PSC Borrows Car Analogy for Solar Rates

Arkansas Public Service Commission Chairman Ted Thomas took time from a hectic week for a telephone interview on arguments involving proposed rate changes for people who operate solar panels at their homes and businesses.

The PSC last Monday pleased the solar industry by largely siding with the industry over utilities, which had suggested a far lower rate for solar power generated by customers and returned to the grid. The PSC chose, for now, to keep the rate at about 10 cents per kilowatt-hour. (See PSC Ruling Pleases the Solar Industry.)

“If our system average cost is above 3 cents, which it is, then why don’t we buy all of our energy there?” Thomas asked rhetorically. “The reason we can’t buy it all for 3 cents is because somebody has to build it [generation capacity]; somebody has to pay for it. And the person that pays for it gets first call on the power. So when we need it, guess what? It’s not available. It might not be available for 9 cents; it might not be available, period, on the hottest day of the year.

“That’s the capacity value. When you put a solar plant here, it serves here, no matter what the price is.”

Thomas likened it to borrowing a friend’s car. That’s great, because you’re paying for gas and maintenance, and that’s not costing your friend any more. But he will still take the car back when he needs it. With solar power built locally, Thomas said, “it’s ours if we need it. We have first call the same way that if you’re borrowing your neighbor’s car, your neighbor has first call. And why do they have first call? Well, they’re making the car payments.”