Fed challenge to limit state control of solar proves unpopular
In Rappahannock, the solar marketplace has grown considerably
More than 110 homeowners in the county have installed residential solar arrays, resulting in a collective investment of more than $3.5 million since 2010.
A controversial petition to the Federal Energy Regulatory Commission (FERC) aiming to revoke state control over solar programs met with widespread opposition last week. Among its critics was the Virginia Attorney General’s Office, which called it a “strawman jurisdictional question” that would “impermissibly ‘intrude’ on state regulatory authority.”
The petition, put forth by an organization called the New England Ratepayers Association (NERA), challenges net metering, a billing arrangement requiring utility companies to compensate household solar generators for the electricity they produce for the grid.
When a solar customer produces electricity in excess of her usage, her utility company can distribute that surplus to nearby homes. The utility company in turn must compensate the solar customer with credits she can apply towards purchasing power from the utility later.
“It’s just a billing arrangement similar to when you had rollover for minutes on cell phones, if you remember that,” says Glen Brand, vice president of Policy and Advocacy for Solar United Neighbors. But without that incentive, Brand says solar could become less affordable and the solar job sector would suffer.
Virginia is one of 41 states to have a net metering policy in place. In March, Gov. Ralph Northam signed the Virginia Clean Economy Act, pledging to create 30,000 new solar jobs by 2030 and bolster economic access to rooftop arrays. Virginia’s net metering policy creates a major incentive for people to install panels because it helps homeowners pay off their initial investment.
In Rappahannock County, the solar marketplace has grown considerably over the past decade. A Rappahannock News study of public building permits revealed that more than 110 homeowners in the county have installed residential solar arrays, resulting in a collective investment of more than $3.5 million since 2010.
Net metering has proved positive for consumers, but NERA’s petition argues that the arrangement is unduly expensive for utility companies and therefore “shifts costs to the most vulnerable customers” on the grid. So, NERA says, since utility companies are required to purchase solar power for resale, they should compensate solar generators not at a retail rate (as they do now) but at a much lower wholesale rate.
“Basically, NERA is saying that rooftop solar homeowners . . . should be considered, in effect, mini power plants and regulated as such,” Brand says.
The distinction between retail and wholesale may seem hairsplitting, but it makes all the difference when it comes to two things: incentives and jurisdiction. If utilities pay only a wholesale rate for solar, homeowners get a much slower return on investment. And while states control retail sales, the federal government controls wholesale sales.
Brand says that if FERC were to side with NERA, “it could really hurt states’ ability to enact their own energy goals.”
Experts are unsure what all the repercussions of this petition might be, but many imagine that it would saddle solar homeowners with new administrative challenges, tax increases and fees associated with installing new meters. As a result of this disincentive, thousands of solar jobs could be at risk.
The solar industry is already facing serious economic vulnerability. According to a recent report released by the Solar Energy Industries Association (SEIA), the industry has hemorrhaged 72,000 jobs nationwide since the beginning of the COVID outbreak. What’s more, existing federal solar tax credits are slated to taper off in the next few years.
“Nobody in China or India can install your solar on your roof,” Brand says. “These are local jobs . . . Anything that would hurt our economy at any time is bad, but right now it’s [especially] unconscionable.”
What about NERA’s claim that net metering forces the most vulnerable utility customers to pick up the tab for wealthier users with solar arrays? According to the Brookings Institution, “the economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers . . . . [N]et metering is in most cases a net benefit — for the utility and for non-solar ratepayers.”
Brand says the rate that utilities pay their solar customers is well below actual value when taking into account that utilities are saving on transmission costs and peak energy prices. “This charge of net metering somehow being a problem is really only a problem for utilities insofar as they want to discourage people producing their own power,” Brand says.
Several states and dozens of lawmakers have urged FERC to reject NERA’s petition, pointing out that the organization may have dubious motives. In a letter expressing their opposition, 24 Democratic congressional lawmakers write: “It appears that NERA operates more like a trade association, representing the interests of a select number of industry or utility players, rather than a grassroots ratepayer group that represent[s] the public interest.”
Indeed, while NERA ostensibly advocates on behalf of ratepayers, the organization is secretive about its members and has declined multiple requests to identify its donors. Its allies in this case include the Heartland Institute, a group which openly promotes climate-change skepticism, and the Institute for Energy Research, a 501(c)3 nonprofit organization with ties to the Enron Corporation and a history of attacking renewable energy.
Groups that filed comments in opposition to NERA include the National Rural Electric Cooperative Association, the NAACP, the Sierra Club, the Southern Environmental Law Center and Conservatives for Responsible Stewardship.
Virginia-based Dominion Energy also filed a motion to intervene in the case, but like many utilities its position is unclear even though they likely have the most to gain from NERA’s success. Ari Peskoe, director of the Electricity Law Initiative at the Harvard Law School, recently told reporters: “The wild card here will be the number of utilities that have already declared their intent to file [interventions] . . . I don't know which side of this they're going to come down on.”
FERC has not yet scheduled a hearing date.