Businesses and others benefiting from sun power are lobbying vigorously against a bill in the Arkansas Legislature that they say would cripple solar development here, an industry that has boomed while building arrays for homes, companies, churches, schools and local governments.
House Bill 1370 by Rep. Lanny Fite, R-Benton, and Sen. Jonathan Dismang, R-Searcy, would strictly reverse solar-friendly state policies enacted by the General Assembly just four years ago.
Read House Bill 1370.
It would upend the ability of people with solar arrays to be credited for excess power their systems produce at the current rate equal to what the utilities charge for retail power. And the effect of significantly cutting that rate of return would make installing solar facilities financially impossible for homeowners, businesses and others looking to save money on their electric bills, renewable energy advocates say.
“While the discussion of eliminating 1-to-1 net metering [compensation] was always expected, I am definitely disappointed in the message it sends,” said Douglas Hutchings, CEO of Delta Solar of Little Rock and a University of Arkansas Ph.D. with expertise in solar panels. “It does nothing to address consumer protection, blocks a vast majority of farmers and business owners from even qualifying to build a system, and quite bizarrely attempts to reduce sales taxes to the state. I am not sure if you have seen the movie 'Finding Nemo' but I can't help but picture the seagulls when I read this bill.”
Introduced by Fite on Feb. 8, the bill is in response to utility claims that one-to-one compensation for solar power put onto the grid unfairly shifts the cost of electricity and infrastructure to customers who lack solar arrays and other green energy systems. That assertion is vehemently rebutted by advanced energy advocates.
But the argument isn’t being advanced only by the industry.
“The short of it is that this bill kills any sort of competition [with utilities, who are also building large solar facilities],” said Lauren Waldrip, executive director of the Arkansas Advanced Energy Association. “Currently, that competition is benefiting every Arkansas ratepayer, and this bill would ultimately increase energy prices for Arkansans. This really is not about solar developers at all. It's about small businesses, farmers and churches and cities and counties.”
The state’s largest electric utilities, Entergy Arkansas and Arkansas Electric Cooperatives Corp., have long made cost-shift arguments that have generally been rejected by the utility regulator in the state, the Arkansas Public Service Commission.
In fact, according to one solar power executive speaking on the condition of anonymity, the PSC has offered to allow a cost-shift charge on net metering customers’ bills if the electric companies will offer proof of the cost shifts.
On Monday, the AAEA distributed a response to the bill naming 90 cities, counties, schools, farmers, water associations and business and trade groups all denouncing the plan.
The response included a letter to lawmakers saying that organizations representing more than a million Arkansas residents “have locked arms to defend and promote” the solar industry and net metering, the accounting system used to compensate customers for their excess power.
They argue that the legislation would raise electric bills and kill thousands of jobs in the solar industry. Pulaski County Judge Barry Hyde, who was instrumental in getting solar projects going for the county, saving hundreds of thousands of power dollars, put the issue bluntly: “This bill will end the solar industry in Arkansas and will cost us thousands of jobs.”
The coalition says that the bill “seeks to unwind promises made in 2019 by passage of Arkansas’ wildly successful Solar Access Act,” which led to nonprofit and government access to solar power systems. Members of the coalition fighting the bill are expected to hold a news conference at 11:30 a.m. tomorrow at the state Capitol.
“After 4 years of development, approval by the Arkansas Public Service Commission, and expenditure of over $40 million on a solar power plant currently under construction, HB 1370 would gut this investment being made by over 2200 farm family members of the Producers Rice Mill cooperative,” said Keith Glover, CEO of Producers Rice Mill. “This project was ruled by the Public Service Commission to reduce rates for all other Entergy Arkansas ratepayers. The 20 MW AC solar power plant, 40 MW hours of battery storage and microgrid will allow Producers to export 17 MW of electricity to the grid and to the benefit of Entergy Arkansas when the grid is under stress.”
Bank OZK also spoke in defense of its new solar plant.
“Investing in our own solar power plant has allowed us to generate clean energy that offsets the electricity usage for our new headquarters and 40 of our bank branches throughout central Arkansas,” said Tim Hicks, the bank’s chief financial officer. “We would not have made this investment if HB1370 had been in place at the time. Long-term, stable policies are vital to promote and protect business investments in this industry and HB1370 virtually assures that such investments will not be economical in the future. This is the wrong direction for Arkansas.”
Lexicon Inc., the Little Rock steel company and another solar power adopter, argued that it isn’t being subsidized by cost-shifting.
“We disagree with the argument that we are being ‘subsidized’ by ratepayers who have not elected to invest in solar,” said Jeff Weatherly, Lexicon’s CFO. “We continue to pay significant amounts monthly to the utilities in ‘demand charges’ which are not offset by the electricity generated by our solar investments. If the utilities do not think we are paying our fair share through these ‘demand charges,’ the utilities have the ability to pursue changes” before the PSC.
Dismang, defending the bill, told Arkansas Business on Monday afternoon that there’s no reasonable argument that cost-shifting doesn’t occur, and that current solar projects will be “grandfathered in.” He added that compromise is possible, “but not at the expense of Arkansas’ consumers.”
Dismang said the current one-to-one net metering rate makes Arkansas an outlier. “As far as net metering now, most states are moving towards two-way billing, so that's what this bill advocates. Two-way billing would charge solar producing customers one rate for the retail power they use and provide them a lower rate for the power they add to the grid.
Dismang said he voted for the Solar Access Act with the understanding that “net metering was a bookend, that we were going to look at two-way billing because there is a cost shift involved. So right now, it's negligible. I would probably generally agree with that. But as solar grows, then the cost shift grows. I don't get how you could see otherwise.”
Those making the opposite argument include Tad Bohannon, CEO of Central Arkansas Water, Batesville School Superintendent Michael Hester and Hot Springs City Manager Bill Burrough. All those entities have been saving money through solar power.
“CAW is not only planning for tomorrow, but also for 2050,” Bohannon said. “A stable legal and regulatory environment is critical to making the complex decisions required to deliver high-quality water at affordable prices for generations to come.”
Burrough said everyone’s power bill will go up under the proposed legislation. “HB 1370 will increase electric bills for all Arkansas ratepayers and will undermine over $20 million of economic investment that is under contract to occur in Hot Springs. Hot Springs would lose $30 million of electricity savings that are under contract resulting in higher costs or reduced services for our citizens.”
Mark Isbell of Isbell Farms in Lonoke County said his solar system provides energy savings and a predictable, stable price. “If that goes away, the investment we have made will be undermined and our farm and family will see significant new challenges that jeopardize our future.”
Waldrip, the advanced energy group’s leader, said lawmakers voting for the bill will be favoring “higher electricity bills” and the elimination of thousands of recently created industry jobs. “If passed, this bill would eliminate the competition that has led to lower utility rates, taxpayer savings and economic growth all across the state."
Senator Dismang insisted that he isn’t anti-solar, and hopes that the development industry can thrive without what he calls an unfair advantage. “I hope they can stand on their own,” he said, “but I’m not interested in solar companies getting rich. This is about the consumers, and the cost-shifting that is undeniable.”
The entities signing the letter against the bill include the Arkansas Rice Federation, the Arkansas State University System, Baptist Health and Riceland Foods.