With the General Assembly controlled by business-friendly Republicans, electric utilities might have sensed an opportunity to ram through legislation to limit the growth of independent solar power in Kentucky.
But they didn’t count on pushback from other business people, who pointed out that Senate Bill 214 would be a job-killing, anti-free market move to strengthen utility monopolies.
After the outcry, Sen. Jared Carpenter, a Berea Republican who introduced the bill, wisely withdrew it before last Wednesday’s meeting of the Senate Natural Resources and Energy Committee, which he chairs. Carpenter said he is meeting with utilities and solar advocates to create a compromise, which could return to the committee for consideration as early as March 1.
“My intention is to expand the availability and the usage for solar,” Carpenter said, adding that he sees solar power as an engine for creating jobs. But he also wants utilities to be fairly compensated for their costs in facilitating solar development.
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At issue is a system called net-metering, which allows homeowners and businesses with alternative energy systems such as solar panels to feed excess power they generate into their local utility’s grid and receive a one-for-one credit toward power they buy.
Utilities say giving credit at the retail rate isn’t fair, because it doesn’t defray any of their costs or investment in the power grid. They have a good point, and solar entrepreneurs agree. But here’s the question: what is a fair price, and how should it be determined?
Also, Kentucky limits the amount of power a utility must buy from a customer-generator to 30 kilowatts per month. Compared to most states, that limit is low. Indiana’s limit is 1,000 kilowatts. Ohio has no effective limit.
Kentucky’s low limit has prevented many businesses from even considering solar panels to cut their energy costs. That lack of a commercial market has limited the growth of Kentucky’s solar industry. Still, it is a growing industry that now claims about 1,200 workers, most of them in blue-collar installation jobs.
“There is no real commercial-industrial market here,” said Matt Partymiller, an owner of Lexington-based Solar Energy Solutions, the state’s largest solar contractor. “There’s the occasional do-gooder, but it’s not a growing industry at the commercial scale the way it is in other states.”
SB 214 would raise that limit to 1,000 kilowatts on a single meter. But it would then abolish the current net-metering system. (Existing customers would be grandfathered in for 25 years, but their accounts would be non-transferrable.)
The bill calls for new net-metering customers after July 15 to be charged and credited at different rates, although it doesn’t indicate what those rates would be or how they would be determined. Presumably, each of Kentucky’s more than 20 utilities would submit separate rate cases to the Public Service Commission.
But could the PSC take into account solar energy’s economic benefits as well as its costs? The bill only mentions costs.
“We’re not opposed to creating a fair valuation,” Partymiller said. “But we need actual data and figures, and we don’t just want the utility arriving at some arbitrary rate without accounting for benefits.”
Partymiller said the solar industry was alarmed by the surprise legislation’s quick deadline, which would create chaos and could even kill much of the industry until the PSC sets rates across the state, which could take years. Customers won’t buy solar systems without certainty about when their investment will pay off.
Carpenter said he wants to move the July 15 transition date to something more reasonable. He also wants existing net-metering agreements to be transferrable within families. “I want to make sure when we pass the bill that it’s something that we feel like everybody gets a win out of,” the senator said.
That’s good, but this would be better: Rather than rushing through any legislation based on claims by either utilities or solar advocates, the General Assembly should direct the PSC to do an independent study of the economic costs and benefits of solar power and use that as the basis for legislation in next year’s session.
There is no emergency that requires changing Kentucky’s net-metering law now, although it clearly isn’t ideal for anyone: utilities, the solar industry or homeowners and businesses that would like to cut their electricity costs.
Renewable energy is the future, and that future is coming more quickly as new technology reduces costs. Kentucky’s renewable energy policies are way behind the curve. Here’s a chance to start catching up.