Advocates for the expansion of Arkansas’ solar power industry are blasting a bill they say could cripple the growth of the state’s emerging renewable energy sector.
The Arkansas Advanced Energy Association is condemning House Bill 1370, which is scheduled to be reviewed Wednesday by the House Insurance and Commerce Committee. The legislation, co-sponsored by Rep. Lanny Fite (R-Benton) and Sen. Jonathan Dismang (R-Searcy), is intended to ensure low-income households do not have to pay higher rates for electricity.
Solar developers “are shifting energy costs from people with means to lower income consumers [who cannot afford to install solar power],” Fite said. “‘I care about all of my constituents and not just the ones who want to build solar. A reliable grid with low costs are my goals for energy policy.”
Opponents to the proposed legislation are calling it a “cost-shifting hoax” and “deceptive.” In an commentary published Monday on the Arkansas Business website, representatives from the Arkansas Advanced Energy Association, or AEAA, described the bill as “an unprecedented money grab” by “rearguard utilities.”
“A coalition of these rearguard utilities have gotten the ear of a few legislators and proposed a bill that would halt customer-owned renewable energy in its tracks,” the AEAA coalition’s editorial said. “The bill would make Arkansas the only state in the country with an automatic rate increase on all customers to help the utility companies make up for every cent of profit they lose when Arkansans produce their own renewable energy.”
Scenic Hill Solar CEO Bill Halter and former Public Service Commission Chairman Ted Thomas joined Shawn McMurray and Eddy Moore in authoring the commentary. McMurray is a former senior assistant attorney general for consumer utilities, and Moore was an administrative law judge at the PSC. Halter was Arkansas’ attorney general from 2007-2111.
Industry leaders say HB 1370 purports to address a problem that doesn’t exist — that electricity customers being credited under current law for the excess power their systems put onto the grid are shifting the cost of their connections to other utility customers.
One effect would be to change the current policy granting credit for solar power from a one-to-one ratio granting customers the same rate as utilities charge for retail power to a system that would credit them far less.
Sponsor Sees Unfairness
Dismang, the bill’s co-sponsor, said there is no logical way not to see that current policy shifts grid costs by over-rewarding solar power producers in the state’s net-metering system. He says other states have limited credits or revised net metering policies.
“Arkansas is an outlier,” he said.
Both Fite and Dismang say they support solar power, but not “on the backs of other ratepayers,” Fite said.
AAEA executive director Lauren Waldrip said in a news release Monday from the interest group that the lawmakers and utilities have not proven their cost-shift claims.
“Arkansas law already allows utility companies to increase electric bills if cost-shifting can be proven,” Waldrip said.
“On four separate occasions the Arkansas Public Service Commission reviewed cost-shifting claims and found none. The rural electric cooperatives took the cost-shift argument to the Arkansas Court of Appeals and the Arkansas Supreme Court and lost in both courts,” the AAEA release said.
Waldrip said the claims are made up, and that Arkansans should demand evidence.
Demand Charges in Force
In a fact sheet accompanying the release, the AAEA said that solar customers do pay for their utility’s capital investments through significant “demand charges” on their bills. These charges make up 40% to 60% of the power bills paid by typical commercial and industrial solar customers, the fact sheet said.
“These charges continue to be paid even after net metering,” it said.
The handout included an example of a large general business service customer’s bill from Entergy Arkansas, the state’s largest investor-owned power company, and one that has been building its own utility-scale solar plants for years.
“Demand charges result in approximately 68.44% of the total bill cost,” the AAEA said.
Dismang said the bill is not pro-utility.
“That’s just not true,” he told Arkansas Business in a phone interview. “To be honest, logic would tell you that there's a cost involved, and the greater number of people that go to solar, the greater the cost shift. So right now, it's negligible. I would probably generally agree with that. But as solar grows, then the cost shift grows.”
Waldrip said the cost-shift argument is a decoy, and Halter, Thomas, McMurray and Moore said they agree. They said the bill is filled with other details meant to hobble solar power development.
Business Projects Cited
“The bill imposes numerous arbitrary changes to current rules, most of which apply to larger non-residential solar projects, such as requiring solar to be located within 5 miles of the customer’s electricity consumption,” Halter’s Arkansas Business commentary said. “This new and completely unnecessary change would dramatically reduce the number of solar power plants that would be legally allowed. Had these provisions been in place previously, the projects for Central Arkansas Water (CAW), Bank OZK, the City of Hot Springs, and countless others would have been eliminated.”
Halter and his co-authors write that four years ago, the General Assembly “passed a law allowing businesses, schools and local governments to develop their own renewable energy … a massive success for business, taxpayers, and especially for rural economic development.”
HB 1370 would reduce that project, they said, adding that it would forbid solar projects like those undertaken by Walmart Inc. of Bentonville, Producers Rice Mill of Stuttgart, Bank OZK of Little Rock and the cities of Hot Springs, Fayetteville and Forrest City.
Dismang said state policy should not favor renewable power so readily with incentives. “I’m not interested in whether or not the solar companies get wealthy,” he said.
Halter points to big benefits for rural counties long starved for economic development. “Every renewable energy project begins with a search for land. Often this land is hard to develop for other purposes, lacks infrastructure like sewer and water, or is in communities with high unemployment,” he said.
Halter said renewable energy projects have created a $500 million development pipeline in just four years, creating jobs, raising property values and tax proceeds for strapped local governments.
HB 1370 would also impose new fees and rate increases on solar projects within four months, so that current projects will be disrupted, opponents said.
Fite said he disagrees. “This bill guarantees those who came in under ACT 464 will continue to remain under those terms until 2040,” the lawmaker said, referring to the net metering law of 2019.
HB 1370 would also impose a 75% reduction in the size of permitted solar net-metering facilities, making it impossible for businesses like Producers Rice Mill to build systems large enough to come close to meeting their power consumption needs, Halter said, urging lawmakers to think through what the bill would mean for Arkansas in a fast-changing energy landscape.
The bill is scheduled to be reviewed by the House Insurance and Commerce Committee Wednesday morning, Feb. 22.
