Whether it’s an approaching cap, a policy overhaul or a program introduction, net energy metering is playing a big part in energy policy conversations in states around the country.
Arizona and California are two states where multiple stakeholders are grappling with how to value distributed solar and treat it economically. More on the energy-related regulatory, legislative and business developments in these two states and several others below.
Arizona Public Service submitted a report to state regulators last week that found it costs $154 per month to serve a typical rooftop solar customer. APS subtracted $36 per month in benefits, primarily from avoided fuel costs, and the total cost came out to $118 per month.
Since rooftop solar customers pay a monthly bill of just $51, that leaves non-solar ratepayers to cover the remaining $67 in fixed costs each month.
APS recently withdrew its proposal to increase fees on residential solar installations from roughly $5 per month to $21 per month -- pointing a finger at national solar installers for turning ratemaking into “political theater.” The Alliance for Solar Choice claimed the withdrawal as a victory, pointing to its campaign to expose bias among the regulators.
In place of the tariff change, APS has asked the Arizona Corporation Commission (ACC) to launch a study of the value of solar. The utility has asked regulators to complete the investigation by March 31, 2016 -- in time for APS’ next rate case.
“We are just trying to get the data out in a way that will facilitate the rate case running smoothly,” Jeffrey Guldner, senior vice president of public policy at APS, told GTM at a conference this week in Washington, D.C.
It’s unlikely that will be the case. Solar advocates say APS’ cost-of-service study is misleading because it only accounts for costs, and does not calculate other benefits of distributed solar, like carbon reductions and customer satisfaction.
“If APS is trying to make rooftop solar look bad, this is a perfect way to present things,” said Nate Watters, spokesperson for SolarCity. “But if they want to have an informed, transparent, and data-driven discussion, it doesn’t make sense to simply look at the costs. You have to include benefits in the calculation as well.”
Guldner countered that APS’ filing is just one part of a broader discussion on the costs and benefits of rooftop solar. In addition to the cost-of-solar study, ACC staff recommended opening a docket to quantify the value of solar. “The challenge will be for regulators to reconcile the difference,” said Guldner.
Debate is also heating up in California over the development of a net-metering successor tariff for distributed solar, or NEM 2.0. The three utility proposals before the California Public Utilities Commission amount to cutting the credit by roughly half, in addition to charging solar customers a new monthly fee. The solar industry has filed to keep the existing net metering regime in place.
California’s Office of Ratepayer Advocates has also filed a proposal, which calls for keeping full retail-rate export compensation in place and phasing in a capacity fee over time, starting at $2 per kilowatt. As more solar comes on-line, the fee would ramp up to $10 per kilowatt, or roughly $70 per month.
According to the ORA, solar companies’ proposals fail to account for cost shifts between customers. Meanwhile, the solar companies have been quick to note ORA’s reversal from a historically pro-net-metering stance to a position more aligned with the utility industry, and with the anti-solar policies proposed in Arizona.
“A California state agency is collaborating with the most notoriously anti-solar state in the country to cripple rooftop solar in California,” said Bryan Miller, vice president of policy at Sunrun. “It’s shameful and completely out of step with California’s values.”
Hundreds of Californians rallied along with Vote Solar outside PG&E’s offices on October 14 to protest the utility’s proposed regulatory changes. In addition, a group of 16 farms and agricultural businesses sent a letter to CPUC declaring their support for the continuation of net metering.
The new tariff will go into effect by July 1, 2017, or once a utility reaches the program cap of 5 percent of aggregate customer peak demand. San Diego Gas & Electric is on track to hit the cap by early 2016, while Pacific Gas & Electric and Southern California Edison are expected to hit it by late 2016. The CPUC is required to finalize a new set of rules by the end of December.
In a separate proceeding (R1206013), all three investor-owned utilities in California are crafting time-of-use pilot programs, with proposals required by January 1, 2016.
Meanwhile, the CPUC has rejected PG&E’s $654 million proposal to build 25,100 electric-vehicle charging stations through 2022. The utility was permitted to deploy a total of 2,510 charging stations over the next two years.
PG&E filed a supplement to its original application on October 12 for regulators to consider. Evidentiary hearings on the proposal will begin February 8, and a decision is expected in June 2016.
Gov. Jerry Brown has signed SB 489, which states the legislature’s intention to push the solar industry to enhance PV equipment recycling by "developing a plan for recycling end-of-life photovoltaic modules in the state in an economically efficient manner." He also signed AB 793, which requires investor-owned utilities to develop education and incentive plans to ensure customers have tools to better manage their energy use.
In addition, Brown signed into law SB 350, California’s landmark climate bill that will double building efficiency and increase renewable electricity generation to 50 percent by 2030. The bill would also allow for the transformation of Cal-ISO into a regional organization.
Net metering has also been top of mind for energy experts in Hawaii, where regulators recently closed Hawaiian Electric Companies’ net metering program to new participants.
The move is necessary to transition to a market-based structure for distributed resources in Hawaii, according to the filing submitted Monday. Solar industry leaders say the decision will not stand in the political arena or in the courts.
Separately, developers in Hawaii have proposed to build a 400-megawatt, $1.6 billion offshore wind energy farm. The project would mirror a 408-megawatt, $1.6 billion project by Denmark-based Alpha Wind Energy.
The Hawaii PUC has also approved a solar time-of-use rate pilot for the Kauai Island Utility Cooperative. The program will lower electricity rates by 25 percent during off-peak daytime periods to incentivize the use of solar power during peak generating hours.
Colorado regulators have delayed a decision on the city of Boulder’s application to create a municipal electric utility (15A-0589E). On September 30, the PUC asked the city and Xcel Energy to submit focused briefs on whether or not the city’s plan violates the doctrine of regulated monopoly, BizWest reports. Filings were due October 14.
A 2016 ballot initiative has been introduced in Oregon that seeks to eliminate all coal-fired resources from utilities’ electricity supply by 2030. Petition 64 would also raise Oregon’s existing RPS to 50 percent by 2040. Campaigners will have to collect more than 1,000 verifiable signatures to move the process forward.
At the same time, Oregon is also working on revisions to the state’s residential energy tax credit rules. The proposal would reduce the tax credit for solar from $1.70 per watt to $1.50 per watt for systems placed in service during 2016. Oregon’s Department of Energy has scheduled a public hearing on the revisions for October 23.
On October 6, Exelon filed a motion to reopen the Pepco acquisition proceeding (FC 1119), after D.C. regulators unanimously rejected the initial deal in August. On October 7, the PSC opened a comment period on whether or not to accept Exelon's motion for reconsideration through October 16.
Exelon wants the PSC to consider a new merger proposal backed by D.C. Mayor Muriel E. Bowser. Under the deal, Exelon will invest $78 million in the District, five times more than the originally proposed investment of $14 million.
Duke Energy has launched a solar rebate program in South Carolina to reduce the upfront cost of installing distributed solar on customer property.
The rebate provides $1 per watt-DC for qualified residential customers who install systems up to 20 kilowatts-AC, and for business customers who install systems up to 1 megawatt-AC. Under this program, a typical residential customer with a 5-kilowatt system could earn rebates of about $5,000. Likewise, a non-residential customer who installs 50 kilowatts could earn a rebate of $50,000.
Signups for both rooftop and ground-mounted solar installations began on October 13. Systems installed as of Jan. 1, 2015, are also eligible for the rebate.
Over the summer, Duke introduced a retail rate net-metering incentive for solar installations through 2025. Both solar initiatives stem from historic legislation (Act 236) signed into law last year.
The battle over the ballot initiative to allow for third-party solar leasing in Florida continues. Floridians for Solar Choice, the group backing the petition, currently boasts over 171,000 verified signatures, with another 100,000 awaiting verification. In the past two weeks, the coalition has gained eight new endorsements, including the 200,000-member-strong Florida Alliance for Retired Americans and the Florida Wildlife Federation.
The opposing group, Consumers for Smart Solar, is also racking up support for a competing ballot that would not allow for third-party financing. The group, backed by the Heartland Institute, recently released a new ad attacking the Solar Choice coalition.
A group of investors led by Dallas energy and real estate mogul Ray L. Hunt recently made a bid to buy Oncor, Texas’ largest power company. The application filed with Texas regulators (45188) values the company between $18 billion and $19 billion, Dallas News reports. Stakeholders have already expressed concern over Hunt’s plan to operate Oncor as a real estate investment trust. The commission must make a decision by March 27, 2016.
Earlier this month, the Austin City Council approved a plan for Austin Energy to purchase of 300 megawatts of solar. This is the city’s largest solar contract to date, and the cheapest solar contract in Texas, at less than 4 cents per kilowatt-hour, the website My Statesman reports. On October 15, the council is expected to consider contracts for up to 300 megawatts of additional utility-scale solar.
Regulators in Mississippi have been investigating net energy metering for the past four years (2011-AD-2). Mississippi is one of just five states in the country that currently do not have a net-metering rule for customer-sited resources. On October 8, the Mississippi Public Service Commission held a hearing to weigh arguments for and against the policy, and decided to extend the public comment period by another two weeks.
A study conducted by Synapse Energy Economics of Cambridge, Mass. on behalf of the PSC found it is in the best interest of ratepayers to proceed with the development of a net-metering policy.
Jeremy Vanderloo, assistant general counsel for Entergy Mississippi, said his utility “absolutely supports net metering,” according to the Mississippi Business Journal. But Vanderloo also warned of a possible cost shift.
The rule proposes a cap of 3 percent of a utility’s distribution peak demand. Mississippi Power said it supports the 3 percent cap, while Entergy has proposed a 0.5 percent cap, and solar advocates are seeking no cap.
Public Utilities Commission of Ohio staff have recommended rejecting American Electric power’s request for guaranteed income at four of its coal-fired power plants, the Columbia Dispatch reports. The decision follows staff’s recommendation to reject a similar case from FirstEnergy. In both cases, staff said different versions of the deals could be approved if found to be in the public interest.
Meanwhile, Ohio leaders stand divided over the future of the state’s renewable energy programs. Late last month, the General Assembly's Energy Mandates Study Committee recommended an indefinite freeze on the state’s renewable energy goals, citing uncertainty related to the Clean Power Plan. Critics say the plan also includes giveaways for industrial customers and calls for changes to net metering.
Gov. John Kasich (R), who initially signed legislation allowing for the freeze, said that conclusion was "unacceptable." The Ohio General Assembly must now decide whether or not to turn the recommendations into a new bill and try to pass it.
The City of Chicago, along with utility companies, the Environmental Law & Policy Center, the Citizens Utility Board, ecobee and Nest, has launched an ambitious initiative to roll out 1 million smart thermostats over five years. The program encourages northern Illinois residents to buy smart thermostats with rebates of up to $120 and subsidized installation and programming help, Midwest Energy News reports.
Xcel Energy filed a new carbon emissions reduction plan on October 2, as part of an ongoing regulatory proceeding in Minnesota (15-21). The revised plan proposes to cut carbon emissions by 60 percent from 2005 levels by 2030; the utility originally proposed a 40 percent cut. To reach the target, Xcel Energy says it will retire two units at its Sherco coal plant. The utility is also targeting 35 percent renewable energy generation by 2030.
On October 1, Northern Indiana Public Service (NIPSCO) filed its first rate case in five years (44688), which seeks to significantly increase fixed customer charges, among other things. For residential customers, NIPSCO has proposed a fixed charge increase from $11 per month to $20 per month. The utility claims the charge could have gone up to $84 based on its cost-of-service study.
Regulators will hold a preliminary hearing on the proposal on October 29, and a technical conference on November 19. The final order is due by July 2016.
In 2014, Governor Jay Nixon signed Executive Order 14-06 charging the Missouri Department of Economic Development, Division of Energy with developing the state’s first comprehensive energy plan. The agencies released the plan earlier this month.
Among the recommendations is a proposal to nudge up Missouri’s RPS from 15 percent of power from renewables by 2021 to 20 percent by 2025. The plan has been met with strong support from clean energy advocates, Midwest Energy News reports. But it’s unclear if or how the recommendations will be used.
Meanwhile, Attorney General Chris Koster has announced that Missouri will join more than 20 other states in suing the EPA for regulatory overreach in issuing the Clean Power Plan.
The comment period recently closed on Idaho Power’s integrated resource plan that calls for shuttering two coal plants on a “glide path” away from coal power, which still makes up 40 percent of its annual electrical generation, the Idaho Statesman reports. The utility is also planning for 400 megawatts of demand-response capacity and is considering a community solar pilot project.
In 2009, there were 2 megawatts of solar installed in New Hampshire. By the end of 2013, installed capacity was more than 10 megawatts. Now, just as New Hampshire’s solar industry starts to gain traction, installers say they are already bumping up against the state’s “arbitrary” net-metering cap.
Net-metering credits in New Hampshire are capped at 50 megawatts, or 1 percent of peak energy demand divided among utilities. According to The Alliance for Solar Choice, that cap could be hit any day.
In other New Hampshire solar news, on October 8 rebates for residential solar projects in New Hampshire fell by a third -- from $0.75 per watt to a maximum of $3,750, to $0.50 per watt to a maximum of $2,500. Regulators lowered the rebate in order to keep the program open, New Hampshire Public Radio reports. Funding for the program dropped from $17 million to $4 million as utilities deployed more renewables, decreasing their payments to a fund that financed the rebate scheme.
Entergy Corp. has announced it plans to close the 43-year-old Pilgrim Nuclear Power Station in Plymouth, Massachusetts before June 1, 2019. According to the company’s press release, the decision stems from “poor market conditions, reduced revenues and increased operational costs.” Low natural gas prices have caused power prices to fall, resulting in annual revenue losses for Pilgrim of more than $40 million.
“The decision to close Pilgrim was incredibly difficult because of the effect on our employees and the communities in which they work and live,” said Leo Denault, Entergy’s chairman and chief executive officer, in a statement. The plant employs 600 workers.
"The Pilgrim Nuclear Power Station closure announcement is yet another indication that Massachusetts needs a new energy future,” said Sean Garren, regional manager for Vote Solar. “Why are we allowing the solar industry to wither under needless net-metering caps when we need that clean, renewable energy and economic development so urgently?"
The Pilgrim plant closing comes as the solar advocates lobby to raise the net-metering caps in Massachusetts. Governor Charlie Baker testified on two pieces of legislation this week, one of which (H3724) would raise the net-metering caps until the state reaches its target of 1,600 megawatts of installed solar. Baker also testified in support of long-term utility contracts for offshore wind and hydropower projects.
The legislature is now considering votes as it enters the final weeks of formal sessions before the winter recess.
Connecticut’s electric and natural gas utilities have submitted a 550-page report to the Department of Energy and Environmental Protection (DEEP) on how energy-efficiency program funding should be spent through 2018, according to The New Haven Register. DEEP will assess the plan before the end of the year.
The plan proposes to spend $250 million per year on energy saving initiatives, which is $20 million more than the current spending level. Program costs will be recovered through ratepayer bills, but are expected to yield a net savings. A DEEP spokesperson said that every dollar spent on energy efficiency produces $2.80 in savings.
Separately, DEEP has requested public comment on the implementation of Public Act 15-113 (SB 928), specifically on the issue of DEEP developing a two-year pilot program to support the development of shared clean energy facilities. DEEP is required to issue a request for proposals prior to January 1, 2016.
Deadlines are approaching for two comment periods under New York’s Reforming the Energy Vision initiative, according to Advanced Energy Economy’s regulatory tracker. The first proceeding (15-00733/15-M-0180) addresses proposed rules for regulatory oversight of distributed energy resource suppliers under the REV Track One order. In a July report, PSC staff determined that some supervision over DER providers will be necessary. Comments in response to the staff proposal are due October 19.
REV Track 2 is currently analyzing ways to reform current rate-making practices to better align utilities’ and customers’ goals and needs. Comments on the Track 2 straw proposal (14-00581/14-M-0101) are due October 26.
REV is part of New York’s larger effort to reduce state emissions 40 percent by 2030 and 80 percent below 1990 levels by 2050. In line with this target, Governor Cuomo recently introduced an aggressive new climate action plan, which includes a pledge to start talks on a North American carbon market.
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.