Tentative Deal Reached in Showdown Over Solar Credit

Tentative Deal Reached in Showdown Over Solar Credit
(Stephanie Dunn)

A tentative deal has been reached between solar power advocates and lawmakers over a bill that would reduce the credit that array owners receive from utilities in exchange for power they put on the electric grid.

The agreement includes amendments to persuade a trade group, the Arkansas Advanced Energy Association, to drop its opposition. If the compromises promised come through, House Bill 1370 is expected to move quickly through the General Assembly now in session in Little Rock.

The bill represents a major shift in Arkansas solar power policy, and the compromises came after a heated daylong committee meeting Wednesday.

It would more than halve the credit future net metering customers will get from utilities for the excess power their systems produce. The rate would fall from the retail price utilities charge for retail power, about 10 or 11 cents per kilowatt-hour, to the wholesale price they pay for electricity, four or five cents per kilowatt hour.

Former Arkansas Public Service Commission Chairman Ted Thomas testified Wednesday at the State Capitol that the proposal would “gut” the state’s solar power program and make the return on investment unattractive for many homeowners, businesses and nonprofits considering future solar projects.

But the AAEA reached a tentative deal with the legislation’s sponsors and will drop its opposition if the bill comes back with the amendments it expects, Executive Director Lauren Waldrip told Arkansas Business on Thursday.

Compromises in the bill, co-sponsored by Rep. Lanny Fite, R-Benton, and Sen. Jonathan Dismang, R-Beebe, will keep current net-metering rates through Sept. 30, 2024, and existing solar systems will keep the retail rate of return through 2040, Dismang said.

Any new systems interconnected with the grid through the end of 2024 will also be “grandfathered in” at the retail rate until 2040, he said.

“We negotiated a deal on principle yesterday afternoon during the committee meeting,” Waldrip said, referring to the daylong meeting Wednesday of the House Insurance and Commerce Committee. “We were having some back and forth with the different entities, as well as Representative Fite and Senator Dismang, and we reached a deal in principle. We're hopeful today that we will see that language.”

The general areas of compromise “had to do with the aggregation limit, the distance [allowed between the solar panels and the users] and also retroactivity that the bill still included,” Waldrip said.

The trade association had fought the bill fiercely, and a lineup of businesspeople, school leaders, and government and nonprofit executives testified against it.

The main point of contention is whether crediting solar customers at the retail rate shifts costs from them to other utility customers, something the bill’s supporters see as an unfair “subsidy.”

Solar power advocates argue that there is no cost shift, or that it is negligible and easily mitigated by the benefits of clean power.

Fite said that the bill “creates a level playing field for all electric customers in the state,” and said that cost shifts in 2021 amounted to about $18 million. Utility officials like John Bethel of Entergy Arkansas and Buddy Hasten of Arkansas Electric Cooperatives testified that the cost shifting will increase exponentially as more solar projects proceed.

Dismang said Wednesday that changes were being worked through with the AAEA.

The previous version had placed the deadline on projects to be grandfathered in at the end of 2023 rather than 2024, and a restriction that would have required solar arrays to be within five miles of the user’s meter will be amended to make the distance 100 miles, Dismang said.

Thomas, who battled with utilities over solar net metering for years before quitting as PSC chairman last year, called the bill flawed and “intended to deceive.” He also accused utilities of hiding data about cost shifts after failing to make their case before the commission and the Arkansas Court of Appeals.

“We’ll keep the projects we have and there will be no more,” Thomas testified. He also vigorously objected to a five-minute limit imposed on witnesses after Fite and utility witnesses had spoken at length in promoting and describing the legislation.

The bill’s opponents urged lawmakers to consider the benefits of solar savings for a growing number of schools, universities, businesses, hospitals and other entities who have built net-metered projects.

Fite told Arkansas Business on Thursday that “with everyone in agreement I see HB1370 moving forWaldrip very quickly.”

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