Lenny Fite's representative, R-Benton, filed bills to pay for fees that he said were passed on to other electricity consumers by clean meter customers. Solar advocates oppose the move, which they say is to the benefit of existing utilities and to the detriment of their business model.
Faith House Bill 1370, or the Prevention of Cost Shifting Act of 2023, would amend existing laws to "end unfair charge transfers and avoid grid congestion and energy disasters that have occurred in other states." It was referred to the House Committee on Insurance and Commerce.
While traditional energy companies are positive about the bill, solar companies fear it could blow up their industry. The HB1370 legislative dispute is likely to be one of the most controversial debates in the 94th Arkansas General Assembly.
Shifting costs in every industry is the concern that a group of payers will absorb the costs of a group that does not pay its fair share. In this case, the utility claims that companies and individuals using solar panels are being charged additional electricity costs that are too high to cover utility costs.
Rob Redel, director of corporate communications for the Arkansas Electric Cooperative, said his company believes end-users of solar power should get wholesale prices for supplying electricity to the grid, rather than the higher retail prices that are currently occurring.
“Under Arkansas' current net meter system, the utility pays net meter customers a retail rate (commonly referred to as 1:1) for electricity generation that feeds into the grid. You only pay for energy at the wholesale rate, just like any other form of production.” By paying an increased retail compensation rate, the costs are passed on to rate payers who do not use the net meter,” said Riddell.
In addition, the electricity tariff for end customers includes not only the cost of energy consumed, but also the cost of constructing, operating and maintaining the entire electricity system. This includes the power generation, transmission lines and distribution lines needed for lighting. While the cost of running the electricity system benefits all tariff payers, someone using a net meter under the current unfair 1:1 scheme avoids paying their fair share of the costs associated with running the network.
Energy companies are not in favor of shifting costs, said Lauren Waldrip, executive director of the Arkansas Advanced Energy Association, which represents a large number of solar companies.
"Loss of revenue is not a change in costs, but that's how the monopoly dictates," he said.
Rep. Fite said Arkansas' current 1:1 net metering policy supports consumers who can afford solar investments while shifting costs to lower-income Arkansas. He said many other renewable-friendly countries have tightened alternative energy policies "to protect their citizens from policies like Arkansas' 1:1 clean meter policy that are unfair."
Fite noted that Bill 464 of 2019 allows the Arkansas Public Service Commission to "continue the policy of consumer implicit taxation at a net measure of 1:1 through the end of 2022." They will be exempt from the higher tariffs by HB1370, the Fee Change Prevention Act," Fite added.
Waldrib said the impact on large energy balancing projects during peak power demand will indirectly affect customers who stay with smaller grids. It stated that several large commercial network projects that were built but not completed last year before the expiration of the conservation rules would be covered by the bill.
"This law will essentially eliminate all competition in the energy industry and ultimately increase the cost of the Arkansas tariff payer," Waldrip said. The people of Arkan suffered greatly during the period of high electricity prices. Forcing them to take the price of a utility monopoly and denying them the freedom to generate their own electricity is unfair. The point isn't that this law will hurt homeowners, small businesses, farmers, churches, school districts, counties, and cities in Arkansas that can't save money by generating solar power.
Fite says that in 2021, one utility company reported transferring around $8 million from net metering customers to other consumers. He noted that electricity bills are expected to reach more than $140 million by 2040 when the CSB retention policy expires.
2021 figures for Southwestern Electric Power Co. and OG&E $337,662 and $39,251, respectively. By 2040, the cost changes for accompaniment are expected to be $6.07 million and $706,518, respectively. Utilities total $16.17 million in 2021 and $290.78 million in 2040. Fite notes that spending trend figures for 2022 won't be available until March.
Daymark Energy Consultants, a Massachusetts-based management consultancy hired by the Arkansas Public Service Commission (PSC) to help investigate possible accumulated net metering costs, received inconclusive results during testimony in January, in part due to missing data from three power companies to provide requested price information.
The committee recommended issuing "more general guidance" to utilities on how to transfer fees.
The HB1370 “changes the rules for anyone who has ever invested in solar power,” said Douglas Hutchings, CEO of Little Rock-based Delta Solar. The net analogy, if you don't get net usage, you don't get charged for it. The HB1370 attempts to implement all of these drivers and additional costs independently.”
"The impact of this will be different for each customer based on preference, use and usability, but can lead to a 30% drop in sales," he said. "Most importantly, all schools, counties and cities that have agreed to buy electricity from the investor's solar panels are expected to buy electricity at an agreed price, but only get a fraction of the cost. There is a risk that this agreement will go negative, and I think it will cause a lot of trouble for investors, the institutions that fund it, and most importantly, the organizations that are empowered.
Faith says the HB1370 will not affect existing net metering customers. He explained that the bill would not affect customers who submitted a unified interconnection contract for their facilities before December 31, 2022.
"The intent of the bill is that the existing provisions for this client will remain the same into 2040," he said. “The HB1370 is not intended to slow solar growth. It is intended to circumvent the current silent tax on Arkansas taxpayers. Arkansas residents still have the right to self-regulate. We draw the line where costs are passed on to non-solar customers.” »
When asked about the costs that go from solar customers to off-grid customers, Fite explained that these are costs that power companies incur to maintain their grid. As network costs increase, utilities will have to increase rates to meet those costs, said Fite, adding that "at this point change is taking place."
The Arkansas Advanced Energy Association has brought together a broad coalition of opponents of Fite Scale. Opponents include the Poultry Federation, Riceland Foods, ASU System, OZK Bank, Baptist Health, Arkansas Livestock Bureau, and Arkansas University System.
In addition to these important business and business interests, the AAEA coalition includes farmers, cities, counties, school districts, water utilities, and churches.
“Our company is investing in solar because the state's Solar Access Act makes investing in this clean, alternative energy source financially feasible,” said Jeff Weatherly, CFO of Lexicon Inc., who works for the Port of Little Rock Authority in the US. Northeast. Arkansas in the Steel Industry is part of the AAEA Alliance. "We don't agree with the argument that we are being 'subsidized' by taxpayers who haven't made a decision to invest in solar. We've said from the start that we don't want to be subsidized by taxpayers who haven't invested in solar, particularly our employees."
“We are pleased that the Arkansas General Assembly is considering clean metering, which is an issue of interest to our customers. Current law has resulted in a net metering policy that requires our customers who cannot afford or do not have a personal metering system to pay a premium to support customers who have a personal net metering system and do not pay their fair share of our electricity costs. system. said a spokesman for Entergy Talk Business & Politics.
Editor's note: Robbie Brock contributed to this article.
