Utility companies use little-known rule which may dim state's solar industry

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wwltv.com

Posted on August 6, 2013 at 10:26 PM

Updated Wednesday, Oct 30 at 12:12 PM

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

FOLSOM -- Three Louisiana utility companies have invoked a little-known rule so they can stop offering net-metering, a key benefit for solar customers across the state.

The cooperatives – Washington-St. Tammany Electric, Northeast Louisiana Power and Texas-based Panola-Harrison Electric – are the first utilities to say they now get more than 0.5 percent of their peak load power from customers’ rooftop solar systems.

Under a 2011 ruling by the Public Service Commission, when any public utility in the state reaches that threshold, they’ll be able to stop installing new meters that give self-producing electric customers credit for the power they supply to the grid. Entergy New Orleans is excluded because it is regulated by the New Orleans City Council, not the Public Service Commission.

Solar companies, advocates and prospective customers say the rule will harm efforts to promote solar as an alternative energy source, through lucrative state and federal tax credits. If the rule isn’t changed, they warn, it could put a damper on Louisiana’s nascent solar industry.

“There are incentives and this is what's been told to us by our leaders in Congress and our leaders at the state level: 'Take advantage of these tax credits, use the solar, use renewable resources,'” said Carl Perilloux, a retired police officer who is trying to install panels at his home in Folsom.

“And now suddenly an entity, the Public Service Commission, with (Washington-St. Tammany), is saying, 'Uh, uh. You can't do it anymore. You're stuck.' And I've got $28,000 out here, and the bottom line is I'm not a happy camper.”

Some solar customers in limbo

Perilloux and others who signed up for solar panels in the last two months find themselves in a strange limbo. Until the PSC’s June meeting, there was no mechanism in place to notify the public that a utility was approaching the net-metering quota, and these new customers and their solar installers say they were caught completely off-guard.

Washington-St. Tammany is the only utility in the New Orleans area that’s hit the threshold, or is even close to it, said PSC spokesman Colby Cook. But until the commission in June began requiring utilities to notify it when they reach 75 percent of the threshold, utilities were under no obligation to say they were getting close to eliminating net-metering.

Washington-St. Tammany CEO Charles Hill said the rule allows him to hold all new net-metering applications in abeyance while the PSC works on verifying that WST has indeed reached the cap. But solar advocates said the utility is putting its thumb on the scale to reach that verdict.

For instance, Hill said WST hit the cap because its peak load in April was 154 megawatts and its “net-metered generation capacity” is 1.039 megawatts, or 0.67 percent. But critics of the cap complain that the maximum capacity of what all solar customers can produce is not the same as what they actually do produce at a given moment.

Tommy Livaudais of Solar Power Today sold Perilloux his system, but he hasn't installed the panels yet. Livaudais said he’d give Perilloux the option of breaking his contract because WST stopped offering net-metering after Perilloux had paid Solar Power Today.

It’s probably too late, however, for another one of Livaudais’ customers, who didn't want to give her name. She already had most of her panels installed when WST announced the end of net-metering.

“She feels she was not delivered the product she agreed to. She agreed to buy a system that came with a net-metering and now … we have it installed and the client is not happy at all,” Livaudais said.

After WWL-TV raised the issue of people who had already purchased solar panels when WST announced the change, Eric Skrmetta, the elected public service commissioner for the North Shore and Jefferson Parish, said the commission would step in to help those consumers.

“At our next meeting on Aug. 21, we will have a discussion and potentially vote to allow people within certain timeframes to be grandfathered in,” Skrmetta said. “We'll have to look at that.”

Without net-metering, solar customers often lose out

But the issue goes well beyond the handful of people caught in this gap. It actually affects the whole future of the solar industry in Louisiana – and across the nation. A recent New York Times story showed how utilities in most of the 43 states that offer solar incentives are pushing back against net metering, saying it punishes customers who rely on traditional power.

Solar tax credits that cover 80 percent of a typical system’s cost remain in effect through 2017, so the number of net-metered households in the state should continue to grow rapidly. Other utilities are likely to hit the commission’s cap before the subsidies expire. And that will affect whether the solar industry will be able to continue to sell and lease systems without net-metering.

Because solar power is only collected during the day -- and varies wildly even on sunny days -- solar customers cannot rely on their panels to provide all of their electricity. And because battery storage devices are expensive and limited in scope, affordable household solar systems must be hooked into the traditional power grid to function.

With net meters, customers get credit for all the extra power they generate during the day. But when net-metering is shut off, customers like Perilloux will be forced to simply donate any excess power they produce during the day to the grid.

“They’ll still supplement energy to their house by solar, so their bill will be reduced, but they’re going to lose the benefit of generating credits during the day that they can use at night when the sun is gone,” Livaudais said.

Solar customers a drain on the system?

On the other hand, utilities and their supporters on the Public Service Commission say the cap on net-metering is necessary because of the costs of running the grid and power plants and of accepting the extra power from solar customers. Collecting that electricity and sending that same amount of power back to them at no additional charge raises the price for everyone else, they say.

“Consumers who are using solar systems, they receive retail,” Skrmetta said. “The problem is the cost difference of paying for the transmission system, the infrastructure, the debt service on all the power plants. That is now borne more completely by people who do not have solar systems.”

But solar advocates such as Forest Bradley-Wright of the Alliance for Affordable Energy say the idea that solar customers are a drain on the system and add to other customers’ costs is a fallacy. And he says the Louisiana Public Service Commission is making that assumption without properly studying it.

“You've got across the country a few states that have done this analysis and you find that there's either little to no cost whatsoever that is being incurred because of these solar systems, or in fact that those solar systems are providing more benefit to the grid and customers than cost,” Bradley-Wright said.

“Get me right; I’m not opposed to solar”

The PSC did, however, take comments from various sides of the issue, and released a report in April that looked at the costs and benefits of the approximately 1,400 net-meters in Louisiana connected to utilities overseen by the PSC. That does not include Entergy-New Orleans or the 18 municipal electric companies under the Louisiana Energy and Power Authority, including Alexandria and Lafayette. The PSC staff determined that the costs outweigh the benefits.

“After considering all of the comments of the parties, the Staff still believes that it is inappropriate to require electric utilities to purchase wholesale power from net metering customers at the utility’s retail tariff rate,” the report stated.

“The 99.5 that’s on regular electricity is paying for backup power for the solar people,” said Commissioner Clyde Holloway, who represents central and southwestern Louisiana. “It doesn’t take a brain to figure that out.”

Holloway -- who opposes alternative energy subsidies like the solar tax credits – offered at the commission’s June meeting to change the net-metering rule to eliminate the 0.5 percent cap, but only if all solar customers would be credited for their solar production at a reduced rate.

He suggested that instead of crediting solar customers at the full retail rate of about 8 cents per kilowatt hour, they would get the wholesale rate of about 4 cents, plus 1 penny, or about 5 cents.

“Get me right; I’m not opposed to solar,” he said. “I’m opposed to people that are on solar benefiting from the other person, and that happens. If they have a battery and they're going to collect their excess power and don’t need the grid -- they don’t need backup power -- I’m all for ‘em. They’re a little independent business to me.”

But Holloway’s compromise plan failed on a 3-2 vote. Skrmetta supported it, but New Orleans area commissioner Lambert Boissiere III, along with Foster Campbell and Scott Angelle, voted to keep the current rules in place.

Bradley-Wright spoke against Holloway’s plan, even though the rule in place now cuts off all net-metering benefits for future solar customers in a few jurisdictions. Better that than a rule that treats all solar customers, including those already getting net-metering, as wholesale power suppliers, he said.

“The people who install solar systems under the state of Louisiana's tax credits, which have been a real inspiration for many people to go solar, or under the context of the net-metering rules, are installing at a size that matches their own energy use needs, so they are not power sellers,” he said.

Holloway said he would consider offering his compromise plan again in the future.

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