Electric utilities, solar companies strike compromise on contentious cost-shifting bill

The House Insurance and Commerce committee spent as much time debating a controversial issue as Senators did with the governor’s education bill on Wednesday (Feb. 22).

HB1370 by Rep. Lanny Fite, R-Benton, pitted electric utilities against the solar industry in a measure called the “Cost-Shifting Prevention Act of 2023.” Sen. Jonathan Dismang, R-Beebe, is the Senate co-sponsor.

Cost-shifting in any industry is the concern that one group of payers is underwriting the costs of a group not paying their fair share. In this instance, electric utilities claim that businesses and individuals with solar arrays are being paid for their additional power at an amount too high to cover the utilities’ costs.

At issue is the credit that utility companies pay to solar producers for excess power generated back to the electrical grid. Electric companies pay a retail rate and claim it is too high to recoup costs of storing and transmitting electricity. The solar companies contend the rate of repayment has been calculated into existing projects as well as projects underway.

The committee’s morning hour and a subsequent afternoon hearing were spent with utility executives speaking in favor of HB1370 and a combination of solar providers, municipalities, school district and industrial customers arguing against it.

After hours of contentious debate and questioning, Dismang, Fite and leaders of the Arkansas Advanced Energy Association (AAEA) announced a compromise. AAEA represents a variety of solar companies and renewable energy firms and users across the state and has been opposed to HB1370, claiming it would halt new projects, disrupt their business models, and kill their industry.

The surprise agreement was announced by Dismang and Fite, with AAEA Chair Heather Nelson acknowledging her group would end its opposition. The compromise includes:

• Grandfathering solar contracts from Dec. 31, 2023 to Sept. 30, 2024;
• Expanding the proximity in which the array must be built to the meter from a 5-mile to a 100-mile radius;
• An array of at least 5 megawatts that is under contract as of Wednesday or has a filing with the Arkansas Public Service Commission would be grandfathered; and
• A complaint filed with the PSC would also trigger grandfathering.

The House Insurance and Commerce Committee may take up the amended measure on Thursday.

Editor’s note: Jeff Della Rosa and Roby Brock contributed to this report.