Senate committee gives ‘do pass’ for state’s solar-powered net-metering program

A Senate bill to reset the state’s net-metering policy on solar energy was finally pushed out of committee on Tuesday (March 5) after going through several revisions since the beginning of the legislative session in mid-January.

Senate Bill 145 by Sen. Dave Wallace, R-Leachville, was approved unanimously by the Senate Insurance and Commerce Committee in a voice vote after Public Service Commissioner (PSC) Chairman Ted Thomas gave lawmakers his assurance that the state’s efforts to set up a market-based net-metering program would benefit all electric consumers.

“Senate Bill 145 puts the consumer first by embracing technology when the price is right and letting consumers determine when the price is right for them, and by also ensuring that value provided to one consumer is not at the expense of another … ,” said Thomas, who was appointed by Gov. Asa Hutchinson to his post in early 2015.

Before Thomas gave a brief speech concerning the intent of SB 145, Wallace told several wary Senate committee members that a final compromise was worked out by a coalition of partners and interests, including the PSC, legislators, state policymakers, and various utility and renewable energy stakeholder groups.

“This has been a long journey. We started this bill probably seven weeks ago and that first meeting had about a group of 30 folks angry on both sides,” Wallace said. “But … under the guidance of Chairman Thomas, our groups have slowly come together. We are at the point where virtually everyone has agreed that they like the bill or will not oppose (it).”

Little Rock business owner William Ball was the lone person to speak against SB 145, telling the panel and committee Chairman Sen. Jason Rapert, R-Conway, he was the original author of the legislation that implemented the Arkansas Renewable Energy Development Act (AREDA) of 2001.

“It is with a great deal of anguish that I come to speak against this bill today because I think as originally filed, it was a wonderful bill,” said Ball, noting that AREDA has been amended and improved several times since 2001. “Now comes SB 145 setting by statute how net-metering should work. I think that you are being asked after hearing a series of brief testimonies from both supporters and detractors to vote on something that may subvert the three years’ worth of work by parties and stakeholders that have been negotiating over at the PSC.”

The recent 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 the 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 determine 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 as mandated by 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.

With Thomas as the lead negotiator, the PSC has delayed the docket that has already developed over 300 pages of new net metering rules to get authority from the legislature to move to a hybrid market-based system to reboot the state’s burgeoning solar industry. Under SB 145, the PSC would reboot the net-metering proceedings at the Commission and allow third-party financing for those looking to use solar energy. The financing tool, according to supporters, 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 that expire at the end of 2019.

In his closing testimony, Thomas told Sen. Missy Irvin, R-Mountain Home, that if SB 145 becomes law all sides involved in the docket at the Commission still will be able to be involved in the regulatory process and have input on the final rules.

“What we will do is a reset under the new law and include all the evidence that they’ve already that have been submitted in the new proceedings so there is a no confusion about what is in or out,” Thomas explained. “And then they will have the opportunity to make new arguments under the new law and then we will resolve (any) disputes.”

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. Entergy Arkansas, which was represented by former PSC Executive John Bethel who joined the state’s largest electric utility in May 2018, has largely remained neutral on SB 145.

The 10-page bill now goes to the full Senate for consideration. Thomas, who now serves on the Commission with fellow Hutchinson appointees Kimberly O’ Guinn and Justin Tate, said after the committee hearing he hopes to reset the net-metering proceedings as soon as possible if SB 145 becomes law. However, he would not give a timetable for a possible new docket.