Senate Debating Bill that Would Undermine Young Solar Industry

Andrew McDonald

The Kentucky Senate is debating HB 227, a bill that would undermine Kentucky’s emerging solar industry, cause job layoffs, and risks shutting down small businesses around the state. Just as solar is becoming affordable for average families, this bill would put it out of reach by radically changing “net metering,” the policy that enables solar customers to connect their solar panels to the utility grid.

This bill is championed by the electric utilities and has been sold as a “compromise” that made “concessions” to the solar industry, but this is not a compromise bill. The solar industry calls for this issue to be resolved before the Public Service Commission in one administrative case, to which all utilities would participate. In this forum, all sides could present their arguments and the PSC could assess the full costs and benefits that net metering provides to the utilities and ratepayers. Based on the evidence the PSC could determine whether net metering should be changed, in a way that is fair, just, and reasonable.

Rather than taking this approach, HB 227 directs the PSC to open 23 separate rate cases (one for each utility) to consider imposing new fees on net metering customers. This would compel us to litigate this issue 23 times, at enormous additional expense for solar advocates, the PSC, taxpayers (who pay for the PSC), and ratepayers. We would then have to re-litigate the issue each time a utility returns to the PSC in a new rate case, meaning we would perpetually be defending net metering. This would place an overwhelming regulatory burden on Kentucky’s small solar businesses.

HB 227 also fails to direct the PSC to consider the measurable benefits net metering provides to the grid. Just as the utilities claimed the benefits of solar when applying for permission to build their own large solar projects, the benefits of customer-owned solar should be considered within this process.

This bill goes even further in its effort to suppress the market for rooftop-solar by placing a firm limit on the growth of the solar industry, to 1% of each utilities’ annual peak demand. Current law allows utilities to request permission to stop offering net metering when they reach this 1% threshold. HB 227 makes this a hard cap, automatically ending net metering at 1% market penetration. If the PSC is engaged to ensure net metering rates are fair, why is any market cap required?

Why would a Republican-led House and Senate pass a bill that would so clearly harm small businesses, cause layoffs, suppress competition, and blatantly favor large monopoly electric utilities? Why would Republicans support a bill that creates an inefficient, wasteful, unfair, and costly bureaucratic quagmire that in-itself would drag down a young solar industry?

Why would they undermine their constituents’ freedom to produce their own power and make investments to reduce their electric bills?

Is it to protect low-income families? No. We have shown that, even if you ignore all the benefits net metering provides to ratepayers, the cost of net metering amounts to no more than a few cents per customer each year. Once you factor in the savings solar provides to utilities, this negligible cost gets even smaller.

Is it because only rich urban people use solar, at the expense of low-income rural people? No. Net metering is commonly used by people on a limited income who want to control their electric bills. For example, People’s Self-Help Housing Inc. in Eastern Kentucky has built 20 energy efficient homes with solar net metering, which helps lower-income families afford their mortgages and pay their bills. Solar net metering offers a real economic development opportunity for rural Kentucky.

So why are Republicans driving so hard to pass this bill?

Andy McDonald works for Earth Tools Inc. in Owenton, Kentucky, where he designs and develops solar energy projects. He can be contacted at [email protected].

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