PSC Chairman says market-based solar program could boost Arkansas economy

Arkansas Public Service Commission chairman Ted Thomas said Wednesday (Feb. 27) that “big picture” legislation to expand the state’s solar marketplace could be a boon for the Arkansas economy – if policymakers are willing to adopt a free market approach that encourages new technologies.

Thomas provided his insight on the state’s emerging renewable energy industry ahead of a Thursday hearing on Senate Bill 145 filed by Sen. David Wallace, R-Leachville, before the Senate Insurance and Commerce Committee. Thomas was one of several speakers at a breakfast event sponsored by the Arkansas Advanced Energy Association (AAEA), which held its annual “Advanced Energy Day” on Wednesday at the State Capitol.

In his brief speech to AAEA members, Thomas said Arkansas had a unique opportunity to become a key player in the solar industry due to its geography and ample land in the Arkansas Delta to develop large sun-powered energy projects.

“There is a very good opportunity for solar that is produced here to be sold in North and (East Coast) markets,” said Thomas, one of Gov. Asa Hutchinson’s first appointees when he took office in early 2015.

Thomas later compared the nation’s burgeoning solar and renewable energy industry to what occurred in the wireless and telecom sector as new innovations and technology dramatically changed the industry and the way people communicate with each other. As an example, he mentioned how smartphones developed by BlackBerry nearly 20 years ago have been replaced by faster operating platforms that can support sleeker smart devices such as Apple’s iPhone.

“What we need to have is a market-based system to phase in the new technologies like in other (industries) where we have seen new (innovations) come online,” said Thomas, who is expected to offer similar testimony on Thursday in support of SB 145.

Earlier at the AAEA meeting, Sen. Wallace offered a preview of the Senate hearing on SB 145, saying he expects a good outcome for his bill.

“I’m convinced I have the votes, and I am committed to bringing this to the (Senate) floor and getting this bill through,” Wallace told the AAEA members at the breakfast held across the street from the Capitol at the Arkansas State University System’s Little Rock office.

Since the 92nd General Assembly kicked off on Jan. 14, AAEA has been working with a coalition of partners to advocate for Wallace’s legislation to overhaul the state’s renewable energy rules for the first time in nearly 20 years, focusing mostly on solar energy.

Senate Bill 145 would allow for third-party financing for those looking to use solar energy. The financing tool is important to nonprofit and non-tax entities, such as schools, churches, cities and counties, colleges and universities and other state agencies.

Existing law doesn’t allow these entities to benefit from federal incentives, such as the federal tax credit and accelerated depreciation, and they could reduce the cost of a solar array. With the option for a third-party solar services contract, the public and non-tax entities could take advantage of the federal incentives, said AAEA Executive Director Katie Niebaum.

“AAEA members are investing in local communities across the state as more businesses, public entities and homeowners seek the benefits of advanced energy technologies,” said Niebaum. “Advanced energy technologies provide jobs and energy savings in states that deploy them. By enhancing access to these resources, Arkansas can continue to lead in the advanced energy economy.”

SB 145 supporters include AAEA, the Association of Arkansas Counties, Audubon Arkansas, Walmart, Ouachita Electric Cooperative Corp., Associated General Contractors of Arkansas, County Judges Association of Arkansas, six conservation and two faith organizations.

Besides Wallace, Sen. Bart Hester, R-Cave Springs, has also signed on as a sponsor in the Senate. Rep. Aaron Pilkington, R-Clarksville, is the co-sponsor in the House.

NET METERING
The push to adopt SB 145 comes nearly four years after the General Assembly adopted legislation for the PSC to study the adoption guidelines for net metering, which allows solar panels or other renewable energy generators to be connected to a public utility power grid. Any surplus power left over is then transferred onto the grid, allowing customers to offset the cost of power drawn from the utility.

Under Act 827 of 2015, sponsored by Rep. Stephen Meeks, R-Greenbriar, the PSC was to use its regulatory 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 opened a companion docket to consider a full range of issues concerning renewable energy generation in Arkansas beyond net generation.

Out of that process, the PSC 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. However, the two subgroups formed to make recommendations to the PSC on the future of net metering split into separate sides. Members of Sub-Group 1, which included state conservation, environmental and renewable energy groups, argued that state utility regulators should hold fast with current policy until further study can be completed.

Sub-Group 2, which included Entergy Arkansas, Pulaski County, Arkansas Electric Cooperatives, the PSC staff, a group of industrial power users, and the Attorney General’s office, have supported an embedded cost of service approach to determining the costs and benefits associated with net-metering.

In November 2017, the PSC heard testimony during standing-room only hearings concerning the costs and benefits of net metering under PSC Docket 16-027-R under Act 827 of 2015. Although the three-person regulatory panel was expected to render a verdict on the state’s net metering policy in early 2018, no decision has yet been made.

According to annual filings with the PSC, the number of net metering systems in Arkansas rose 56% to 988 systems in 2017, from 633 systems in 2016, according to the most recent data available. The growth rate was double the rate over each of the previous three years and was the largest year-over-year rise in the number of systems.

Net metering in Arkansas is available to residential customers whose facilities have generator capacity up to 25 kilowatts and to non-residential customers whose facilities have generator capacity up to 300 kilowatts. The process has been available to customers in Arkansas for more than 15 years, permitted by Arkansas Renewable Energy Development Act (AREDA) of 2001.