Each week brings new developments in net metering, as utilities, state legislators and regulators continue debating how to price solar on the grid.
Recent decisions follow proceedings in Arizona, Colorado and a host of other states, where utilities have argued for fixed charges to net metered customers or changes to how solar customers are paid to send electricity onto the grid.
Although the results have been mostly positive for the solar industry, it is clear that many of the net metering conflicts will not be settled until regulatory proceedings decide on a calculated value of solar that is satisfactory to utilities and solar advocates alike.
The Public Utilities Commission recently clarified a legislatively mandated net metering revision. It rejected utility efforts to shorten the twenty-year guaranteed retail rate reimbursement for all systems installed before July 1, 2017. But the CPUC continues to study the costs and benefits of solar and must send new net metering rules to state legislators by December 2015.
A new law nearly quadruples the net metering cap to 15 percent of each Vermont utility’s peak demand. That could grow Vermont solar to 3.5 percent of total demand.
Legislators maintained off-ramp protections in the compromise bill, which would allow utilities to develop an alternative net metering program if solar penetration reaches a certain threshold. But they turned back utility calls for a bill charge to net-metered solar owners. Governor Peter Shumlin proclaimed that solar had “exceeded our wildest dreams,” and he is opposed to any new bill charges.
The new law does not eliminate the Public Service Board’s scheduled net metering redesign, expected by the fall of 2016. The mandated revision must be based on a thorough evaluation of distributed generation’s costs and benefits. That process will likely recognize a state study (PDF) showing distributed solar is a net positive to the grid, which could vindicate arguments made by solar advocates.
Local solar advocates and utilities thought they had a compromise law to spur solar growth at the beginning of April. But controversy erupted when The Alliance for Solar Choice (TASC), a political advocacy group representing national rooftop solar installers, stepped in.
The bill seemingly has a lot that would keep solar advocates happy. It features new regulatory parameters that allow third-party ownership of solar. Another provision allows for an increased net metering cap after a PUC study determines the value of solar.
Ryan Mosier, a spokesperson for Duke Energy, said the utility supports the bill. “If it becomes law, this state can become the national model for how solar growth can be successful and fair.”
However, TASC sees the approval process as an effort by South Carolina utilities to unfairly block competition and monopolize rooftop solar installation. “This is South Carolina politicians doing the bidding of Duke,” TASC President and Sunrun VP Bryan Miller told The State. “Duke gives a lot of money to candidates.”
Miller argued that utilities have an unfair economic advantage over outside solar providers because the bill allows them to recover their costs — allowing them to avoid competing in the free market. But not all agree that solar installers are being shut out.
“We don’t share TASC’s concerns. We think this will be good for solar,” said Hamilton Davis, climate director of the South Carolina Coastal Conservation League. “We think commission oversight of the approval process will prevent the unfair advantage to utilities in the leasing market that TASC perceives.”
TASC’s criticisms come from “a misperception” of the bill, echoed Solar Business Alliance President Grant Reeves. “South Carolina has studied solar policy long and hard, and we’ve come up with a comprehensive program that everybody supports in this state.”
The bill creates and protects customer choice in buying solar, Davis said. It provides flexibility that works with utilities’ business models, but institutes opportunity for leasing companies. It also mandates “substantive improvements” to net metering and establishes a process for the commission to reach a “value-based approach” to solar, Davis added.
Now some fear that TASC’s intervention will stall the compromise bill before the legislative session closes on June 5.
“TASC could have had a productive impact,” Reeves said. “But they hijacked the process. I’m very concerned the bill’s window of opportunity is closing.”
If the bill does pass, South Carolina regulators will join others trying to determine solar’s value.
Minnesota recently became the first state in the country to create a process for determining a “value of solar” tariff. But the hard work in agreeing on a specific value is still ahead.
“It remains a question as to whether the warring factions will accept any of the current proposed numbers,” said Karl Rabago, a consultant and former utility executive who helped the calculate the the first value of solar tariff in Austin, Texas. “That’s why the coming regulatory proceedings are so important.”
TASC is also opposed to this proposed method of compensating solar because of questions about taxation issues. We will have more details on that debate in a future article.
Some argue that the new eight-factor solar value formula, mandated by Minnesota’s legislature and approved by its PUC, could be precedent-setting.
“It solves problems for utilities and for utility customers around compensation,” writes the Institute for Local Self Reliance’s John Farrell in a new report on the tool. “But its ultimate success lies in whether electric utilities can be convinced that accommodation of customer-owned power generation is in their best interest, or whether any concession of their market share is a deadly threat to their economic livelihood.”
Photo Credit: Net Metering Decisions/shutterstock
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