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Competing Net Metering Proposals Filed With PSC

3 min read

Two subgroups of a panel formed to make recommendations on the future of solar energy development in Arkansas have presented competing proposals to the state Public Service Commission, which has been studying the issue of net metering for more than a year.

Net metering is the billing arrangement that allows homeowners and businesses that generate their own renewable energy — most often through rooftop solar panels — to “run the meter backward” by gaining credits from utilities when they put their excess electricity back onto the grid.

The Arkansas General Assembly ordered the PSC last year to determine the costs and benefits of net metering, and to apply their findings to the rules governing how utilities compensate solar customers. According to figures presented last year, only 600 or so Arkansans had solar net metering systems at their homes or businesses.

But under current law, those customers receive a one-to-one retail credit for unused power put back onto the grid. 

Subgroup 2 of the net metering working group, made up largely of power companies like Entergy Arkansas and the PSC staff, has recommended a “two-channel” billing system that would give Entergy customers credit for self-generated power at about 50 percent to 75 percent of what they pay for power that comes into their homes or businesses, depending on the time of year and usage details. The adjusted compensation rate, the subgroup says, would cover the utilities’ infrastructure and service expenses while taking into account the needs of customers who do not have solar arrays.

Subgroup 1, made up of environmental groups, advanced energy advocates and businesses with interests in rooftop solar power, have recommended against changing the one-to-one compensation ratio. They also presented a cost-and-benefits report on Monday that found that the benefits of net-metered solar power equal the costs in monetary terms. Further, the study, conducted by the consultancy Crossborder Energy, identified societal benefits that make solar a net gain for all ratepayers served by Entergy, the state’s largest investor-owned utility, including those without home solar panels.

“We found that the direct benefits of distributed solar for all of Entergy’s ratepayers exceed the costs imposed on the utility or on other ratepayers who do not install solar,” said Tom Beach of Crossborder, the report’s lead author. “We also quantified the substantial societal benefits of net metering recognized by the Arkansas legislature, such as the local economic benefits, and improvements to public health associated with less air pollution.”

The study, commissioned by the Sierra Club, drew support from business owners like Josh Davenport, co-founder of Seal Energy Solutions of North Little Rock, which installs solar systems as part of its comprehensive energy conservation work. 

“Consumer awareness about renewable energy’s affordability and short-term payback has grown” and is expanding from cities to farms, Davenport said, noting his company’s recent installation of an array to serve a major farm in Arkansas County.

In a statement, Entergy Arkansas said it supports the Subgroup 2 recommendation, saying that it was developed within a “framework that credits net-meting customers for net excess generation at a rate that is more appropriate than the retail rate, ensuring that net-metering customers pay rates more accurately reflecting the utility’s cost of providing service. 

“We will continue to collaborate with the working groups as this process goes forward,” Entergy Arkansas said.

On Oct. 20, the two subgroups will respond to each other’s proposals in written form, and “several weeks later there will be an additional round of comments,” according to Casey Roberts, a Sierra Club attorney. A public hearing is scheduled for Nov. 30, when the commission will officially take up the debate and hear from witnesses.

A decision seems unlikely before the end of the year, observers say. 

“Perhaps spring of next year,” Roberts said, “but there’s no specific deadline for the commission to decide.”

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