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Solar Power Rate Debate Draws Crowd to PSC

4 min read

The Arkansas attorney general’s office came down squarely on the side of utility companies Thursday morning as the state Public Service Commission heard testimony on whether rooftop solar customers should get less compensation for the excess power they put onto the electrical grid.

The attorney general’s office, as well as the state’s investor-owned utilities and rural electric cooperatives, spoke up for a plan that would pay a lower rate to residents and businesses creating more solar power than they can use. The lower rate for power returned to the grid, perhaps half the retail rate utilities charge, would let power companies recover what they say is the cost of serving those customers. 

Solar installers and renewable energy advocates argued for continuing the current system, which mandates an equal rate for retail power going out and excess power coming back in. Part of their argument against a two-channel billing proposal is that by law costs must be balanced against the benefits power companies receive from net metering — including reduced peak demand — and the economic and environmental benefits Arkansans derive from renewable energy.

Assistant Attorney General Shawn McMurray told Commissioners Ted J. Thomas, Elana C. Wills and Kimberly O’Guinn that if utilities cannot recover their costs from net metering customers, those costs will be borne by customers without solar panels. “We represent the interest of Arkansas ratepayers, and we support the recommendations of Sub-Group 2.”

That was a reference to one of two competing proposals that emerged after a working group studying net metering rates split in two, Sub-Group 1 and Sub-Group 2, after finding little common ground through months of meetings. Sub-Group 2’s two-channel rate approach reflects the thinking of the power companies, industrial energy customers and the PSC staff. Sub-Group 1 represents contractors like Scenic Hill Solar of Little Rock; environmental groups including the Sierra Club and Audubon Society, and home-solar array owners like Pat Costner of Carroll County, who also addressed the hearing.

The arguments were familiar, but an overflow crowd of at least 150 was rapt as the public hearing began. A call went out for extra chairs in the hearing room at the PSC headquarters in downtown Little Rock, and intermittent microphone problems left the crowd straining to hear.

Attorneys Casey Roberts of the Sierra Club and Jason Keyes, representing Scenic Hill, pointed out that Arkansas’ renewable-energy law, known as AREDA, was designed to promote distributed generation, or on-site power generation. Business owners like Josh Davenport of Seal Energy Solutions of North Little Rock noted the economic benefits of solar energy adoption, asking commissioners to avoid turning ratemaking into a roadblock.

“Twenty-year financing has allowed low-income households with good credit to benefit from going solar,” said Davenport, whose company has hired 19 people at with an annual payroll of $795,000 to work on solar projects. “A good portion of these financed projects are cash-flow positive, putting money into our clients’ pockets every month, even if it’s just a dollar or two. The current net-metering structure is helping households in Arkansas that need it the most, and any minute change will negatively shift the ability of low-income clients to take advantage of this technology.”

He also said a two-channel billing system would make it much harder to project savings for potential clients. “A one-to-one ratio is easy to explain to customers. Two-channel billing is extremely hard to explain, and we believe the confusion will dramatically decrease the adoption of solar.”

McMurray, however, said the law requires that rates charged to net-metering customers must “recover the electric utilities’ entire cost” of providing services to them. Otherwise, he said, costs would necessarily be passed on to ratepayers who don’t have solar generation systems.

“The act, read as a whole, is a mandate to encourage distributed generation through the limited vehicle of net metering where it can be done in a cost-effective and fair manner,” McMurray said. He added the law was “not a mandate to promote rooftop solar generation without regard to cost or benefit or the impact of policy on other ratepayers.”

Adam Fogleman, an attorney for Pulaski County, argued that the law does not require the commission to make any change to rates at present. He suggested, in fact, that since fewer than 1,000 Arkansans have solar-generation systems in the net-metering system, neither the utilities nor solar power advocates have sufficient evidence to determine eventual costs and benefits. Pulaski County, he said, suggests that the state stand pat while a third party studies costs and benefits, allowing the PSC to make adjustments when it has more data.

Thursday’s hearing was expected to continue through the afternoon, with testimony to continue through Friday, if necessary.

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