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Solar Projects on a Roll With PSC Ruling in Offing

7 min read

Carlisle farmer Don Kittler looked out at his 18-acre field east of Lonoke, beaming at row after row soaking up the sun.

But these weren’t the usual rows of corn, soybeans and rice he farms on 10,000 acres of in Lonoke and Prairie counties. Instead, they were 8,455 photovoltaic panels in neat array, expected to provide 90% of the electricity needed by Kittler Farms, which had an electric bill north of $400,000 last year.

The array, Arkansas’ largest individually owned sun farm, testifies to a growing market for solar on the farm, according to Kittler and his solar project manager, consultant Craig Shelton. Kittler, who also owns a farm construction business, hopes he and Shelton can consult with other farms looking at solar power, and their viewpoint was reinforced Wednesday by the announcement of two other major solar developments involving private businesses.

Delta Farms Inc. and Southland Gin Inc., both of Lake City, announced a commercial-scale solar-plus-storage development with Craighead Electric Cooperative and Today’s Power of Little Rock; and Bank OZK of Little Rock committed to a $6 million solar system, the largest renewable energy investment ever by an Arkansas-based financial institution.

“Yes sir, it feels good to be a pioneer in applying solar to agriculture,” Kittler told Arkansas Business, noting that farming is Arkansas’ largest industry, with about $16 billion a year in economic impact.

Kittler’s solar array, constructed by Solar & Renewable Power Systems of Jackson, Tennessee, is also an exhibit in Arkansas’ long struggle to set a fair price for utilities to pay for power made by business owners like Kittler and homeowners with rooftop arrays. The state’s utility regulator, the Public Service Commission, has haggled for years with a large group of stakeholders on net metering, the system that credits solar customers for the excess power they put onto the electric grid. A crowd of nearly 200 packed a  public comment hearing in Little Rock Dec. 5 as commissioners headed for the finish line in the rate case. On Friday, the PSC set another public hearing for 9:30 a.m. Feb. 19.

On Dec. 5, dozens of citizens spoke in favor of renewable power after opening remarks by utility and policy group lawyers, solar installers and others.

The Kittler Project

Kittler Farms has about 75 employees and offers planting, harvesting, drying and storage services. A constant drain was spending 6% to 8% of operating costs on electric bills, Kittler said. “The solar array should be a money-saving venture over a number of years, with tax credits and other policies incentivizing it. In our project, net metering worked the way it should have, I guess, but there were some hurdles and issues.”

One concern was getting connected with Entergy Arkansas, the area’s utility, before any PSC decision that might cut net-metering returns. Under grandfathering rules, likely to be extended in the pricing case, Kittler hopes to “reduce operating costs to assure continued success,” and to generate additional capital for expansion, he said. “I like the sustainability aspect of it, and the design lets us create 90 percent of the power we need from one location.” The solar farm feeds 90 different electric meters of the farm operation, Shelton said.

William Ball, the policy godfather of Arkansas’ solar power industry and owner of Stellar Sun of Little Rock, consulted on the Kittler project. He called it a prime example of what solar power can offer commercially, as long as pricing stays attractive.

Ball, the author of Arkansas’ original renewable energy development act nearly two decades ago, expects a compromise when the PSC does rule, but he said he has no crystal ball on details or timing, and has been surprised before. “This isn’t a jury trial,” he said. “We have to wait to see what the judges come up with, and in this case the judges are the commissioners. They could have an answer soon, or in the last quarter of last year. They could move to do nothing, or they could adopt more than one option.”

Ball said, however, that he’s certain of one thing: Everyday Arkansans showed their support for renewable power. “It was remarkable that I’ve been dealing with the PSC since 1993, and I’ve never seen a room packed like it was for the hearing. Speaker after speaker after speaker, and they came to speak on behalf of renewable power, and they spoke with intelligence and understanding.”

He said submissions by the PSC staff suggest that customers paying a demand charge will remain on the current 1-to-1 retail rate they now get for net metered power.”

An overall compromise is likely, Ball said, because PSC Commissioners Justin Tate and Kimberly O’Guinn, as well as Commission Chairman Ted J. Thomas, are likely seek to recognize infrastructure costs utilities face in maintaining their transmission and distribution systems.

The Jonesboro Project

In northeast Arkansas Southland Gin and Delta Farms in Jonesboro have partnered with Today’s Power Inc. of Little Rock and Craighead Electric with a plan for a project using two solar technologies and battery storage, the first of its kind in Arkansas.

The system, expected to be completed by March, will power gin and farm operations, offering years of energy savings, according to Delta Farms’ Len B. Nall. “Our mission with solar has been to make a profitable and reliable investment,” he said in a news release, “all the while reducing our carbon footprint and environmental impact.”

The project, on nearly 15 acres in Jonesboro, will total 2 megawatts of solar generation from two arrays and 6 megawatt-hours of battery storage. Delta Farms will buy and own a 1.2-megawatt fixed-tilt system, while Today’s Power will own a separate 882-kilowatt solar tracking and storage system. Today’s Power, a wholly owned subsidiary of Arkansas Electric Cooperatives, will operate both systems. The output of the smaller system will be leased to Southland Gin.

Back at the PSC

In the Dec. 5 PSC hearing, utility lawyers argued for a quick decision, saying delays would add to unfairness faced by non-solar customers footing more than their share for grid infrastructure. Ball and several members of the Arkansas Advanced Energy Association also offered statements, including Stone Creek Solar’s John Sawyer, Entegrity’s Matt Bell and AEV Solar’s Jaimin Vashi, who all spoke of capital outlays and rapid hiring in the solar industry. Mark Cayce of Ouachita Electric Cooperative in Camden explained how solar power has saved his co-op members money. Reckless meddling with net metering rates could harm a growing industry, they argued.

Whenever the PSC ruling comes, it could end years of debate over whether the state should cut the 1-to-1 retail rate net metering customers now get for their electricity: Entergy Arkansas charges 10 cents per megawatt hour for the power it delivers, for example, and now pays 10 cents for every megawatt hour produced by rooftop solar. They would prefer paying less, or to be allowed to add access or other fees for customers with solar projects. Solar installation pros say a certain rate of return helps systems pay for themselves, and sell themselves.

Utilities and some big power customers argue that net metering should be tied to the “avoided cost” of the energy, basically the wholesale rate they pay for all power. The credit to solar customers, they say, should deduct a fair share for grid access, transmission, distribution and infrastructure costs.

“Strong arguments were made that accounts paying a demand charge should remain on the 1-1 rate,” Ball said. “One possibility [for commissioners] would be to do nothing. Another option is a two-channel billing system [in which utilities would charge one rate for providing electric power but credit a lesser price for energy flowing back onto the grid]. Pro-solar groups oppose two-channel billing, and the utilities have stated that it is better than nothing.”

Ball said he makes his living in solar power, “but I’m before the PSC as a policy guy. It’s my baby, I wrote the law and all that. But the law sets a high bar for charging charging net-metering customers additional fees.”

Katie Niebaum of the AAEA, which promotes the advanced energy economy and industry in the state, called distributed generation a net benefit for utilities, meaning all ratepayers will pay less over the long term because of solar’s contribution. “The amount of solar distributed generation in Arkansas is extremely low,” she said, “less than one-quarter of one percent. The solar market is still just getting off the ground, and the economic development benefits it offers could easily be eliminated by an abrupt change toward less favorable rates that don’t align with the value of solar.”

The case’s intervening parties and their attorneys are PSC general staff, Dan Parker; Entergy Arkansas, Matt Suffern; SWEPCO, Stephen Cuffman; Oklahoma Gas & Electric, Larry Chisenhall; Arkansas Electric Cooperatives, John Elkins; Carroll County Electric Cooperative, Linda Lamb; Arkansas Electric Energy Consumers, Shawn Murray; Walmart, Rick Chamberlain; Scenic Hill Solar, Jason Keyes; AAEA, Randy Bynum; Audubon, Ross Noland; Sierra Club, Casey Roberts; Arkansas Attorney General’s office, Christina Baker. Ball and Francis M. Kelly appeared pro se.

On the likely timing of any PSC order, Niebaum said who knows? “The commission is clearly being thoughtful about the path forward. I think every party would feel that they were given a fair hearing and an opportunity to make their case.”

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