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Crucial Hearing in Solar Debate Is Thursday

5 min read

After nearly a year and a half of debate on the value of rooftop solar power generated at homes and businesses in Arkansas, a day of reckoning is at hand.

The Arkansas Public Service Commission will begin hearing testimony Thursday in the last public hearing on a state energy policy that experts say could transform the state’s rooftops or hobble home solar power installation.

While all sides want certainty, one businessman with skin in the game would like to see a little more analysis. Josh Davenport, CEO of Seal Energy Solutions, a home efficiency and solar power company in North Little Rock, pointed out that two factions of a working group have made competing proposals on solar power pricing to the three-member PSC, which oversees Arkansas utilities. “If Sub-Group One doesn’t agree with Sub-Group Two’s solar study,” and vice versa, “would it not be prudent to order an independent third-party study?” Davenport asked.

The conflict is over rules for net metering, the billing system that gives utility customers credit for the excess power they generate on-site at their homes and businesses and then put back onto the grid. Solar energy proponents want to stick with the current system, which gives solar customers compensation for excess power that is equal to the cost of retail power.  

The PSC is expected to issue a ruling in coming months, but Thursday’s hearing offers a final chance for solar companies and utilities to make their opposing cases, and for the public to offer its testimony.

Solar energy advocates and utility officials offered a preview of their arguments this week. “Solar energy advocates and Arkansas Utilities have dug into their respective positions regarding net metering over a year and a half of meetings,” said Jason Keyes, a partner at Keyes & Fox LLP in Oakland, California, and attorney for Scenic Hill Solar of Little Rock, which has installed major commercial solar systems for L’Oreal and the city of Clarksville’s municipal utility. “Everyone is ready” for some finality with this hearing, he said.

“Net metering has been adopted by over 40 states, allowing homeowners, nonprofits and businesses with solar on their roofs to meet on-site load during the day and export excess kilowatt hours to the utility in exchange for an equal number of kilowatt-hours at night,” Keyes said. “Solar advocates want Arkansas to continue that policy, based on a study showing that excess kilowatts sent to the utility are actually worth more than the retail rate.”

Keyes said that when thousands of customers generate excess power on sunny afternoons, it means utilities won’t have to build more costly generation facilities, “which means that your neighbor’s solar panels are saving you money.”

The solar advocates of Sub-Group 1, including environmental groups like the Audubon Society and the Sierra Club, propose that the state require power companies to pay essentially the same rate for excess power that solar customers put onto the grid as the retail rate they charge customers for taking energy from the grid. The members of Sub-Group 2, including investor-owned utilities like Entergy Arkansas, the state’s electric cooperatives and a group of industrial power users, as well as the PSC staff and the Arkansas attorney general’s office, make the case that power companies should pay less, perhaps 50 percent of the retail rate, for excess power returned to the grid. This arrangement is known as two-channel billing.

They also say that home solar customers can continue to offset the full cost of their power with the energy they generate; in fact, Sandra Byrd of the Arkansas Electric Cooperative Corp. suggests that customers should match generation capacity to past usage when selecting a home or business solar facility. 

“The customer who puts a system behind the meter would still be able to offset 100 percent of their energy usage with solar, and our proposal would pay them the energy cost, plus a little extra, for the excess power they produce,” she said. 

The energy cost is less than the retail cost, she said, “because a lot of factors go into delivering electricity. Not just generation, but infrastructure, the lines, the people who work on them, services.”

Casey Roberts, a senior attorney for the Sierra Club, argues that power companies reap benefits that exceed the costs of distributed generation, a term for electric power generated on-site. She says keeping the one-to-one ratio of retail charges and compensation for power returned to the grid makes simple sense. 

“What’s at stake in this proceeding is whether the commission will maintain a tried-and-true framework for compensating distributed generation customers, or impose a confusing scheme that undercompensates distributed energy customers for the value of the power they export to the grid,” Roberts said. “There is no need for the commission to change net metering at just the time that distributed generation in Arkansas is starting to take off.”

Davenport, the Seal Energy Solutions executive, agreed. 

“Our firm uses monthly and annual usage from clients’ bills and PV Modeling software to project the client’s solar savings,” he said. PV is shorthand for photovoltaic, the process by which solar panels turn light into electricity. He said that giving a prospective client an accurate proposal “showing the true consumption after production instantaneously netted through two-channel billing, a solar provider will need to electrically meter-log a client’s residence for a full year before proposing and installing an array. As is, net metering is easy to explain. Two-channel billing is hard to explain, and we believe the confusion will dramatically decrease the adoption of solar.”

Byrd counters that the Sub-Group 1 proposal keeps things simple. 

“It’s not complicated, in that operationally speaking it’s the same as it is today,” she said. “Customers will still be able to offset 100 percent of their usage with solar. The difficulty is that some customers are oversizing their solar facility, planning for the excess generation to be sold back to us. The curious thing is that we already have our own power, and we’re required by law to meet the needs of all our customers 24/7. The debate is whether we should pay for the excess power, and we’re offering not just the energy cost but actually a little more.”

As to Davenport’s suggesting that a third party should be called in, Byrd said the Public Service Commission itself is the third party. “They’ve been doing that for a hundred years.”

Keyes, the lawyer for Scenic Hill, notes that the PSC staff, as well as the attorney general’s office, are actually parties to the Sub-Group 2 proposal on the side of the utilities. 

“A big disappointment in Arkansas has been that the commission’s staff and the attorney general’s office have sided with the utilities from the start… Maybe there’s still hope that the commission staff and the AG will recognize that net metering actually benefits the people they are representing,” Keyes said.

Opening statements are set for 9:30 a.m. Thursday, and a sign-up sheet for those wishing to address the commission will be available at 8:30 at the commission’s offices at 1000 Center St. in Little Rock.

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