Belinda Lister and her husband Samuel, 76, figured early last year that putting solar panels on their 1,200-SF all-electric home in Fairfield Bay would help save money.
Worst-case power bills of $200 a month would fall to as little as $75.
But since Shine Solar of Rogers installed a rooftop array in June, the Listers have watched every sunny day go by wasted, blocked from interconnection by their utility, Petit Jean Electric Cooperative of Clinton.
The cooperative demanded various and shifting requirements for plugging in, including proof of a million-dollar liability policy, according to Belinda Lister and Shine Solar President Caleb Gorden.
“So we did that, and it raised our house payment,” Lister said, a hardship considering her husband’s cancer diagnosis. “We got a notice back from Petit Jean that they’d changed their rules. The insurance requirement was gone, but they kept moving the goalpost back a little more, a little more. We still don’t have electricity from the panels, and my opinion and my husband’s is that they don’t want to lose their bread and butter.”
Farmer Scott George of Corning has been on hold with Clay County Electric Cooperative since October in a similar interconnection delay, this one for a much larger 141-kilowatt commercial system installed by Seal Solar of North Little Rock.
Both cases illustrate what solar contractors and the Arkansas Advanced Energy Association see as a pattern of foot-dragging on projects “grandfathered in” under existing Arkansas regulatory rules that set a strong rate for solar power returned to the grid by net metering customers. That rate, nearly 10 cents per kilowatt-hour, was the object of a five-year case the Arkansas Public Service Commission finally decided in June 2020, but it is guaranteed only through the end of the year.
“I’ve talked to my state representative about it [the interconnection in Corning], and I’ve not been saying much because we’re looking for a resolution, but long story short, it has not been a good experience,” said George, whose first request for inspection of his farm array was dated Oct. 15.
The cooperatives argue that solar systems and net metering present novel challenges, and that adding too much capacity too fast can overwhelm planning. As member-owned cooperatives, there is no profit motive in delaying solar work, they say, and co-ops that borrow certain federal funds for rural electrification also have an obligation to require insurance of interconnected systems.
Fees and Insurance
Still, several of the state’s cooperatives have instituted $500 net metering application fees that industry executives called unprecedented. Some co-ops have insisted on state inspections for solar arrays despite a shortage of state inspectors, a step that adds time and costs.
AAEA Executive Director Lauren Waldrip said the state Legislature made promoting advanced energy a priority with Act 464 of 2019, which allowed third-party ownership of solar projects and sought to fuel competition and growth in the renewables industry. “Arkansans trying to utilize those very laws and technologies … should not be prohibited by entities who are resistant to advancement,” she said. “Unnecessary red tape is hindering the economic growth of our state.”
The association submitted a confidential memorandum and request for assistance to the general staff of the Public Service commission on Nov. 29, arguing that the new fees and insurance requirements were invalid and unauthorized by the panel.
In a brief telephone interview Tuesday, PSC Chairman Ted Thomas told Arkansas Business he would be speaking on the interconnection dispute at a hearing of the Arkansas General Assembly’s Joint Energy Committee last week. That meeting, which was scheduled for after Arkansas Business’ press time Thursday afternoon, was expected to put pressure on the co-ops.
“For the record, I can say that the commission is well aware of this issue, and that we’re looking at formal and informal ways of addressing it,” Thomas said. The chairman has battled Petit Jean Electric in the past; the co-op sought his recusal from net metering cases in 2020, but that didn’t happen.
“We’re just looking for a transparent system with the same rules for everyone,” said Waldrip, who also planned to testify at the hearing.
The association’s memo to the commission’s general staff, which was obtained by Arkansas Business, accused the Clay County, Woodruff, Petit Jean and Rich Mountain co-ops of requiring $500 application fees contrary to PSC authorization. It also said some solar customers were required to show proof of $1 million to $25 million in insurance coverage as a term of net metering.
“Petit Jean had implemented a requirement for a residential customer to purchase a $1 million commercial liability policy to protect from any mishaps with the operation of the solar system we install,” said Gorden, of Shine Solar. “We’ve seen versions of that in other states, like Oklahoma, and we offered the solution of having the utility added as an additional insured entity on our business liability policy. In the event of catastrophe, the utility would have $2 million worth of additional coverage under our policy as the installer of record.”
That approach worked in Oklahoma, but not for Petit Jean Electric. “They declined, wouldn’t accept it,” Gorden said. “It wouldn’t be the homeowner’s liability anyway; it would have to be a case of poor installation, I’d guess. The way these inverters are made, they shut down if they don’t sense the frequency of the grid. In my seven years in the industry, I’ve never heard of damage happening down the line.”
Inverters on solar systems convert the direct-current power created by the panels into alternating current for use in homes. They also synchronize that AC current with the frequency of the power grid so that excess generation can be fed back. The devices’ safety and reliability are well established, Gorden said.
‘We Couldn’t Sell’
The cost of fees and insurance in net metering cases can add up to more than customers’ utility bills, one solar industry executive said, speaking on the condition of remaining anonymous. “Some solar installation companies have had to stop serving these cooperative territories altogether. Utility fees and charges are within the sole jurisdiction of the Arkansas Public Service Commission, and the co-ops are regulated utilities.”
The recent requirement for a state inspection, the executive said, is causing six-month delays on solar projects, costing the average customer $11,000. “These delays are potentially harmful to the consumer in so much as a consumer’s ability to grandfather in [on the favorable net metering pricing] is tied to a deadline of Dec. 31, 2022 set by the Public Service Commission,” the AAEA memorandum said.
Belinda Lister, the Fairfield Bay homeowner with the unconnected roof array, said the hundreds of dollars she had expected in solar savings could have been spent on groceries or her husband’s medical expenses.
“We expected to go from a $200 bill to about $75 a month, and the first conversation I had with the man at Petit Jean was fine,” Lister said. Afterward, conversations grew more tense, “and then he wouldn’t talk to me at all.”
Now the Listers sit glumly in their living room, under a roof lined with solar panels, reaping no sun power whatsoever. “Shine Solar offered to come and take them off, but I said no, not wanting to damage the roof,” she said. “Shine hasn’t charged us, and they even gave us $1,000. It’s been frustrating. We were going to sell the house, but with a solar roof installation that’s not working, we couldn’t sell.”
The Co-op Response
Rob Roedel, director of corporate communications at Arkansas Electric Cooperative Corp. in Little Rock, spoke for the distribution cooperatives but specified that local electric cooperatives act on decisions by their own boards of directors.
AECC is the generation and transmission cooperative serving and owned by Arkansas’ 17 distribution cooperatives. It provides the power consumed by about 500,000 cooperative members and has annual energy sales of more than $725 million, according to its website.
Roedel said all cooperative procedures are based on state and federal regulations. “For instance, electric cooperatives that are RUS borrowers are required to require insurance for all vendors that attach to their distribution system, such as solar.” RUS is the Rural Utilities Service, an arm of the U.S. Department of Agriculture that makes direct loans and provides loan guarantees to utilities serving rural America. “State inspections are also required for many interconnections to ensure safety and quality workmanship.”
One industry complaint in the PSC memo involves “saturation areas” that the cooperatives see as zones of surplus solar generation.
“Craighead Electric Cooperative Corp. indicated as of November 22, 2021, that it will no longer interconnect net metering facilities in certain areas of its service territory based on purported levels of saturation,” the AAEA memo said. “It is unclear from Craighead what constitutes saturation, or whether such a claim is valid. However, Arkansas law requires electric cooperatives to allow net metering, and any decision to limit that offering should have been brought before and overseen by the commission.”
Roedel, the AECC spokesman, said a flood of net metering projects can throw off years of utility planning. “With regards to interconnect areas, the state’s electric cooperatives plan infrastructure needs based on projected load and demand growth,” Roedel said. “Changes to these plans due to unplanned net metering adjustments require additional investments that are passed along to all members of the cooperative. Additionally, an over-saturation of net metering could create an imbalance and harm the cooperative’s distribution system.”
At press time Thursday, the Listers’ residential array and Scott George Farms’ larger system still lay dormant and unconnected.
“Renewable energy has economic benefits that are undeniable,” said Waldrip, who grew up on an Arkansas family farm and led the Arkansas Rice Federation before joining the AAEA. “Farmers make a significant risk every year when they put a crop into the ground, gambling on volatile markets, unpredictable weather and sometimes trade wars. Renewable energy is not a gamble, but rather one fewer variable for farmers and their bottom line. It is simply unacceptable that even though Scott has taken all the right steps and has panels sitting in the sun, he is not producing due to illegitimate requirements.”
Belinda Lister also remains in limbo.
“We’re waiting for something to happen so that we can get the array turned on,” she said. “Our bills are so high, and we’re on a fixed budget. We don’t go out much anymore, even to go to a restaurant, because of a lack of funds.”