PSC chief reiterates market-based approach for state’s net metering, solar energy expansion

Arkansas Public Service Chairman Ted Thomas said Tuesday (Oct. 8) that regulators will reopen the controversial net metering docket a week from now and reiterated his past stance that Arkansas should adopt a free market approach in expanding use of solar and other renewable energy sources.

In his 45-minute speech at the Arkansas Advanced Energy Association (AAEA)’s annual meeting and policy conference at Heifer International’s global headquarters in downtown Little Rock, Thomas said political differences have kept the nation’s power industry from moving from the existing regulated model to a market-based method.

“In my view, my right-wing friends are in default in bringing these issues to the table. The obligation of a center-right party is to say, ‘Hey that’s good but how much does it cost,’ and then to seek market-based solutions,” said Thomas, appointed to his post by Republican Gov. Asa Hutchinson in January 2015. “Instead, they are denying these problems and talking about coal bailouts.”

Thomas called that approach “a dumb-idea standing alone (that) takes up space in the public square for an irrational debate” on energy costs. However, even though renewable energy and environmental advocates have gained leverage as more consumers choose solar, wind and cheap natural gas, he said, they have not fully opened up about potential higher costs for those choices.

“My friends on the left … have momentum from a political perspective on these issues in my view, but I don’t think the public is being prepared about the possibility of higher electric bills in many instances,” continued Thomas. “And they are also not being prepared if we spend a lot of money and we did not solve the problem.

“What if we keep spending money and the temperature keeps doing what it’s doing? And then we come back and ask, ‘more money, more money, more money …,” the PSC chief panned.

The solution or “first step” toward a new process of regulating the power industry is to adopt a market-based concept that allows for the phase-in of new technology and innovations by associated costs.

“We need to take that concept and meld it with our existing (regulated) model,” he told the 175 attendees at the conference. “We know the ultimate solution on carbon issues is technology – that’s easy. The problem is we don’t know which technologies.”

SOLAR ACCESS ACT IMPACT
Later in his speech to AAEA, Thomas said Arkansas had a unique opportunity to adopt a market-based approach with the upcoming net metering docket and the difficult passage of Senate Bill 145, now the Act 464, during the 2019 legislative session.

Under the earlier Act 827 of 2015, the PSC was to use its regulatory authority to establish new guidelines for net metering facilities that exceeded pre-2001 limits and establish a revised rate structure for those customers. The PSC also 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.

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 is 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. Although the three-person regulatory panel was expected to render a verdict on the state’s net metering policy in early 2018, no decision was ever made.

Under Act 464, sponsored by Sen. Dave Wallace, R-Leachville, lawmakers opened the door for 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.

The new law also made fundamental changes to the 2015 net-metering law, undercutting many positions, arguments, and legal analyses that had been under consideration in the earlier docket. Thomas said the PSC has determined that it is necessary to open the final phase of the docket to consider and implement new changes to the rules, including the cost structure that will be adopted under the new act.

Thomas told the AAEA audience that the possible way forward for Arkansas regulators to move beyond the “status quo” was to continue with the aggressive implementation of Act 464, reboot the earlier net-metering proceedings at the Commission and re-write rules for that fledgling power sector. The PSC chief said he hopes discussion will center around the five broad areas, including data access, aggregation, visibility in power distribution, rate design and capacity costs.

“If you care what my views are, you have probably already heard these things,” said Thomas, who oversees the PSC with fellow Hutchinson appointees Kimberly O’ Guinn and Justin Tate. “If there are solid policy reasons, you are not doing me a favor by going along because that’s what you think that I want, and we walk over the cliff.”

In a follow-up session to Thomas’ speech, a four-person panel further discussed the impact that Act 464 has already had on the state’s fast-growing renewable energy market. Sen. Wallace, one of the panelists, credited Thomas for negotiating and spearheading the bill through the legislature over a seven-week period.

“I don’t know who he is or who she is, but someone in this room is going to make it big in the energy field. And a whole bunch of you are going to do real well,” Wallace commented. “And the true hero of this bill is not Dave Wallace, it is Ted Thomas …”

Later during the panel discussion, Walmart Senior Manager of Energy Services Lisa Perry restated the  Bentonville retailer’s companywide sustainability goals of being supplied 50% by renewable energy by 2025 and ultimately 100%. She also mentioned the previously revealed, environmentally-friendly design plans for the company’s new corporate offices.

“Senate Bill 145 was a great step for us because what we really liked about it is that we always have to manage the use of our capital and our expenses; and being able to use solar allows us to do more,” said Perry. “And currently, we are building a new campus, which I am very excited about and it some years away, but we want it primarily 100% renewable energy. And being able to use solar panels are at a great price will allow us to do that.”

The panel also mentioned several new municipal and private industry solar projects that have been announced in Arkansas since the passage of Wallace’s Solar Access Act, which was signed into law by Gov. Hutchinson on April 3, 2019.

“This is just like the camel getting his nose under tent, and now we are going to go forward from there,” he said.

ASSOCIATION AWARDS
AAEA Executive Director Katie Niebaum also handed out its annual awards for 2019 at the all-day conference. Following are the award winners.

• Advanced Energy Rising Star Award
Winning this award was Gary Moody, director of state and local climate strategy for the National Audubon Society. The award recognizes a rising star within the industry for contributions to their organization and the industry.

• Advanced Energy Business Innovation Award
The AAEA recognized Today’s Power Inc. of Little Rock for courage, savvy and innovation to expand the market for its products and services.

• Ron Bell Advanced Energy Leadership Award
Sen. Dave Wallace was awarded for outstanding and consistent contributions to Arkansas’s advanced energy industry.

• Advanced Energy Policy Pioneer Award
Mark Cayce, CEO of Ouachita Electric Cooperative Corp., received the award for extraordinary contributions during the Solar Access Act legislative debate