Solar advocates are nervously eyeing a bill moving through the Kentucky General Assembly that they say would quash the growth of the state’s solar industry.
Senate Bill 214 was introduced last week and could be heard in committee soon. It would allow utilities to change the rates they pay for electricity from certain renewable energies, like rooftop solar panels.
Current net metering customers would be grandfathered in for 25 years. But anyone who gets solar panels after July 15, 2017 would be affected. This, said Steve Ricketts of Lexington-based Solar Energy Solutions, would mean people deciding to invest in solar panels would likely have a much longer payoff period.
“I think this would halt or completely stop residential solar in the state of Kentucky, without a doubt,” he said.
Currently, under net metering, utilities buy back the energy customers produce at the retail rate.
“You get a one for one deal,” Ricketts said. “If you pay 10 cents a kilowatt hour, they’ll give you 10 cents a kilowatt hour.”
But if the bill becomes law, it would allow each of Kentucky’s more than 30 utilities to seek approval from the Public Service Commission for individual rates. The end result would likely be utilities buying electricity from rooftop solar panels at a reduced rate, then selling the electricity back to those customers at the regular retail cost.
A similar bill is moving through the Indiana Legislature — though that measure gives net metering customers until 2027 before the program is eliminated.
‘We think it’s fair’
Bill sponsor Sen. Jared Carpenter didn’t return a request for comment. But Louisville Gas & Electric spokeswoman Chris Whelan said the utility is supportive of the bill.
“It reflects what we have wanted all along and we think it’s fair,” she said.
Paying the retail rate for energy produced from solar panels leaves the utility in the hole, she argued. Rates should take the utility’s fixed costs into account.
“Customers want energy 24/7,” Whelan said. “So this helps recover the costs that everyone is paying for — those fixed costs — those costs that help deliver the energy to your home. And currently, with the net metering bill, those costs are unfairly being distributed across all our customers even those who can’t afford to have private solar on their house. This bill would allow that to help us recover those costs associated with the pipes, the wires, the infrastructure basically that it takes to get the energy to your home.”
This argument is nothing new, as utilities work to determine how to still make money even as more customers use less energy due to efficiency or investments in renewable energy. It’s similar to LG&E’s argument to justify a large increase to customers’ basic service charge, in a case that’s currently pending before the Kentucky Public Service Commission.
“This has been a big topic in the utility industry for the last two or three years,” said PSC spokesman Andrew Melnykovych.
“There’s something to be said for the philosophical approach that you ought to have a charge for being connected to the grid that fully reflects that cost,” he said. “If you’ve got a solar panel and you don’t have storage batteries, when the sun goes down, you want the grid to provide you with power. Certainly there’s a cost to the utility of maintaining that line and providing that service to you. It’s just a matter of what’s the most equitable way to do it, and I think that’s at the core of the debate.”
But solar advocates argue the benefits they provide by using renewable energy aren’t accounted for in that approach — everything from reduced air pollution to reduced demand, allowing utilities to avoid the huge expenditures associated with building a new power plant.
“It’s just ridiculous,” said Sarah Lynn Cunningham of Louisville Climate Action Network of the bill. “The electric utilities are what we call natural monopolies. And it means that it just wouldn’t make sense if we let multiple electric companies run their wires up and down the street. I’m an engineer — I get that. But the concept of a natural monopoly does not mean that you get to prevent competing technologies.”
Cunningham and Ricketts of Solar Energy Solutions predict the bill would have a depressing effect on the state’s solar energy industry.
With a less generous return on investment, Ricketts said he would expect fewer people to choose to install rooftop solar panels. This, he said could cause companies like his to shed skilled, blue-collar jobs.
“I think we come at this from a business perspective,” he said. “We are in this to help people get into solar but also to create these jobs and at a time when Kentucky is looking to position itself as a manufacturing employment base, to actually take away one of the biggest growth job sectors in the U.S. at the current time, seems to be very counter to the Republican legislature’s basic principles.”
There were just over 1,000 jobs in the solar industry in Kentucky in 2015, according to solar advocacy group The Solar Foundation.
‘It’s a no-brainer’
Rather than kill Kentucky’s burgeoning solar industry, Chris Whelan of LG&E said SB 214 will give it a boost.
“We basically support it because it promotes the growth of solar and other renewable energies in Kentucky in a fair and equitable manner,” she said.
She pointed to language that increases the size of installations net metering customers are allowed to have — from 30 kilowatts to 1000 kilowatts — a change solar advocates have been requesting for years.
But for Sarah Lynn Cunningham, that change is pointless if those net metering customers will have to sell the electricity they produce at a fraction of the retail rate.
“This would be bad enough if it were only anti-consumer,” she said. “But this is the way in which we’re going to be able to overall reduce people’s expenses, we’re going to be able to create jobs and we’re going to be able to slow and eventually stop climate change. It’s a no-brainer.”
Senate Bill 214 has been assigned to the Committee on Natural Resources and Energy, and could be heard soon.
This story has been updated.