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Utilities, Allies Contest Landmark Net Metering Ruling

5 min read

Entergy Arkansas has asked for a rehearing of last month’s state regulatory decision to keep compensation at retail levels for power put onto the grid by customers with solar generation systems interconnected to utilities under net metering.

After more than four years of filings, debate and hearings over net metering, the accounting system that credits customers for the solar power they contribute, the Arkansas Public Service Commission ruled June 1 that rates for that energy would remain at about 10 cents per kilowatt-hour. Utilities and industrial power users, among others, had argued for a lesser rate, perhaps half as much, under a two-channel billing system.

The order by the PSC, which regulates public utilities in Arkansas, was seen as a victory for the growing solar installation industry in Arkansas and a rebuke to utilities.

Entergy Arkansas, the state’s largest power company and an investor-owned utility, filed its appeal of the case on Wednesday, saying that the ruling, Order No. 28, conflicts with Arkansas renewable energy law and burdens electric customers who lack solar arrays.

Filings to rehear or stay the PSC’s net-metering order were also filed Wednesday by Arkansas Attorney General Leslie Rutledge, the Arkansas Electric Energy Consumers Corp., and the Arkansas Electric Cooperative Corp.

Entergy’s filing said that Act 464, the renewable energy law that allowed government and tax-exempt entities to lease net metering facilities from third parties, required the PSC to “take steps to ensure the utilities’ other, non-participating customers do not have to bear an unreasonable share of the cost of maintaining the grid that serves all customers,” a refrain heard from utilities and their allies throughout the four-year net metering docket.

The Entergy filing used the words of PSC Chairman Ted Thomas, including a reference to “grandma’s pocketbook,” to argue that the commission’s decision fell short in balancing public interest and private economic interest.

Entergy said the order should be reconsidered to make sure that “many of our customers are not paying for some other customers to invest in private solar facilities.” The utility holds that “Order No. 28 extends the subsidies to private developers” by upholding the one-to-one retail credit for solar customers’ power, and “provides for the continuation of those subsidies far into the future through the provisions of grandfathering.”

Entergy’s filing quoted Thomas’ testimony before state lawmakers considering net metering laws, including this passage: “The issue, like most issues that come before this committee, is a mixture of public interest and private economic interest… This issue also involves questions related to the balance of environmental protection and cost imposed on individuals… When the price is right, that is how we protect grandma’s pocketbook.”

The utility argued that “cost shifting” will drive up electric bills for plenty of grandmas and other non-solar power consumers. “As a result, the customers with private solar facilities do not pay their fair share of the grid they use, and all other customers have to pick up those costs,” said the company, which serves about 700,000 homes and businesses in Arkansas.

In response to questions from Arkansas Business, Chairman Thomas said there are two ways to measure cost-shifting, as a percentage of any single transaction or as a cumulation of all transactions “so that the total impact on each non-solar customer can be stated.”

The commission chose the cumulative approach, recognizing “the fact that a small amount of solar deployment necessarily results in a small cost shift while maintaining the ability of the commission to protect ratepayers” if growing solar deployment results in growing cost shifts.

“Order 28 gives utilities an opportunity to demonstrate with data any cost shift and directs them to express that cost shift in terms of impact on monthly bills of consumers,” Thomas said. “Any potential cost shift should be netted against benefits provided by the solar installation.” He said that approach would create a common set of data for lawmakers and concerned cities to “judge for themselves the costs and benefits of increased deployment of solar in Arkansas.”

Thomas said when he first joined the commission, Arkansas faced potentially large power rate increases tied to President Barack Obama’s Clean Power Plan. “Our only options were to complain and file lawsuits,” Thomas said, but the CPP was scrapped by the Trump administration. “A significant purpose of our solar policy is to be better prepared if there is a change of administration and again large rate increases loom for Arkansas families and businesses,” Thomas said.

“I look forward to working with legislators and other stakeholders using a common set of data regarding the costs and benefits of solar energy during the next legislative session,” Thomas said, “when we will know more about the cost risk of federally mandated carbon reduction.”

In its filing Wednesday, Entergy also argued that the commission rejected two-channel billing “with very little explanation,” and did not immediately impose a still-possible grid charge “to offset the shifting of costs to other customers.” Grandfathering was another area of concern for utilities. Act 464 “does not permit the commission to grandfather entire classes of net-metering facilities, Entergy argued, saying that is the result under the PSC’s order. It called limits on grandfathering “important to ensure that customers choosing to invest in private solar developments are paying their fair share.”

Steve Patterson, acting spokesman for the Arkansas Advanced Energy Association, said Entergy’s request for rehearing broke little new ground. 

“The Entergy Arkansas petition rehashes arguments that were a part of the original rulemaking proceedings, which we believe ended with a well-reasoned order that should be confirmed on appeal,” he said. “Commissioners have recognized the economic benefits and energy savings that a competitive solar market is generating for Arkansas.”

Former Arkansas Lt. Gov. Bill Halter, CEO of Scenic Hill Solar of North Little Rock, said his company had anticipated Entergy’s filing and had filed its own counterargument to the PSC on Wednesday. He told Arkansas Business on Thursday morning that the electric utilities are refusing to accept the judgment of lawmakers and regulators that solar power is an economic and environmental benefit to Arkansas.

“After four years of effort and thousands of pages of analysis and testimony, it is disappointing that the electric utilities are unwilling to accept the judgment of 135 members of the Arkansas General Assembly and three independent commissioners.”

He said his company was disheartened that utilities “do not recognize that the days of unfettered predatory monopoly practices are over.”

Several other solar installation executives held off commenting Thursday, giving themselves time to absorb the filings. But early last month, Arkansas Advanced Energy Association Executive Director Katie Laning Niebaum welcomed the PSC order, describing it as a “clear economic winner” for Arkansans.

“The state’s solar business leaders have created careers, produced local community investment, and generated energy savings across Arkansas,” Niebaum said June 4. “The commission has reaffirmed the economic benefits provided by solar technologies, setting the stage for solar energy to continue to grow in powering Arkansas’ economy.”

The AAEA was the only industry-wide voice in the four-year debate, she said, arguing  throughout that distributed solar generation is a “customer-financed investment and a net benefit for utilities and their customers.”

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