Resource Page on House Bill 227 addressing Net Metering

KCC Statement on House Bill 227 being recommitted to the Natural Resources Committee as the Legislative Session was concluded:

We are very pleased with the outcome regarding House Bill 227, but at the same time, we want to continue to raise the issue of the tremendous lobbying expense incurred over two sessions now, to move legislation which only serves to protect the monopoly interests of the utilities.  It is a waste of time and money at ratepayer expense.
There was a concerted effort from solar installers, advocacy groups, and homeowners who were defending their right to choose rooftop solar for their homes, all working to defeat this utility-drafted bill. 
The citizens and advocacy groups we have worked with have been campaigning nonstop, since the bill was originally filed on January 22nd,  to protect their right to solar choice. We are glad that the Senate made the right decision in recommitting the bill, and we encourage lawmakers to now begin an actual dialogue with solar installers and utilities on real solutions that benefit the customer and protect solar choice. Solar is here to stay!
-Lane Boldman, KCC Executive Director
(Our thanks to our many partners and allies)

 

 

Fact Sheets, postcards and public-resource handouts:


  • LEGISLATIVE UPDATE: Today is last day of the legislative session…opposition is out in force…TODAY is the last day to call the FULL Senate AND House

    CALLS TODAY (Saturday April 14) ESSENTIAL…Utilities have spent a record in lobbying funds at customer expense to ensure this bill clears the legislature this session (See memo here) so every email and call matters.

    ACT:
    1. Contact Senate Leadership and the full Senate as well as the full House
    • Ask them to vote NO on this bill, and tell this this bill is NOT a REAL compromise that grows the independent solar industry and protects residential solar owners. The Senate Committee substitute (1) that passed out of the Senate Natural Resources committee is no compromise.
    • EMAIL both the Senate and House   link here 
    • Phone Message line 1-800-372-7181. (phone lines open from 7:30AM-9PM 
    • If the bill is passed by the Senate, the bill will need to be concurred with the House version. However the language of the bill could ALSO be amended into other bills still awaiting completion! 
    • ANYTHING CAN HAPPEN TODAY so every call and email matters!
ACT:
1. Contact Senate Leadership and the full Senate as well as the full House
  • Ask them to vote NO on this bill, and tell this this bill is NOT a REAL compromise that grows the independent solar industry and protects residential solar owners. The Senate Committee substitute (1) that passed out of the Senate Natural Resources committee is no compromise.
  • EMAIL both the Senate and House over the veto period  link here 
  • Phone Message line 1-800-372-7181. (phone lines only open from 7:30AM-9PM weekdays and we expect this bill to be heard on April 13 or 14)
  • If the bill is passed by the Senate, the bill will need to be concurred with the House version.  
  • Finally, THANK the following Senators on the Senate Natural Resources & Energy Committee for voting against the latest Committee Substitute: Jones, Turner, Smith.

Concerns regarding Latest Senate Committee Substitute (link here)

The latest proposed senate committee substitute retains many of the provisions of the House-passed version of HB 227 that are of concern. There is nothing in this bill that is for the benefit of solar rooftop customers, and it does not represent a fair compromise on the key issues. Among the problems with the proposed substitute are these:

  • The bill changes the definition of “net metering” by ending 1:1 measurement of energy generated and energy consumed, introducing idea of the credit being “compensation.” Any reference to monetization of the credit, such as “dollar-denominated” credit and “compensation” risks the customer being considered as a “wholesale” supplier of power, implicating FERC jurisdiction and requiring that the electricity generated be valued at wholesale rates.

Solution: eliminate all references to monetization of credits for energy generated.

  • The soft 1% in current law becomes a hard 1% cap.

Solution: restore soft cap. If “fairness” issue is being addressed (and it isn’t being addressed properly) why artificially cap?

  • Section 2(3) provides that the Commission shall set the rate to be credited for all electricity fed into the grid, and that this rate will be set based on a rate case for that utility. This language provides that the Commission is to set the rate for all electricity fed into the grid, not merely the excess of that produced over that consumed. No standard is provided for what that rate should be or what should be considered in setting the rate, but it is certain that the utilities will argue that the rate should be less than a 1:1 crediting, which is the current law. No consideration is given to the benefits of that fed-in solar.

Solution: restore 1:1 crediting of what is produced and what is consumed.

  • Section 2(5) provides for a second rate-setting process with respect to net metering customers, in which the utility is “entitled” to recover “all” costs of serving net metering customers through rates (rather than a meter charge). No consideration is given to the benefits of solar when determining the rate.

The combination of Section 2(3) and (5) means that the Commission would, in a rate case, set two rates – first, the rate of “compensation” for all electricity fed into the grid (not just the excess), for which there is no benchmark in the bill, and second, the rate to be charged for electricity consumed by the net metering customer, which would be based on assuring recovery of all costs associated with service.

No utility is ever guaranteed full cost recovery from any customer, other than, under this bill, net metering customers. The bill language speaks of an “entitlement” rather than an opportunity to propose, for Commission consideration, a rate structure to recover costs of service with a reasonable return on investment.

  • The “rolling” grandfather provision is eliminated, and an ambiguity is introduced into the grandfathering for existing customers that weakens the assurance that those customers will in fact be grandfathered. The use of the phrase “all of which may change from time to time in accordance with the ratemaking processes set out in this chapter” to modify the provision that states that the “energy rates, rate structure, and monthly charges” shall be identical, creates an ambiguity that does not exist in current law as to whether those charges will remain identical in the future.

Solution: strike the phrase, since under current law no one has argued that rates for residential customers can’t be changed.

Solar customers have asked for a fair rate-setting process that considers costs of service and the value that rooftop solar provides for the grid and other customers. This bill fails to provide that process, and is no compromise.

 


 

Solar Jobs at Risk from HB 227, a bill that will fundamentally change net metering laws
Last February Kentuckians defeated an attempt by utilities to end net metering and undermine Kentucky’s emerging solar industry. Now the utilities are back again with HB 227. Below are articles and resources on this anti-net metering legislation. The bill passed the House on a vote of 49-45, and passed the Senate Natural Resources committee on a vote of 6-3.
The version which passed the House was House Committee Substitute 2.
HCS2 – Retain original provisions; require the Public Service Commission to set the compensation rate for eligible customer-generators according the ratemaking processes in KRS Chapter 278; specify that retail electric suppliers are entitled to implement rates to recover all costs from eligible customer-generators for providing service to them, including fixed and demand-based costs, and regardless of rates for non-participating customers; allow lessees, successors, or assignees of eligible customer-generators, as well as subsequent owners of premises owned by eligible customer generators taking net metering service on December 31, 2018, to maintain the same net metering rates as the eligible customer generator until December 31, 2043, or until they stop taking net metering service; EFFECTIVE January 1, 2019.
Read the House version of  (HB 227- HCS2) here: http://www.lrc.ky.gov/recorddocuments/bill/18RS/HB227/HCS2.pdf

HB 227 directs the PSC to allow utilities to recover all costs of service from net metering customers and would enable utilities to do that through their rate cases. This means potentially 23 rate cases recurring at regular intervals, an enormous burden for solar advocates to cope with. We have advocated for one administrative case before the PSC to resolve the issue in an equitable manner, based on the evidence, including consideration of the costs and benefits provided by solar. HB227-HCS2 does not do this.

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More information:

CRITICAL PROBLEMS WITH HB 227/HCS2 (House version) –
the Anti-Solar Net Metering Bill 

HB 227/HCS2 was NOT a compromise negotiated in good faith with the solar industry. It DOES NOT address our fundamental concerns and would radically undermine Kentucky’s young solar industry.

  1. UNFAIRNESS – HB 227 is UNFAIR to solar businesses and Kentuckians who support using solar energy. It is a one-sided bill that favors only utilities – allowing them to recover costs without considering the benefits of solar to the utility or ratepayers.
  2. REGULATORY BURDENS – HB 227 would burden the solar industry and PSC with 23 recurring rate cases and will result in hundreds of thousands of dollars in recurring PSC litigation costs.
  3. ENSURING UNCERTAINTY FOR CUSTOMER INVESTMENTS – This bill allows frequent, recurring rate cases that could change the terms of net metering for existing and future customers and offers no language to protect customer investments. If customers don’t know how their net metering rate might change in the future, it becomes impossible to predict the value of an investment. This would ruin the market for rooftop solar.
  4. CLAMPING DOWN ON MARKETS – The last-minute changes to HB 227 made it even worse by imposing a hard cap of 1% on the solar market for every utility. This restriction is the exact opposite of the solar industry’s goal (and the desire of many Kentuckians), which is to expand the solar market.
  5. TILTING THE PLAYING FIELD FURTHER IN FAVOR OF UTILITIES – The solar industry seeks a level playing field to compete with utilities via increasing the cap on system size above 30 KW, and access to leases, PPA’s, and other tools. This bill does not address any of these concerns. It only serves the utilities’ interests. 
  6. RADICALLY DE-VALUING SOLAR – HB 227 radically changes how net metering operates. Rather than crediting customers for their net energy generation on a monthly basis, HB 227 would enable utilities to use “instantaneous” netting, de-valuing all solar energy supplied to the grid. This further de-values a customer’s solar investment.
  7. RISKS TO EXISTING NET METERING CUSTOMERS – HB227 does not clearly grandfather existing customers, who installed their solar arrays assuming they would receive a retail one-to-one credit for all electricity fed into the grid.
  8. A FALSE PRETENSE OF COMPROMISE – HB 227 creates the false pretense of meeting the solar industry’s concerns by directing this issue to the PSC, but fails to create a fair and reasonable process to resolve the issue. Establishing an unclear, unfair, costly, and burdensome process that favors only the utilities, while immediately disrupting the solar market and restricting its long-term growth is not the result of compromise.

WE SUPPORT ONE ADMINISTRATIVE CASE BEFORE THE PSC to resolve the issue of how to value customer-owned solar energy, considering costs and benefits, resulting in a fair and equitable solution for all parties. All utilities would be party to this one case, which should be resolved before any changes are made to net metering.

Prepared by Andy McDonald, Earth Tools Inc., member – Kentucky Solar Industries Association. March 23, 2018 

 

Published Articles on HB227 Supporting Homegrown Solar: