State Bulletin offers a biweekly roundup of the most significant and novel energy policy updates.
In this edition, we break down the news by categories. Click to jump to a section on Grid Modernization, Net Metering, Rate Design, Third-Party Ownership, Power Plants and Renewable Portfolio Standards. See our previous post here.
Hawaii
On March 31, Hawaiian Electric Co. filed a grid modernization plan with the state's PUC that aims to improve outage restoration, integrate higher levels of renewable energy, and give customers more control of their energy usage through the adoption of smart grid technology.
The project will consist of a modern wireless communication network, smart meters, and other enhanced technology that will make the electric grid more automated and energy efficient. The plan will allow customers to better manage their bills and other service requests, and will give grid operators the data and tools they need to safely integrate greater amounts of renewable energy to help achieve Hawaii’s 100 percent renewable electricity goal.
The $340 million smart meter project included in the plan would bring smart grid technology to more than 455,000 customers on Oahu, Hawaii Island and in Maui County. If approved by regulators, smart meter installation could begin as early as 2017. If the proposed merger with NextEra is approved, HECO expects smart meter installations will be accelerated by two years and that implementation costs will be $22 million lower, thanks to NextEra’s smart grid expertise.
HECO also recently submitted a 30-year energy plan that charts a course for meeting the 100 percent renewable energy target, the most ambitious goal in the country. According to the update, Hawaiian Electric, Maui Electric, and Hawaii Electric Light Company say they could increase private rooftop solar by more than 250 percent from current levels, and 370 percent over 2014 levels. The utilities also claim they can achieve 100 percent renewable energy statewide by 2045, and complete the transition to 100 percent renewable energy on the islands of Molokai and Lanai by 2030, and on Maui and Hawaii Island by 2040.
The utilities laid out several steps to reaching these milestones, most of which require PUC approval. These actions include: implementing smart grid technology, issuing RFPs for 350 megawatts of renewable energy projects to be developed by 2022, taking steps to pursue the use of LNG as a bridge fuel, and supporting rooftop solar through new programs.
Without new programs, Hawaii’s rooftop solar market could stagnate. Solar installers report that they’re struggling with the decision to end Hawaii’s net metering program last fall, in favor of grid-supply and self-supply tariff options. At least 10 solar companies say they already have or plan to cut staff as a result of the policy change, according to the Hawaii Solar Energy Association. A backlog of net-metering applications has kept the solar industry busy -- as of March 8, HECO was reviewing 1,175 applications. But the number of new applications has declined, which is expected to trigger job losses and force some companies to leave the state, West Hawaii Today/Associated Press reports.
Minnesota
The Minnesota Public Utilities Commission has initiated a grid modernization proceeding to bring the state’s electricity system into the 21st century. Last week, staff released a report that suggests plans would likely include roadmaps for smart inverters, better interconnection procedures, hosting capacity analyses, advanced metering infrastructure, volt/VAR optimization, third-party aggregation, time-varying rates and customer energy data access. But while the report marks progress, the next steps in the process are unclear.
Separately, Minnesota lawmakers are considering a bill (HF 3513) that would offer rebates of up to $2,500 for customers who buy or lease a new electric or plug-in hybrid vehicle through the year 2021, The Star Tribune reports. To pay for the rebates, the state would take funds away from solar energy subsidies. Supporters say the decision makes sense because electric vehicles reduce pollution more than solar panels. The bill has garnered bipartisan support, but is awaiting further action.
Massachusetts
Lawmakers in Massachusetts introduced a compromise bill (H 4173) on April 5 that would lift the state's net-metering cap by 3 percent, while lowering compensation for electricity sold back to the grid. The bill would also allow utilities to petition the Department of Public Utilities to introduce a minimum bill mechanism to cover fixed costs.
Policy uncertainty has stalled the construction of more than 500 solar projects in Massachusetts valued at a total of $617 million, causing cities and towns to lose out on $3.2 million in annual tax revenues, according to an analysis conducted by Vote Solar and the Solar Energy Industries Association. The market freeze stems from inaction on raising the state’s net metering cap and reforming the state's Solar Renewable Energy Credit (SREC) program.
The Massachusetts net-metering limit -- set at 4 percent of peak load for private installations -- only affects projects above 25 kilowatts. Consequently, the net metering debate does not affect growth in the rooftop solar segment, but it does affect the fast-growing community solar and commercial solar segments.
National Grid hit its net-metering program cap a year ago. Eversource is expected to hit its cap very soon. Solar advocates have been urging lawmakers to take action after legislative attempts to raise the net-metering caps failed last fall. The solar industry held a lobby day last week, delivering more than 5,000 petitions and letters to Speaker of the House Robert DeLeo, PV Magazine reports.
Vote Solar praised the Conference Committee for introducing a solar bill that it says will put solar workers back on the job, but expressed concern over the credit reduction. If adopted, the compromise bill would reduce the value of net-metering credits by about 40 percent, reducing compensation from 17 cents to 21 cents per kilowatt-hour to 11 cents to 12 cents per kilowatt-hour, WBUR reports. Solar and consumer advocates argue that reducing the reimbursement for community solar will have negative consequences for low-income customers, writes Mass Live.
The conference bill seeks to address incentive concerns by directing the Massachusetts Department of Energy to craft a new version of the SREC program. Earlier this year, the Massachusetts SREC II program reached its cap for projects over 25 kilowatts, dealing another blow to commercial and community solar projects. The incentive is also running out for residential solar systems. In February, there was still a small amount of SREC capacity (67 megawatts) available for projects under 25 kilowatts. Solar companies expect that capacity to quickly be used up.
Nevada
On March 28, a Nevada judge delivered a setback to supporters of a referendum seeking to restore favorable rates to homes with rooftop solar in NV Energy territory. The proposal would strike out parts of a 2015 law that enabled utility regulators to lower the net-metering credit and impose new fees on solar customers.
The judge ruled that the referendum brought by No Solar Tax political action committee, also known as the Bring Back Solar Alliance, reads more like a initiative, which means it cannot be considered on the November ballot. Instead, solar advocates will have to collect signatures for an initiative petition to undo changes to the state’s net-metering program, which would first go to a vote in the state legislature in 2017. If lawmakers do not approve the proposal, voters can take up the issue in 2018.
Chandler Sherman, spokesperson for the Bring Back Solar Alliance, said the group will refile for an initiative petition and appeal the judge’s ruling at the Nevada Supreme Court. “We’re committed to bringing back solar through whatever the best legal option is,” she said in an interview.
Solar advocates will have to collect 55,234 signatures by November 8 to pursue an ballot initiative, and will have to collect the same number of signatures by June 21 to quality for the general election ballot, which may or may not be upheld by the Supreme Court. The legal challenge to the referendum was brought by the group Citizens for Solar and Energy Fairness, which is backed by NV Energy.
As the initiative advances, Governor Brian Sandoval has assembled an energy task force to advise his office on ways to promote renewable energy and distributed energy resources in Nevada. Recommendations from the committee -- which includes lawmakers, solar developers, and utility affiliates -- could underpin legislation introduced in 2016. A top aide to Sandoval said Nevada’s reputation on energy has been tarnished by the fallout from the net metering decision, the Las Vegas Review-Journal reports. The task force will address a variety of clean energy issues in an attempt to restore confidence.
Meanwhile, The Alliance for Solar Choice has filed a lawsuit against the Nevada Public Utilities Commission for implementing changes to net-metering rates that put “a stake in the heart of future rooftop solar development.”
Vermont
The Vermont Public Service Board released new draft rules on net metering last month. The proposal compensates small solar customers for excess generation at a utility’s tariff for general residential service or a blended residential rate, for electric companies that employ inclining block rates.
All renewable energy credits can be transferred to the utility, unless the customer elects to retain ownership of them. The proposal ensures existing small solar customers can keep their current rate plan for 20 years. The proposal is designed to support the expansion of renewable energy in Vermont, which has a requirement to reach a 90 percent renewable energy mix by 2050.
Two years ago, Vermont lawmakers passed a bill establishing a net-metering cap of 15 percent of a utility's peak load -- several utilities have already reached their limits. The law also ordered the the board to develop new rules for net-metered systems by Jan. 1, 2017.
The Public Service Board proposal received support from solar developers and the Vermont Department of Public Service, but at least one utility has pushed back, the Associated Press reports. Christine Hallquist, the CEO of the Vermont Electric Cooperative, said the draft rule does not address the issue of shifting costs for grid maintenance from solar to non-solar customers.
Maine
Landmark legislation to grow Maine’s solar market passed out of committee last week, with votes falling along party lines, the Portland Press Herald reports. The bill (LD 1649) is now making its way to the House floor, with about two weeks left in the legislative session.
The proposal requires the PUC to enter into long-term contracts for the procurement of 248 megawatts of solar energy by 2022, 118 megawatts of which would be for residential and small-business projects. For small-scale customers, the proposal would replace retail-rate net metering with a 20-year fixed-price contract for net electricity exports measured hourly. Contract prices would be set for the year and decline each year for five years, at which point the program would end.
The proposal is designed to be a compromise; it brings an end to net metering but continues to support rooftop solar as the industry scales. The bill has won the support of local solar companies, consumer groups and utilities; however, there are still some strong detractors.
Late last week, Republican Rep. Wadsworth introduced an amendment that would give consumers the option to continue to net-meter their solar -- a policy favored by national rooftop solar installers -- rather than go on the new rate plan. The amendment did not make it out of committee, but could be taken up on the House floor.
“Net metering, the status quo solar policy in Maine, should be allowed to continue,” Wadsworth wrote in an op-ed for CentralMaine.com. “The state should not remove a policy that has been proven to foster tremendous growth in solar in dozens of markets while also providing net benefits to all ratepayers, and on which people have counted in making the choice to go solar. Moreover we should expand, not limit, opportunities for municipalities and other communities to share in the benefits of appropriately scaled solar projects.
If Wadsworth’s amendment does somehow pass, it’s highly unlikely to become law. Republican Governor Paul LePage is a vocal critic of solar power and views net metering as an unfair subsidy. He has also pledged to block the compromise proposal, claiming it also shifts costs onto non-solar customers. If the bill fails to win the two-thirds vote necessary to override a veto, the Maine PUC will have control of the state’s net-metering policy. This worries Democrats who fear that LePage-appointed regulators will gut the net-metering credit and potentially impose new fixed fees or demand charges.
Arizona
A year after Salt River Project (SRP) approved new demand rates for rooftop solar customers, a preliminary review found that 14 percent of customers are saving money, while the rest are incurring a price penalty and paying significantly higher bills, The Arizona Republic reports.
SRP analyzed the bills of 190 customers who have installed solar since the demand rate took effect. The numbers show that the average customer in that group paid $181 a month before going solar, versus $122 per month with solar on the demand rate. On the old rates, solar customers paid an average of $93 per month, or $29 less than under the demand rate. The bill change is lower than the $50 per month change SRP anticipated.
The same study found that the overall number of solar applications in SRP territory has dropped. In October 2014, before the demand charges were proposed, SRP had received 677 solar interconnection applications. The new rates came into effect on December 8, 2014. In February 2015, SRP had received 333 applications. At the same time, the number of solar leases fell from 75 percent to 25 percent of installations.
SRP is governed by an independent board; however, its demand charge data could help inform state regulators as they consider demand rates for other utilities. The Arizona Corporation Commission (ACC) is currently working on a rate request from UniSource Energy Services (UNS), which is looking to implement a mandatory 7 percent demand charge on all electricity customers (E-04204A-15-0142). Arizona Public Service is expected to file a similar proposal later this year.
In addition to the demand charge, UNS is seeking to increase fixed charges from $10 to $15 per month, and to lower the net-metering credit for solar customers from the retail electricity rate to the wholesale rate. ACC staff have come out in support of mandatory demand charges, but opted not to weigh in on net metering. “Staff is attempting to keep the Commission out of the technology conflict,” said Tom Broderick, director of the ACC staff, in an interview.
While regulators could rule on UNS’ net metering request this summer, it’s possible they will delay and wait for the outcome of a separate proceeding on the value of solar (E-00000J-14-0023). This proceeding is designed to inform how solar customers are compensated for excess generation, but Broderick said it’s currently unclear how the findings will be incorporated into upcoming rate cases. Hearings on the value of solar proceeding are scheduled to begin on April 19.
Florida
On March 31, the Florida Supreme Court approved a utility-backed ballot measure in a 4-3 vote. The “Consumers for Smart Solar” petition will appear on the November ballot as “Amendment 1,” and must receive 60 percent of the vote in order to pass. If approved, the measure would maintain the status quo by giving local and state regulators the ability to make decisions related to solar energy.
“We are pleased that the Supreme Court will allow the people of Florida to have a voice on our amendment to advance solar energy in the Sunshine State,” said Dick Batchelor, co-chair of Consumers for Smart Solar. “We look forward to making our case to the people of Florida -- that we must advance solar energy, and do it the right way -- a way that protects all consumers, whether they choose solar or not.”
Advocates for third-party-owned solar say the “Smart Solar” petition is a sham. The utility-funded campaign was launched in July in response to a grassroots solar initiative sponsored by Floridians for Solar Choice. The measure led by Floridians for Solar Choice would have allowed homeowners to lease solar systems and potentially sell excess electricity back to the utility, but the initiative failed to gather enough signatures to get on the November ballot. Rooftop solar advocates say the “Smart Solar” petition was designed to confuse voters and restrict the expansion of Florida’s solar market.
“It is shameful that the utilities would go so far and spend millions to manipulate and deceive their own customers,” said Stephen Smith of the Southern Alliance for Clean Energy. “We will absolutely continue to shine a light on their dirty tricks and hope that the voters of Florida will see their ballot initiative for what is it: a wolf in sheep’s clothing, a sham designed to keep more money in the power companies' pockets.”
Ohio
Ohio regulators have approved income guarantees for both FirstEnergy and American Electric Power, despite strong objections from competing generators and consumer groups. The decision means that ratepayers are now locked in to covering all costs to keep open seven coal plants and one nuclear power plant through May 2024, Columbus Business First reports.
The plans allow AEP and FirstEnergy to buy electricity from their affiliated power plants via long-term power-purchase agreements (PPAs) and sell it on the open power market. The utilities argued the decision was necessary to keep their uncompetitive power plants operational and would save consumers money in the long term. Regulators insist the proposals have been modified to protect consumers.
On December 1, 2015, FirstEnergy announced it had reached an agreement with staff at the Public Utilities Commission of Ohio after the agreement was denied in September. The utility proposed to shorten the length of the agreement from 15 to eight years, reboot suspended energy efficiency programs, and establish a goal, but not a mandate, to reduce emissions 90 percent below 2005 levels by 2045. According to Advanced Energy Economy’s PowerSuite, the utility also agreed to enact several grid modernization initiatives, including decoupling (with a specific plan by 2017), removing barriers to distributed generation, AMI with data capabilities, and investigating alternative net-metering tariffs. FirstEnergy is also required to build 100 megawatts of renewables.
Like FirstEnergy, AEP also filed a joint settlement in December following an earlier rejection. The agreement includes a commitment to retire or shift 1,500 megawatts of coal to natural gas, as well as the development of 500 megawatts of wind and 400 megawatts of solar over the next five years. According to PowerSuite, “the Commission approved the joint settlement because they believed the PPA, which is intended to act as a hedge against price volatility in the wholesale markets, and the provisions to invest in grid modernization and more renewables will ultimately benefit ratepayers.”
Restrictions included in the settlement deals are designed to limit the impact on consumers. AEP, for instance, cannot increase customers bills by more than 5 percent, and FirstEnergy has agreed to freeze distribution rates for the duration of the contract. In FirstEnergy’s case, the commission estimates that customers will receive a net credit of $256 million over the eight-year term of the PPA. The Ohio Consumers’ Counsel does not project any savings, however, finding instead that the agreements could cost ratepayers nearly $6 billion.
The PUC decision on March 31 comes after more than a year of debate, with strong opposition from power producers, businesses and environmental groups that called the PPAs “bailouts.” Many stakeholders argue that offering guaranteed income to AEP and FirstEnergy’s power plants undermines Ohio’s deregulated market. The merchant generator Dynegy has already pledged to launch a legal challenge, and others could follow suit. Two separate complaints filed with the Federal Energy Regulatory Commission are still pending.
Maryland
Governor Larry Hogan has signed into law the Greenhouse Gas Reduction Act of 2016 (HB 610/SB 323) that requires Maryland to cut emissions by 40 percent below 2006 levels by 2030. Existing law requires the state to reduce emissions by 25 percent below 2006 levels by the year 2020. Only California and New York currently have set higher greenhouse-gas reduction targets, which were enshrined through executive action.
Environmental groups praised lawmakers for passing the new law. “By committing to deeper cuts in carbon pollution, Maryland is taking a historic and notably bipartisan step toward the protection of our health, our economy, and our children's future,” said Mike Tidwell, director of the Chesapeake Climate Action Network.
Attention now turns to a separate bill (HB 1106) that seeks to increase the state’s renewable portfolio standard from 20 percent renewables by 2022 to 25 percent by 2020, putting the state on track to reach 40 percent by 2025. The legislation has already passed in the House of Delegates. Similar legislation (SB 921) passed in the Senate on April 6. The House and Senate must now take final votes to approve the same version of the bill before it heads to Governor Hogan’s desk.
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Policy developments are tracked in partnership with EQ Research, which offers in-depth subscription services covering regulatory developments, legislation and general rate cases in all 50 U.S. states.
