State Bulletin offers a biweekly roundup of the most significant and novel energy policy updates.
In this edition, we look at net metering, renewable portfolio standards, energy storage, third-party ownership, interconnection and community solar. See our the last edition here.
New York
Six New York state electric utilities and three of the largest solar companies in the country have jointly proposed a transition from the current compensation model for solar net metering while continuing to support solar development in the state. The coalition, named the “Solar Progress Partnership,” submitted the filing on April 18 as part of New York’s value of distributed energy resources (DER) proceeding (15-E-0751) under the Reforming the Energy Vision (REV) initiative.
The filing addresses compensation for both community and rooftop solar projects. It proposes that solar developers begin to pay utilities to connect community solar and remote solar projects in areas that are less favorable to the grid, while preserving retail-rate net metering for all distributed solar customers. This setup gives solar companies the long-term stability they need to attract customers and financing. At the same time, payments solar companies make to connect larger solar projects would give utilities the financial resources they need to maintain a reliable electrical system and help to target solar resources where they’re needed.
Advanced Energy Economy Institute (AEEI), a key facilitator of the agreement, offered the following summary of the proposal: “On community solar projects, which have been filling up interconnection queues in New York at a rapid pace, customers would continue to get full retail net-metering credits, but a portion of those credits would start to be paid by the solar provider, rather than the utility (and its non-solar customers). The solar-utilities filing suggests a similar approach could be taken to remote net metering, but leaves that up to the Commission.
For behind-the-meter solar (i.e., on-site, rooftop) customers, full retail net metering would remain in place until Jan. 1, 2020, unless action in a specific utility service area is needed sooner, under criteria to be set by the Commission. After that, net-metering credits would begin to ramp down for new solar installation owners, with credits locked in for 15-25 years at each step of the ramp-down, until the REV target of fair compensation for solar power sent to the grid (i.e., the LMP+D+E formula) is reached.”
LMP+D+E is the formula being used to assign value to distributed energy resources in New York. It refers to the wholesale power system (LMP), the electric distribution system (D), and society at large (E), which is generally the environmental benefit.
The Solar Progress Partnership includes Central Hudson Gas & Electric Corp., Consolidated Edison Company of New York, Inc., New York State Electric & Gas Corp., Niagara Mohawk Power Corp, National Grid, Orange and Rockland Utilities, Inc., and Rochester Gas and Electric; and the solar companies SolarCity, Inc., SunEdison, Inc., and SunPower Corp. The consensus achieved by the Partnership is being heralded as an important milestone in nationwide discussions on DER valuation.
“It is exciting to have true collaboration between the utilities and the solar companies, which has been tried many times before with varying degrees of success,” said Lisa Frantzis, senior vice president of strategy and corporate development at AEEI, in an interview. “I think this is an example where we really succeeded.”
However, Frantzis added that discussions are only just beginning; several other stakeholders have submitted filings in the DER proceeding that must also be considered. All filings will be reviewed by the New York Public Service Commission, which has scheduled a workshop to discuss the proposals on May 10 and established a deadline of June 10 for the submission of public comments.
Massachusetts
Massachusetts Governor Charlie Baker signed a bill last week that will raise the state’s net-metering cap by 3 percent, ending months of uncertainty and stagnation for the local solar industry. The bill also reduces the value of net-metering credits by about 40 percent, lowering compensation from 17 cents to 21 cents per kilowatt-hour to 11 cents to 12 cents per kilowatt-hour. In addition, it allows utilities to propose a minimum bill charge for solar customers to help cover their fixed costs.
The changes only apply to commercial and community solar projects. Residential solar projects are not affected by the net-metering cap.
Most stakeholders view the bill as a balanced compromise; however, the work is not over. The solar industry anticipates the higher program cap will only last for a few months, at which point the issue will need to be addressed again. Furthermore, the Massachusetts Department of Energy Resources is just beginning to craft a new version of the Solar Renewable Energy Credit (SREC) program, which serves as a major solar incentive in the state but is now almost fully subscribed.
Shaun Chapman, vice president of policy and electricity markets at SolarCity, said agreement on distributed solar compensation in New York could have positive spillover effects in Massachusetts. "We’re encouraged by New York, and we think it could happen in other states," he said. "Massachusetts will be taking up this issue very quickly, and we’d love to see the same result from them."
Arizona
Solar advocates have launched a ballot initiative in Arizona that would preserve net metering in the state. The industry-backed political action committee called Yes on AZ Solar filed paperwork on April 15. The Arizona Republic reports that Kris Mayes, a former chair of the Arizona Corporation Commission and director of an energy council at Arizona State University’s Global Institute of Sustainability, will take leave from the university to run the campaign.
The initiative, named the Arizona Solar Energy Freedom Act, will need 225,963 signatures by early July to get on the November election ballot.
Meanwhile, Arizona Senator Debbie Lesko has announced she’s planning to introduce a competing ballot measure. "It is totally unfair to lock in stone in our Arizona Constitution that a homeowner who happens to be able to afford to have rooftop solar will get this retail rate on net metering," Lesko told The Arizona Republic. "I really believe the initiative that was filed last Friday will increase the utility rates of most of the vast majority of ratepayers that do not have solar."
Ohio
In May 2014, Ohio lawmakers passed Senate Bill 310, which imposed a two-year “freeze” on the state’s renewable energy and energy efficiency mandates. The standards require utilities to reduce customers' power consumption by 22 percent and get 25 percent of their power from renewable sources by 2025. With the program on hold, the renewable mandate stands at 2.5 percent.
The freeze allowed the appointed Energy Mandates Study Committee to evaluate the costs and benefits of the clean energy program. In a report released last fall, the committee recommended the policy freeze be extended indefinitely.
The pause has had a chilling effect on the renewable energy industry. A 2015 report from Policy Matters Ohio found that investments in low-income weatherization programs in Ohio dropped nearly a quarter after the standards were suspended. Solar companies have had to lay off staff and move to other states.
A broad group of stakeholders, including businesses, environmental groups, faith leaders and consumer advocates are now calling on Ohio lawmakers to lift the freeze on the state’s renewable energy and energy efficiency targets. As the legislature reconvenes, a group of advanced energy companies operating in Ohio sent a letter to legislators calling on them to support renewed investment in advanced energy.
“The legislature has a clear choice. It can create a business-friendly environment to attract investment in advanced energy or Ohio can keep the door shut on billions of dollars of benefits,” said Ted Ford, president of Ohio Advanced Energy Economy. “By embracing advanced energy, Ohio will send a signal to the rest of the country and the world that it is laying the foundation for long-term growth and competitiveness.”
To the surprise of many, Republican Governor John Kasich said last fall that a continued freeze of Ohio’s energy standards is “unacceptable.” However, a proposal is being circulated by state Sen. Bill Seitz (R-Cincinnati) that would extend the freeze by another three years. Seitz told the Associated Press the delay is needed to allow time for the fate of the Clean Power Plan to be sorted out.
“Even if you believe everything in Mr. Ford’s letter, it would be the height of folly to resume imposition of ever-increasing state energy mandates at a time when it is uncertain how they will or will not match up against the looming federal energy mandates now being litigated in court,” Seitz said. “Subjecting Ohio to conflicting mandates would be inefficient and costly.”
If legislators fail to act by the end of the year, SB 310 calls for the law to resume as originally intended.
New Jersey
New Jersey legislators are currently considering legislation that would require utilities to source 80 percent of their electricity from renewable energy by 2050. The bill (S1707) has already passed in the Senate and how heads to the General Assembly.
Democrats make up the majority in both houses, which makes it seem likely that the bill could pass. However, it faces a veto threat by Republican Governor Chris Christie.
In addition to increasing the RPS mandate, S1707 calls on the New Jersey Board of Public Utilities to establish an “emissions portfolio standard” for all electric utilities in order to comply with the Clean Power Plan (CPP). This provision is likely to be controversial. The Supreme Court recently issued a stay on the CPP as 27 states, including Governor Christie’s administration, seek to block it permanently. Energy and Finance Report writes that the New Jersey legislature may not have enough votes to overcome a veto on S1707 if Christie opposes it.
New York
Governor Andrew Cuomo has announced $150 million in funding to support large-scale renewable energy projects across the state. “This funding will facilitate public-private partnerships to advance the governor's Reforming the Energy Vision strategy and ensure the state meets its goal of generating 50 percent of its electricity from carbon-free renewable energy projects by 2030,” according to a NYSERDA press release.
A recent study released by the Public Service Commission indicates that New York consumers will see little change in their electric bills as the state switches to renewable energy resources at an accelerated pace.
The Clean Energy Standard cost study states: “[E]ven in this period of lower electricity prices due to historically low natural-gas prices, New York can meet its clean energy targets with less than a 1 percent impact on electricity bills (or less than $1 per month for the typical residential customer) in the near term and show net positive benefits of $1.8 billion by 2023.”
Maryland
Both the Maryland General Assembly and Senate have passed legislation (SB 921) that would increase the state’s renewable portfolio standard 20 percent by 2022 to 25 percent by 2020, putting the state on a path toward 40 percent renewables by 2025. Boosting the mandate to 25 percent is expected to create demand for more than 1 gigawatt of renewable energy. The bill would also advance Maryland’s efforts to build a diverse clean energy workforce through workforce training and funding for minority-owned businesses.
The Clean Energy Jobs Act now goes to Maryland Governor Larry Hogan for his signature. Hogan recently signed into law the Greenhouse Gas Reduction Act of 2016 (HB 610/SB 323), which requires Maryland to cut emissions by 40 percent below 2006 levels by 2030.
Nevada
The Nevada Public Utilities Commission has opened a docket to investigate battery storage technologies. Initial comments are due May 2, and a workshop is scheduled on May 19. According to EQ Research, topics to be discussed include:
- What services are currently being provided to the grid from battery storage and where? What services can potentially be offered over the next 15 years?
- Have cost-benefit analyses for storage for utility and customer applications been performed?
- What types of residential, commercial and/or utility-scale storage options are currently offered and by who?
- How does battery storage compare to other storage options?
- Should Nevada Power and Sierra Pacific Power be required to address storage as part of their resource planning? If so, how?
- Are there changes that should be made to Nevada’s statutes, the PUC’s regulations, and/or the two utilities’ tariffs and rates to eliminate possible barriers or unintended outcomes pertaining to storage technologies?
Hawaii
The Hawaii House and Senate are conferencing on legislation (SB 2738/HD2) that would create an energy storage rebate program and direct the Department of Taxation to create forms and requirements for rebate applicants. According to EQ Research, rebate levels are set at:
- $0.25/kWh of the system's capacity of usable stored energy, if funds in the Energy Storage System Fund are greater than $35 million
- $0.20/kWh if the available funds are between $20 million to $35 million
- $0.15/kWh if funds drop to $20 million or less
Rebates are limited to $5,000 for systems located at a single-family home and $100,000 for commercial and multi-family properties. The bill also amends the Green Infrastructure Loan program to provide for the administration of the energy storage rebate program, and transfers $50 million to the Energy Storage System Fund from the Green Infrastructure Special Fund. The bill initially created broader renewable energy tax credits, but now it only relates to storage after amendments were introduced in March. Once both houses reconcile their approved versions of the legislation, it will head to the governor’s desk.
North Carolina
Regulators in North Carolina have rejected a petition to allow for third-party ownership of solar projects in the state. NC WARN, a nonprofit environmental group, filed a petition with the North Carolina Utilities Commission (NCUC) last June seeking approval for selling solar power to the Faith Community Church in Greensboro. The nonprofit built a rooftop solar project on the church last year as an act of civil disobedience designed to test a state law prohibiting the direct sale of electricity from any entity other than the utility.
On April 15, the NCUC issued an order stating "there is no provision in the Public Utilities Act that expressly authorizes the Commission to allow third-party sales of Commission-regulated electric utility services to the public for compensation.” Duke Energy, the dominant utility in the state, cheered the decision.
NC WARN’s executive director Jim Warren said the group now plans to launch a lawsuit challenging the NCUC’s ruling. While there is strong support for third-party ownership in North Carolina among solar companies and consumers, a legal challenge likely faces an uphill battle given that the state’s laws prohibit electricity sales by any entity other than a utility. Furthermore, NC WARN sought the commission’s approval for the Greensboro project primarily by relying on Iowa’s 2012 decision to allow third-party sales, but that decision has no bearing on North Carolina state law.
Maryland
Both houses of the Maryland legislature have passed legislation (HB 440) that requires interconnecting utilities to approve a customer’s solar PV system within 20 business days after completion of the installation process and all necessary paperwork. Each utility must meet these interconnection requirements for at least 90 percent of installation processes completed in its territory each year. The Public Service Commission has the authority to waive these requirements if deemed warranted.
Minnesota
On March 31, an independent engineer appointed by the Minnesota Public Utilities Commission released a report criticizing Xcel Energy’s handling of the state’s community solar program. The report looked specifically at a SunShare solar project near Becker, Minnesota after the developer filed a complaint that Xcel failed to complete engineering studies and give interconnection cost estimates in a timely fashion. These issues are said to be affecting the entire community solar program and causing significant delays.
The engineering report found SunShare’s concerns to be credible, the Star Tribune reports. “Xcel has provided inaccurate site data [and] inaccurate computer models, and has had to rerun those same models multiple times, delaying SunShare’s Becker interconnection completions,” the report said.
The report also issued recommendations for improving the Minnesota program. On April 7, Xcel and SunShare filed appeals to the recommendations (15-786).
Xcel wrote that it is taking the criticisms seriously, but said the report is unfair because it doesn’t look at total project numbers. The utility has received around 1,500 solar garden applications since the program launched in December 2014. Xcel said 150 megawatts of projects are now in design and construction, and another 622 megawatts of projects are under study. However, only one small 40-kilowatt community solar garden is currently on-line.
Colorado
The Colorado PUC has issued a written order rejecting a settlement agreement between Xcel Energy and three community solar installers that say the deal would have fixed structural issues in the state’s community solar program that have led to delays and negative renewable energy credit (REC) prices.
The settlement proposed adding 60 megawatts of community solar through a request for proposals this year, and retroactively setting a floor of 3 cents per kilowatt-hour for RECs produced by the 29.5 megawatts of community solar companies bid for in 2015 -- rather moving forward with the negative REC prices offered in the request for proposals. Solar developers say negative REC pricing means they can only afford to serve large industrial customers, and can’t serve the low-income customers that need solar most.
In March, the PUC voted down the agreement, offering little explanation. Stakeholders said they believed the commission misunderstood the proposal, which already had utility buy-in. The written order specified that regulators took issue with the 3-cent price floor: “The Settling Parties provide no explanation of why it was reasonable and advantageous to ratepayers for Public Service not to award contracts to bidders at the negative REC prices and not to negotiate final bid prices in the range of $0.001/kWh to $0.01/kWh as suggested by SunShare.”
Settling parties and supporters of the agreement, including Grid Alternatives and Conservation Colorado, are calling on regulators to revisit their decision.
"We believe that the settlement agreement drastically increases consumer access to solar energy by expanding the size of the community solar program and equalizing the economic value of community solar bill credits for residents and commercial entities,” said Karen Gados, chief of staff at SunShare, one of the three settling solar companies. “We hope the Public Utilities Commission will reconsider its decision, and eliminate the dramatic economic incentive to only serve commercial entities."
Oklahoma
On March 30, the Oklahoma Corporation Commission issued a final order approving the February 17 settlement agreement allowing Oklahoma Gas & Electric to establish a community solar program, finding it to be in the public interest. According to EQ Research, the settlement agreement includes the following terms:
- OG&E will not use the term "community" in its program tariff, but it may use that term when promoting the program.
- Participating customers may terminate participation at any time without incurring a fee.
- The levelized price in the program rider for a participating customer's allocation of solar energy will be $0.1073/kWh. This price will be adjusted when OG&E’s ongoing rate case (PUD 201500273) concludes. It applies to all energy included in the program from the Mustang solar facility and the next 25 MW of solar added to OG&E's system, if any, during the pilot period.
- The standard rate for all participants will be the applicable time-of-use rate until a final order is issued in OG&E’s ongoing rate case, at which point the standard rate will mirror the tariff for net energy metering (NEM) customers approved in that case.
- The pilot program will last two years and is limited to the capacity of the facilities included in the program.
- Minimum and maximum customer participation levels apply.
- If, in the future, the OCC approves the inclusion of one or both solar facilities in OG&E's base rates, OG&E will credit the revenue received under the pilot program to customers.
- OG&E will retire RECs on behalf of participants.
- OG&E will file annual program reports with the OCC.
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Policy developments are tracked in partnership with EQ Research, which offers in-depth subscription services covering regulatory developments, legislation and general rate cases in all 50 U.S. states.
