 1:1 and not to implement two-channel billing only until December 31, 2022. After that date, the order provides the opportunity for utilities to propose two-channel billing and other rate structures, which Entergy Arkansas intends to do.
Two-channel billing represents the most reasonable approach to crediting net metering customers for excess generation while protecting their ability to self-generate without causing unreasonable cost-shifting to other customers.
Additionally, although the ruling does allow 1:1 crediting to continue for all current net-metered facilities, the fundamental change the order acknowledges is the company’s recommended consideration for a grid charge, which is another means to help address the cost shift that is occurring and will continue to occur.
In this respect, the order makes a step in the right direction by recognizing the cost shifting from large private solar systems and establishing a process for implementing a grid charge applicable to facilities over 1 MW. For non-residential facilities that are under the 1MW limit, the Commission determined that the statute requires the current rate structure to continue, implying they otherwise would have applied the grid fee to those facilities as well.
With the level of cost shifting that is occurring and will continue to occur, Entergy Arkansas plans to file its application for approval of a grid charge so that this measure can be instituted as expeditiously as possible to protect all other customers from this undue financial burden and to avoid the negative effects on overall economic development that will follow.
The Commission’s ruling also recognizes the potential harm that can arise with private solar facilities that propose remote (off-site) solar arrangements. Those types of facilities provide fewer benefits and use the grid more than other types of solar generation. The Commission recognized that fact and gave utilities the ability to seek an additional fee on these purely remote facilities. For example, in a recent application to install nearly 4MW of solar arrays near a residential subdivision, the system is not tied to any of the customer’s major pumping facilities or reservoirs and thus will rely exclusively on Entergy Arkansas’ grid to accept and utilize its electrical output. The private solar facility also will depend on Entergy Arkansas to generate and deliver the energy that is used to run the pumps. None of the customer’s load is actually reduced by these facilities and thus, this is the type of facility where an additional fee may be warranted.
While these provisions begin to address some of the unfairness placed on all other customers, there is far more work to be done to ensure that private solar arrangements do not increase rates for all other customers and disadvantage this state from economic development opportunities. Getting the grid charge approved expeditiously is an important first step; Entergy Arkansas will continue to advocate for all of its customers and provide them with the least cost resources.
Is Entergy considering any recourse to challenge the ruling, and does any such recourse exist?
We are continuing to evaluate the order. We’ve not made any decisions on whether to request clarification or challenge any portion of the order at this time. As the order explains, the draft rules are subject to review by the Legislature.
Will the ruling affect operations going forward?
Entergy Arkansas is still reviewing the Commission findings and evaluating how those findings affect current processes for reviewing, interconnecting, and ultimately billing, net-metering customers. Obviously, the cost shifting that is currently occurring and will continue to occur will allow customers with private solar systems to continue avoiding paying their fair share of the cost of the grid that serves them and will cause all other customers to pay more.
The order references Entergy Arkansas’ testimony that describes how just two announced private solar deals alone represent a cost shift to other customers of approximately $40 million over their respective contract periods. With this level of cost shifting, it is critical that requesting utilities obtain expeditious approval of their grid charges to mitigate further increased costs to all other customers. Operationally, this order is not expected to affect Entergy Arkansas’ pursuit of lower-cost renewable options for the benefit of all customers.