Kentucky’s electric utilities, including KU/LG&E and the East Kentucky Power Cooperative’s co-ops, are pushing Senate Bill 214 that would undermine customers’ freedom to use solar energy and threatens the loss of many jobs in Kentucky’s emerging solar industry.
After an outcry of opposition to the bill, its sponsor Sen. Jared Carpenter, R-Berea, pulled it from a committee’s consideration on Wednesday and said more time is needed to ensure that legislation does not harm Kentucky’s growing solar industry. Carpenter’s willingness to listen, and take a step back to ensure that the bill addresses the utilities’ concerns without harming the solar industry, is impressive.
Utilities are using misleading arguments with their customers and lawmakers, claiming that net metering customers are subsidized by the general ratepayer and not paying their fair share. This argument runs counter to mounting evidence from across the United States, which shows that net metering imposes no net costs on ratepayers while providing many benefits.
Net metering allows businesses and homeowners to feed excess power generated by their solar panels into their utility’s grid and receive a one-for-one cred toward power they buy.
In a report released Feb. 30, I demonstrate how KU/LG&E’s own data show that net metering has had a negligible impact on electric rates. According to this analysis, net metering may add, at most, one half penny per month to the average KU/LGE customer’s electric rates. Significantly, KU/LGE’s cost data fail to account for the many benefits that net metering provides to the electric grid, meaning the actual cost, if any, is almost certainly even less than this amount.
These findings are consistent with the conclusions of numerous studies from across the U.S. on the value of solar net metering. A recent report from the U.S. Department of Energy states, “for the vast majority of states and utilities, the effects of distributed solar on retail electricity prices will likely remain negligible for the foreseeable future.”
Many studies have evaluated the range of costs and benefits that net metering provides to the grid and ratepayers. A 2016 report by the Brookings Institution concluded that “the economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers. Far from a net cost, net metering is in most cases a net benefit — for the utility and for non-solar rate-payers.” These net benefits are found even before considering broader societal values such as economic development, job creation or public health.
To give just one example of how net metering benefits all ratepayers, solar customers will feed power into the grid on hot summer afternoons when the utilities experience peak demand. This reduces the need for the utility to operate high-cost peaking power plants, saving the utility and all customers money.
The utilities’ efforts to undermine net metering are distracting lawmakers from the major benefit solar energy offers to Kentuckians — an economic development opportunity that could create jobs in every region of the state. Employment in the U.S. solar industry now exceeds 260,000 workers and grew by 25 percent last year. The maddening thing about SB 214 is that it would undercut this surging industry just as it’s taking off. Lawmakers should be asking, how can we grow this industry and get more people working in it? Not, how can we smother it before it gets any bigger? SB 214 is the answer to the latter question.
When you consider what HB 214’s effects would be, you have to wonder what Senate Republicans were thinking to even entertain such a bill. Why would they team up with the monopoly utilities to push through a bill that undermines small businesses, would destroy jobs and the great job-creating potential of rooftop solar, undercuts the free market, reduces competition and ratepayers’ freedom of choice, and creates a complicated web of regulations that would overwhelm small solar companies?
Net metering is a simple, effective policy that supports one of the country’s fastest growing industries. If we want this industry to thrive we need to maintain and build upon good policies like net metering.
Andy McDonald is director of Sustainable Systems Programs at Earth Tools Inc. in Owenton.