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With Solar Power Ruling Near, Law’s Sponsor Backs Utilities

5 min read

As state regulators weigh two years of arguments on what compensation utility customers should pay for self-generated electricity, the lawmaker who helped initiate the process has clarified which side he’s on in the case: He’s with the utility companies.

Rep. Stephen Meeks, R-Greenbrier, told Arkansas Business on Monday that in his view, utility customers with home or business power-generating systems should get less for the excess power they put onto the grid than the retail rate they pay for the electricity they pull off.

That runs counter to the interpretation solar power advocates had of his testimony in November before a packed house of witnesses, regulators and lawyers at the Arkansas Public Service Commission. Solar advocates and businesses want home-generating customers to continue to be credited at the utilities’ retail rate.

Those customers rely on a system called net metering, which charges them for the electricity they use when the sun isn’t shining and credits them for the power they produce when it is. In November, Meeks’ testimony before the three-member commission, which regulates Arkansas utilities, was that the law he sponsored requiring the state to update its net-metering rules did not call for “two-channel billing.” That’s the term utilities like Entergy Arkansas use for their recommendation to charge home-generation customers one price for the power they use and a smaller price for the power they generate.

“Let me be clear that the intent of the language is not two-channel billing,” Meeks said at the time, a declaration that elated solar installation businesspeople like Heather Nelson of Seal Energy Solutions of North Little Rock.

“It was a mic-drop moment,” she said back then, but her interpretation was mistaken.

Meeks told Arkansas Business that he’d had other billing mechanisms in mind at the time of his testimony, and that he has believed all along that net-metering customers should be charged under a system that recovers the entire cost that utilities face in serving them. 

“When I originally talked to utilities about how bills are written up there was no talk of a two-channel system,” Meeks said on Monday. “But the very reason I proposed Act 827 was that Arkansas was not calculating the benefits that net-metering customers provide to the system, and not accounting for the costs in service and infrastructure that utilities have in providing service to their homes.”

Meeks said the dual system is necessary for billing to be fair to utilities’ non-solar customers. Entergy Arkansas, the largest power company in the state with more than 700,000 consumers, has generally let its pleadings in the PSC case speak for themselves. But Meeks explained the case pertaining to net-metering customers. 

“You send electricity onto the grid in the day and pull it off at night,” he said. “If the infrastructure cost in the rate is zero for you, you’re not paying your fair share. That cost is now shifted to your neighbors, and everybody’s electric bill goes up.”

The utilities, top power customers, the state attorney general’s office and the PSC staff have all sided together favoring the “two-channel” approach to make credits for net-metering customers about half of the retail rates the utilities charge. Solar power installers, investors and advocates like the Arkansas Advanced Energy Association, as well as environmental groups, have spoken out for keeping the solar credits at the retail rate. They say individual power generators provide more benefits than costs to the utilities, largely by reducing costly peak power demands. They also cite valuable social benefits of “distributed generation,” the industry term for power produced at or near the sites where it’s used.

A ruling from the PSC, which solar power businesses say could either boost or hamstring their industry, is expected in the coming weeks. The PSC’s deadline for comment on the docket ends Friday.

John Bethel, executive director of the PSC, has made clear that he believes changes in the rate structure should benefit the utilities. He told Bobby Ampezzan of Arkansas Public Media that the intent of the law was “to ensure that the utility recovers its costs net of benefits,” and that the while the solar power side of the argument has argued that the cost of serving net-metering consumers is actually less than the toll or serving non-solar customers, “they have not really advanced that beyond a pretty superficial statement to that effect.” Bethel is swayed more than the rate adjustment data the utilities have submitted as evidence, he told APM. And, as Ampezzan put it, “Bethel’s side has all the heft of the legacy players at the commission,” not only his PSC staff, but the utilities side and Arkansas Attorney General Leslie Rutledge, whose task is to represent the state and all ratepayers.

Meeks said that as a political matter, he favors solar power and wants the state to enjoy all the economic and business benefits of booming installation. He also wants Republicans to be seen as environmentally friendly. But as a free-market advocate, he argues it is unfair for utilities to be forced to pay retail rates to net-metering customers when they could be buying power elsewhere, for far less, on the wholesale market. Existing net-metering customers — there are fewer than 1,000 in the state, by most estimates — are guaranteed the higher retail rates after being grandfathered in by an earlier ruling in the PSC docket, the commission’s term for a case.

Casey Roberts, an attorney for the Sierra Club, an environmental party to the docket, has testified that having more distributed generation actually reduces the bills of all customers by relieving utilities of the cost of investing in fuel and generation capacity, and by shaving peak usage rates.

“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 generation customers for the value of the power they export to the grid…. ” Roberts said. “Under net metering, distributed generation customers are already paying their fair share and 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.”

Katie Niebaum, executive of the Arkansas Advanced Energy Association, a trade group, said that as rooftop solar has become more affordable, the companies in her association have been able to tell customers clearly how quickly their systems will pay for themselves. Certainty about rates has become part of a successful sales pitch. 

“As a result, companies have added new positions to meet growing customer demand, and new companies have entered the marketplace,” she said.

“This is a growing industry that significantly benefits the state’s economy by creating good-paying jobs and lowering energy costs for households and businesses. AAEA is urging the Commission to allow the market to continue to grow unfettered by unnecessary policy barriers.”

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