State utility regulators have upheld the value of rooftop solar and established new rates for net-metering customers with Louisville Gas and Electric and Kentucky Utilities.
Under the revised rates, LG&E and KU customers who want to put solar on their homes will be credited about 7 cents per kilowatt hour for the excess energy they put back onto the grid, according to last week’s order.
That’s less than the one-to-one retail rate LG&E and KU customers received before, but more than the 2.3 cents per kilowatt hour that the utility wanted to pay.
LG&E spokesperson Chris Whelan says that rate is the same as what they would pay for the wholesale cost to produce the power.
“We can purchase it or generate for less than three cents and now we have to, we are required by law to purchase this excess generation for 7 cents,” Whelan said.
State utility regulators, known as the Public Service Commission, made a similar decision regarding Kentucky Power in May, though in that case the net-metering rates are slightly higher.
The new rates are based on the acknowledgement that net-metering does result in deferred system costs for utilities including reducing overall power loads, said commission spokesperson Karen Wilson in a press release.
In last week’s ruling, the commission made it clear that utilities need to cost-effectively integrate rooftop solar and other sources of distributed generation into the grid. So far, LG&E hasn’t done that, according to the order.
“LG&E/KU’s arguments throughout this proceeding demonstrate that LG&E/KU are in their infancy with respect to realizing the value of [distributed energy resources], and therefore has not begun to comprehensively integrate these resources into their planning or operational processes,” the order states.
In a particularly harshly written order, regulators said LG&E made inaccurate statements, used hyperbolic examples and made arguments not grounded in reality to make their case for the lower net-metering rates.
Regulators effectively said LG&E needs to get with the times in anticipation of the rapid growth of distributed generation, battery storage and electric vehicles. The commission based their decision on trends in other states and LG&E/KU’s own forecasts, according to the order.
The planet’s foremost climate scientists say mankind needs to eliminate its use of fossil fuels as fast as possible to avoid the worst impacts of climate change. The transition to renewable sources of energy is a major component of that transition.
Whelan with LG&E said she thinks the power company put forth a solid case and it’s within the commission’s purview to disagree.
Any LG&E/KU customers who already had solar panels under 45 kilowatts on their homes or businesses maintain legacy rights under their existing terms for 25 years. That applies to about 1,700 LG&E/KU customers as of August, Whelan said.
The new rates, which took effect last week, apply to anyone who purchases solar panels or any other form of distributed generation like wind, or geothermal, until net-metering customers make up 1% of all the peak load capacity of LGE/KU.
Kentucky Solar Industries Association President Matt Partymiller says that although the new rates are slightly lower than they were before, they still allow for a return on investment.
“For anyone considering solar in Kentucky at this juncture, there is still a clear path to get solar on your home or business through net-metering and this is a great opportunity to take advantage of that,” said Partymiller, who is also the owner of his own solar installation company, Solar Energy Solutions.
The commission also established new net-metering rules for larger solar arrays and distributed generation over 45 kilowatts. Partymiller said the new rules ensure larger solar arrays have access to the grid, and that utilities credit them for the excess power those arrays put on the grid.
“Those rates are not going to usher in utility-scale solar farms in Kentucky anytime soon,” he said. “But for a larger entity, perhaps the new Ford plant they’re planning to build outside of Louisville, and likely to connect to KU, they’ll be able to put in a very large solar array.”