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A Solar Compromise with House Bill 1370

3 min read

A bill to shift Arkansas policy on solar power appeared headed toward legislative victory last week after some compromises and a heated committee hearing during which solar advocates and utility executives argued over the rate of compensation for the power that solar panel owners put onto the electric grid.

House Bill 1370 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, 4 or 5 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 a major opponent of the bill, the Arkansas Advanced Energy Association, reached a deal in principle 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 Thursday morning.

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 & 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 5 miles of the user’s meter will be amended to make the distance 100 miles, Dismang said.

Waldrip, the trade association leader, said the bill “was always a disappointing starting point. But, you know, we were consistently ready to come to the table and talk about compromise, and I’m glad that, specifically, Senator Dismang was able to facilitate and broker that yesterday afternoon.”

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

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