Renewable energy and environmental advocates welcomed new net-metering rules that have been in the works since 2016, but a business organization representing the state’s largest industrial users and two of the state’s largest electric utilities question whether net-metering customers will be paying their “fair share.”
The Arkansas Public Service Commission (APSC) approved June 1 rule changes allowing residents to continue to receive a 1:1 retail credit for the unused electricity their renewable energy systems send to the grid until at least 2023.
The new rules established rates, terms and conditions for net metering in Arkansas and implemented the provisions of Act 464, which went in effect in July 2019. The law allows third-party financing for those looking to use solar energy and increased the allowed generating capacity for commercial solar systems from 300 kilowatts to 1 megawatt.
The new net-metering rules also allow existing agreements between net-metering customers and utilities to remain in place, or grandfathered, for 20 years.
Starting in 2023, a utility can request an alternate net-metering rate structure “that is in the public interest and will not result in an unreasonable allocation of, or increase in, costs to other utility customers,” according to the new rule.
Another change in the net-metering rules regards commercial systems with a generating capacity of between more than 1 megawatt and 20 megawatts. For customers with these systems, they will receive a 1:1 retail credit for net electricity generation but will face a utility grid charge. The charge will initially be set at zero, but utilities may request to change the charge.
“The Public Service Commission has struck a fair balance between both sides of this issue with a ruling that presents clear long-term benefits,” said Heather Nelson, co-founder and president of North Little Rock-based Seal Solar, a solar installation company. “The solar industry is a powerful force in our state’s economy, and this shot in the arm will only further our ability to support job creation, economic development and energy independence for Arkansans.”
“The Arkansas Public Service Commission order does not require the customers with private solar systems to pay their fair share of the costs required to serve them,” said Randy Zook, president and CEO of Arkansas State Chamber of Commerce and Associated Industries of Arkansas.
“Although the order provides the opportunity to implement a grid charge for some customers with private solar systems, it ensures that all other customers will be forced to bear a disproportionate share of the costs of the electric grid used to serve a significant number of existing and prospective customers with private solar systems.
“Low rates are a valuable economic development tool for Arkansas, and low rates are critical to economic recovery and stability,” Zook added. “Part of maintaining low rates, however, is ensuring that all customers pay their fair share of the costs required to serve them, and the APSC order does not appear to accomplish that.”
“We are fully assessing the Arkansas Public Service Commission’s ruling and its implications to all Entergy Arkansas customers,” said David Palmer, director of regulatory affairs for Entergy Arkansas. “The commission’s decision to provide the opportunity to implement a grid charge for some customers with private solar systems is a step toward establishing fairness for all customers. However, significant work remains to ensure that customers with private solar systems pay their fair share of the cost of the grid that serves them. Entergy Arkansas remains committed to leading the state’s solar future by bringing low-cost renewable resources to all customers, while controlling customer costs and ensuring electric grid reliability.”
Buddy Hasten, President and CEO of Arkansas Electric Cooperative Corporation, explained how he sees the ruling unfairly impacting his members.
“We are disappointed in the Commission’s order, because it unfairly over-compensates those who have net metering facilities, which then causes unfair cost-shifting to Electric Cooperative members. The idea of paying net metering customers the ‘full retail rate’ of electric service, when the true value they provide is excess energy going back onto the grid, is illogical and unfair. The full retail rate is at least four times more than the market cost of the excess energy, so that creates a windfall to the net metering owners at the expense of our members who don’t net meter — particularly those in our rural communities who are in the low to middle income classes.
“Arkansas ranks 47th in per capita income – the 4th poorest state in the nation – and many of our rural cooperative members struggle to pay their bills as it is. A government policy that forces our low income members to subsidize wealthy folks is both inappropriate and tragic. The Electric Cooperatives support innovation and modernization of Arkansas’ power supply but only if it is done in a manner that balances cost, reliability, and fairness for all of our members. We believe that the Commission’s order is well intended but sacrifices fairness in order to expedite the transition to solar energy in the state,” Hasten said.
The Arkansas Advanced Energy Association (AAEA) has been active in the commission’s net-metering docket item since it was opened in April 2016 and welcomed the commission’s decision.
“The state’s solar business leaders have created careers, produced local community investment and generated energy savings across Arkansas,” said AAEA Executive Director Katie Laning Niebaum. “The commission has reaffirmed the economic benefits provided by solar technologies, setting the stage for solar energy to continue to grow in powering Arkansas’ economy.”
The AAEA has advocated that distributed solar generation is a customer-financed investment that’s a net benefit for utilities and their customers. It also worked with legislators to secure bipartisan support for Act 464, which has led to greater adoption of solar energy systems as cities, counties and school districts work to establish arrays.
Between 2018 and 2019, the number of net-metering systems rose 53.8%, or by 812, to 2,320, with more net-metering systems added in the state in 2019 than in any other year, according to the AAEA. The majority of those systems were solar, and a few were solar and wind or wind-only systems.
Conservation organization Audubon Arkansas called the PSC ruling “a big victory for solar in Arkansas,” while the Sierra Club said it would lead to clean energy jobs.
“While it may not be perfect, the PSC’s ruling is tremendous news for Arkansas consumers and businesses alike,” Gary Moody, director of state and local climate strategy for the National Audubon Society, said. “Equally important, this ruling carries forward the positive momentum achieved by the passage of the Solar Access Act (Act 464). We appreciate the diligent work of the PSC and the leadership of Chairman (Ted) Thomas through this process.”
“The PSC followed the lead of bipartisan lawmakers who realize the solar industry is good for the Arkansas economy, good for Arkansas consumers and good for our Arkansas environment. This monumental decision puts the solar industry in a position to thrive by providing a regulatory environment that should grow green collar jobs through the state,” Glen Hooks, director of the Sierra Club’s Arkansas Chapter, said.