After Two Years, Utility Commission Set To Fix Rates For Private Solar Energy Credits

Mar 15, 2018

Friday is the deadline for two sides to file arguments with the Arkansas Public Service Commission, the state's three-member panel that sets usage and administrative rates for most utilities in the state.

At issue is "distributed energy generation" — private, typically small solar and wind power systems in the state — and the state's net metering program, whereby those systems get credits worth the full retail rate for every kilowatt-hour they export onto the electrical grid.

Utility companies want to make those credits much smaller. Solar power investors, both private and corporate, as well as advocacy groups like Audubon Arkansas and the Sierra Club that celebrate renewable energy, want further examination of the issue (and no immediate change in rates).

The two groups have been arguing in filings for the Public Service Commission for two years now. The electrical utilities are led by Entergy, and are joined by the state attorney general’s office and the staff of the Public Service Commission, including Director John Bethel.

"A change in the rate structure to ensure that the utility recovers its costs net of benefits — I think that’s the standard the commission has to meet for whatever finding it makes, because that’s what the law requires."

Three years ago, Act 827 was signed into law by Gov. Asa Hutchinson, and it directed the commission to reappraise rates for net metering customers, those solar investors who can push electricity out on the grid and get retail credit for it.

John Bethel
Credit Bobby Ampezzan / ARKANSAS PUBLIC MEDIA

"The utility can buy [electricity at the] wholesale rate out on the open market. They shouldn’t be forced to buy the retail rate from someone else, then you get into picking winners and losers," says state Rep. Stephen Meeks (R-Greenbrier). 

Worse, Meeks says this deal naturally raises "the cost to the utility ... which means everyone is paying higher on their electric bill."

But there's another factor influencing utilities' gambit.

Utilities' electrical usage rates, measured in kilowatt-hours, has embedded charges for electrical grid build-out and upkeep.

What they’re proposing is something called two-channel billing. They would continue to charge net meterers the same usage rate as everyone else; then, on a second channel, they would monitor electricity exported to the system, and credit it — at a rate substantially less than the current one.

"Distributed generation customers actually offer more benefits to the grid than costs they impose on it," says Casey Roberts, a lawyer for the Sierra Club who has penned many filings before the commission.

"So, in the long run, having more distributed generation actually saves all customers, reducing the bills of all customers. We disagree that there’s any kind of cost shift to other customers. It’s important to remember that DG customers, they use less energy from the grid during those peak hours."

By law utilities have to invest in fuel and capacity to meet peak hours, so shaving peak usage rates can be especially cost-saving.
 

"What we want is a regulatory scheme that can meet any technologies that we know of now, and whatever disrupts the technologies that appear to be beginning the disruption of other technologies right now," says Ted Thomas, chairman of the Arkansas Public Service Commission.

THE FUTURE IS KNOWN

What both sides may agree on is that the way we power our homes is changing. Only a few hundred customers in the state have solar power systems today. (The commission’s already locked in their current credit rates for the next 20 years; an early victory for that side.) But advances in battery technology and much cheaper and pretty durable solar power systems means big changes ahead for Big Electric.

Roberts with the Sierra Club says those changes can be good.

"We disagree that there’s any kind of cost shift to other customers" by net metering customers, Roberts says. "It’s important to remember that distributed generation customers, they use less energy from the grid during those peak hours of the day that really drive up utility system costs. So, by doing that, they’re reducing the need for the utility to build new generation, buy expensive fuel, to upgrade those transmission and distribution systems."

Roberts has argued the cost to a utility of serving a solar powered customer is actually less than other customers.

John Bethel says, if that’s true, Roberts’ side hasn’t sufficiently substantiated it in its filings. Her side "has hinted that the benefits are in excess of the costs, but they have not really advanced that beyond a pretty superficial statement to that effect."

At the commission, dockets are like court cases. There’s evidentiary hearings and case law. The utilities, Bethel says, are submitting rate adjustments based on evidence of both market and industrial factors. The other side, the solar power generators, don’t have the evidence that solar generation is a bottom-line benefit.  

Bethel’s side has all the heft of legacy players at the commission — his staff, utility companies and the Arkansas attorney general's office, representing the state.

Spokesmen for Entergy declined an interview. They directed inquiries to the attorney general’s staff, who declined an interview.

Commission chairman Ted Thomas wouldn't comment on the merits of the docket but says this decision is really about the future.

"What we want is a regulatory scheme that can meet any technologies that we know of now, and whatever disrupts the technologies that appear to be beginning the disruption of other technologies right now."

Thomas said the commission will decide the matter very soon.