Officials with the Arkansas Advanced Energy Association (AAEA) offered several policy recommendations on Tuesday (Oct. 11) concerning two recent dockets that some local energy experts say could determine the future of state’s burgeoning renewable energy industry.
In a presentation at the Embassy Suites in west Little Rock before a roomful of Arkansas utility executives, state regulators and other energy policymakers, AAEA Policy Director Ken Smith provided a list of policy recommendations and changes that his organization is recommending to mature and grow the state’s renewable energy sector. The issue arises from the dockets recently opened by state utility regulators under Act 827 of 2015.
Smith told the audience gathered for the AAEA’s annual convention that Arkansas is poised to benefit from the explosive growth in the energy efficiency and renewable energy sector, which is estimated to see growth of $200 billion annually over the next decade. In Arkansas, Smith said, the sector is already generating an annual economic benefit of $2.8 billion and 25,000 jobs.
“It is bursting at the seams,” Smith said. “So even here [in Arkansas], we had a robust industry that will only grow.”
In his 30-minute talk, Smith discussed Docket No. 16-027-R established by the Public Service Commission in late April that will be used to determine appropriate rates, and terms for net metering contracts, including any changes necessary to the PSC’s rules.
In Arkansas, qualified customers that generate electric power using solar, wind, hydropower, geothermal or qualified biomass resources can generate and use their own solar powered energy under the state’s net metering rules. According to the PSC, net metered customers that have a generating capacity of up to 25 kilowatts are credited for renewable energy they supply to the grid minus energy they consume.
NEW DOCKET COULD EXPAND RENEWABLE ENERGY SECTOR
Under ACT 827, the PSC is exercising it authority to establish new guidelines for net metering facilities that exceed the state’s current limits, and to establish a revised rate structure for those customers. In conjunction with the net metering docket, the PSC also opened companion Docket No. 16-028-U, which the AAEA officials called a “historic attempt” by the PSC to consider a full range of issues concerning renewable energy generation in Arkansas beyond net generation.
To date, there are already more than 40 companies and trade groups that are interested parties and intervenors to both PSC dockets. Smith said the AAEA has “tee’d up some ideas” that he hopes the PSC will consider to expand the state’s renewable energy rules over the next year.
They include recommendations to adopt third-party generation rules to allow companies to procure power from onsite resources such as solar, storage, fuel cells or small-scale while still remaining connected to the Arkansas grid. Smith said he would like to see the PSC change the definition of public utilities or adding an exemption to current rules that would exempt third-party power providers of renewable energy selling directly to customers.
“There are ideas that we are kicking around that we’ve proposed to the PSC, which are not anything new, but we have discussed this in prior association meetings,” he said.
In addition, Smith said the AAEA would also like to see the PSC change the definition of a net metering customer. He said he would like to see rules expanded to include not only owners of net metering facilities, but also lessees and other associated customers with distribution generated systems, such as rooftop solar.
THIRD-PARTY POWER PROVIDERS SEEK EXEMPTION
During the discussion, Smith asked Bill Halter, CEO of Scenic Hill Solar and former lieutenant governor of Arkansas, for his view of third-party power generation rules in Arkansas. Last month, Scenic Hill partnered with L’Oréal USA to develop two large-scale commercial solar projects in North Little Rock and Florence, Ky.
As a third-party power provider, Scenic Hill will develop a 1.2 megawatt solar power plant, making it Arkansas’ third largest commercial solar array and the state’’ fourth largest solar project. L’Oreal’s Kentucky solar array will utilize 5,000 solar panels mounted on the manufacturing facility’s roof.
The French perfume giant’s North Little Rock solar array will utilize approximately 4,000 solar panels mounted on single-axis tracking systems and will extend over 8 acres of land adjacent to L’Oréal’s manufacturing facility.
Halter said a rules change would aid companies such as L’Oreal and Wal-Mart Stores, which aren’t energy providers but are looking to renewable energy to power their operations.
“We have a number of customers that would like renewable energy, but they don’t view it in their wheelhouse to be the sole owner and operator of that facility – they view it outside their basic business strategy,” Halter said. “So, at the same time, there are very significant federal tax incentives that are geared toward ownership of the assets.”
Halter said other states have adopted third-party ownership rules that allows companies to gain access to federal tax credits for using more renewable energy,
“So what other states have done is to be very explicit in allowing third-party ownership, and that in fact unlocks the availability of tax credits and makes the net cost of power cheaper,” Halter said. “To the degree that Arkansas is not clear about that, we are missing an opportunity to take advantage of very significant tax credits.”
Halter said power companies in other states have taken advantage of more than $10 billion annually in third-party generation tax credits. He said Arkansas companies have received less than 1% of that tally.
“As a basic policy matter, we believe we ought to be doing everything we can do to take advantage of that … because it has a very powerful economic effect on Arkansas,” he said.
Following the discussion on third-party energy generation, Smith also said the PSC’s renewable energy docket should look at expanded rules on expanding “green power” tariffs to commercial, industrial and residential customers who wish to buy renewable energy through their utility.
AAEA officials also said they would like the PSC to also contemplate policy changes involving direct access tariffs, utility-enable power purchase pacts, and integrated resource plans.
WORKING GROUP WILL REVIEW NET METERING CHANGES
PSC Executive Director John Bethel, who was in attendance at the AAEA event, said the commission has assigned a net metering working group to hold meetings to discuss PSC rules, a possible revised rate structure and other renewable energy policies under Act 827.
Bethel said the PSC is developing an agenda and a schedule for the working group to meet over the next year. He said the PSC will likely make only one major recommendation or policy change under the state’s renewable energy policies.
Earlier at the AAEA event, utility executives from Energy Arkansas, Southwest Electric Power Co. (SWEPCO), and Arkansas Electric Cooperative Corp. held a roundtable discussion on the financial, political and environmental implications for the increased adoption of renewable energy in Arkansas.
In discussion about the Obama administration’s Clean Power Plan, the panelists said they will likely meet or exceed the guidelines mandated by the onerous Environmental Protection Agency’s carbon emissions rules without federal intervention.
Paul Means, manager of public affairs for Entergy Arkansas Inc., citing a new U.S. Energy Information Administration report said the utility industry has already cut carbon emissions by 6.2% even before the new rules will even come into effect.
“That’s without EPA regulations, that’s just happening. It is driven [lower] natural gas prices and by folks looking at coal and saying: ‘With all these problems of plant’s getting old – let’s just go ahead and retire them and move on to something else,’” Means said.
Means and SWEPCO President and COO Venita McCellon-Allen said the utility industry is now on “nervous standby,” until the U.S. Court of Appeals for the D.C. Circuit renders a decision on the centerpiece of President Barack Obama’s climate change policy.
The Washington, D.C.-based appeals court heard oral arguments Wednesday (Sept. 27) on the EPA’s mandate to force states to reduce carbon dioxide emissions by an average of 32% by 2030. A decision by the court is not expected until next year, and even then will likely be appealed again to the U.S. Supreme Court.
In other business, the AAEA’s new executive director, Little Rock-native Katie Niebaum, began her new duties at the annual event. Last month, Niebaum was named executive director of the AAEA and its educational affiliate Arkansas Advanced Energy Foundation (AAEF). AAEA founding director Steve Patterson will retire on Oct. 31.