The Arkansas House on Thursday voted to pass the legislation cutting utility credits to solar power-generating customers basically in half, sending it to Gov. Sarah Huckabee Sanders, who is expected to sign it into law.
The legislation is certain to curb the state’s growing solar development industry, and former Arkansas Public Service Commission Chairman Ted Thomas has said it will kill third-party solar installation business in the state. The vote Thursday was 73-14 with six representatives abstaining.
The state’s largest power company, Entergy Arkansas, praised the passage of the legislation, which ends state policy of compensating solar panel owners at retail rates for the excess power their systems contribute to the electricity grid. Those customers will now get wholesale rates for their power, about 5 or 6 cents per kilowatt hour as opposed to 10 or 12 cents. Existing systems will reap the present credit rate through 2040, as will new systems connecting to the grid this year and most of 2024.
The accounting system used to give credit to solar customers is known as net metering.
Afterward, solar arrays will generally take longer to pay for themselves, denying solar developers a key selling point. But compromises in the legislation led solar power advocates like the Arkansas Advanced Energy Association and the Audubon Society to drop their opposition to the bill.
Other business groups like Arkansas Electric Energy Consumers Inc., made up of heavy power users, maintained their opposition, arguing that restricting solar development is bad for business.
Supporters of the legislation, including sponsors Lanny Fite, R-Benton and Jonathan Dismang, R-Beebe, say its purpose was to prevent solar energy customers from shirking costs of grid infrastructure and electricity service and shifting that cost burden to other utility customers.
In a statement, Arkansas Electric Cooperatives CEO Buddy Hasten said that now “the cost shifted to members who do not have a net-metering facility will stop compounding after the grandfathering of overcompensation for excess generation expires [on Sept. 30, 2024].” He said the legislation “ensures fairness down the line in that it allows members to continue to net-meter solar if they choose to take advantage of that technology while at the same time reducing the amount that other members are required to subsidize…”
Entergy Arkansas’ Kacee Kirschvink said that the compromise with the Arkansas Advanced Energy Association “ensures those who want to install solar panels can continue to do so, and those who do not will no longer pay more.”
Thomas, the former utility regulator who resigned from the PSC last year after long battles with utilities over net metering, issued a statement condemning the “political muscle” that led to legislative action rather than a regulatory decision based on actual data on any cost-shifting. He contends that any cost-shift has so far been slight, and that the legislation fails to account for the financial and social benefits of net metering.
“No utility brought the required evidence. Now political muscle is being used in place of evidence,” the statement said, adding that existing policy allows utilities to assess fees on the bills of net-metering customers if utilities provide data confirming cost-shifting.
“The bill rejects this approach and eliminates customer options in solar at the request of monopoly utilities,” Thomas wrote. He said the legislation would kill non-utility solar “by setting the compensation for scaled customer-owned solar lower than the amount of credit that the utility receives from the regional markets for that same solar.” He called that a cost shift from the solar customer to the utilities.