Kentucky’s legislature has approved changes to Kentucky’s net metering law which undermines access to solar power for many Kentuckians. The new law makes it harder for people to use solar power to reduce their energy bills and threatens the viability of Kentucky’s small solar businesses. Traditional net metering enables customers to connect solar panels to the utility grid and receive credits for any excess power they supply to the utility. With this one-for-one credit, one solar kilowatt-hour produced by the customer is equal to one kilowatt-hour bought from the utility.
This simple system gives people the ability to control their long-term energy costs, reduce their energy bills, and produce their own power.
The new law directs the Kentucky Public Service Commission (PSC) to consider changes to how net metering customers are compensated for power they feed back to the utility, potentially ending the one-for-one kilowatt-hour credit. It gives utilities a chance to impose new fees on net metering customers, allowing utilities to recover “all costs necessary to serve” net metering customers, but does not specify consideration of the benefits provided by net metering. However, the PSC commissioners have written to the Legislature and stated that they would account for those benefits during this process.
The utilities lobbied hard for three years to end net metering, spending hundreds of thousands of dollars on lobbying and campaign contributions in the process. It’s still surprising that a Republican Legislature and Gov. Matt Bevin passed this bill because it is contrary to so many conservative principles.
Traditional net metering provides a simple set of rules that empowers people to make investments to control their energy costs. It gives people the freedom to produce their own energy and benefit from their investments. The new law uses regulations and bureaucracy to undermine customer ownership of solar power. It replaces a simple, consistent system with a complicated bureaucratic process that will cost solar businesses, taxpayers, and ratepayers hundreds of thousands of dollars to litigate before the PSC. It replaces a transparent, predictable system with uncertainty and instability.
The new law allows monopoly electric utilities to smother competition from small solar businesses, while the utilities build their own large solar facilities and take control of the solar market.
Net metering could have been the seed for a new economic sector in Kentucky. The U.S. solar industry has grown exponentially in recent years, with states like North Carolina adding tens of thousands of jobs to serve the demand for solar power. U.S. employment in solar now exceeds 250,000. Kentucky’s solar industry is still very small, with net metering accounting for less than 0.1% of total electricity production in Kentucky. A few smart policy changes to our previous net metering law could have triggered rapid growth in Kentucky’s solar industry and brought its benefits to counties throughout the state. Instead, the Legislature chose to end net metering and stifle the growth of rooftop solar.
Utilities have argued that net metering customers aren’t paying their fair share for use of the electric grid and shift costs onto other ratepayers. However, they have provided no evidence of this and the facts do not support this claim. The Kentucky Resources Council has analyzed utility data provided to the U.S. Department of Energy. Their analysis found that the potential cost-shift onto other ratepayers by net metering is less than 1 cent per month, and that’s if you disregard all the benefits net metering provides to utilities and other ratepayers. These benefits have been well-documented in numerous studies across the U.S.
The PSC is accepting public comments on this issue until October 15th. For more information: kftc.org/PSC-comments.
Andy McDonald is a member of the Kentucky Solar Energy Society and lives in Frankfort.