Legislation threatens to hamstring Arkansas’ rooftop solar expansion

Arkansas’ major electricity companies favor proposed legislation that likely would end the state’s boom in rooftop solar generation.  Renewable energy advocates counter that such efforts will dismantle consumer-friendly policies put in place by the Legislature only four years ago.

Introduced Wednesday by Rep. Lanny Fite, R-Benton, House Bill 1370 would end the state’s current policy that requires owners of solar arrays and other renewable energy sources to be compensated at the regular retail rate for excess power generation.

The state’s largest electricity providers, Entergy Arkansas and Arkansas Electric Cooperatives Corp. (AECC), say the policy unfairly shifts the cost of electricity onto customers who don’t want or can’t afford solar or other renewable energy systems. 

“We got some numbers in on the cost shift, and there is really $300 million (through 2040), not counting last year’s numbers that won’t be in until March,” said Fite, who is sponsoring the bill with Sen. Jonathan Dismang (R-Searcy). 

Fite’s bill was filed three weeks after Rep. Stephen Meeks (R-Greenbrier) introduced the competing House Bill 1047. The chief architect of the state’s net-metering and renewable energy legislation said last month that his bill was a “temporary placeholder” to allow stakeholders to work on a draft acceptable to everyone.

“I’m very much opposed” to HB 1370, Meeks said.

But Arkansas Electric Cooperatives Corp. spokesman Rob Roedel said the existing policy results in higher electricity costs that fall on “the backs of Arkansans that are the least able to pay.”

“HB 1370 … protects Arkansas ratepayers by modifying Arkansas’ net metering law to cease unfair cost-shifting and avoid power grid strains and energy disasters that have occurred in other states,” Roedel said.

The existing 1:1 net metering policy under the Solar Access Act (464) of 2019 put in place by the Arkansas Public Service Commission (PSC) only favors consumers that can afford a solar investment, Roedel said. 

Utility customers who fed excess electricity to the big suppliers received 10 cents per kilowatt-hour for their net generation through the last day of 2022. The PSC order also allows existing pacts between net-metering customers and utilities to remain in place or grandfathered for 20 years.

Silent tax

Calling Act 464 a “silent tax,” Roedel said many other renewable energy-friendly states have tightened regulations on alternative energy policies to protect their citizens.

“Approximately $8 million was shifted from net metering consumers to other (AECC) members in 2021. Even if no new net metering facilities are installed under the current unfair 1:1 rate structure, the amount will swell to more than $140 million by 2040 when the PSC’s grandfathering policy of 1:1 under Act 464 ends,” he said. 

“HB 1370 … will cease this unfair policy that is basically robbing Peter to pay Paul.”

Entergy Arkansas spokesman Brandi Hinkle also expressed satisfaction that state lawmakers are now addressing the four-year old net metering billing option, which she said will affect the Arkansas utility giant’s 728,000 customers across 63 of the state’s 75 counties. 

Four years ago, Entergy Arkansas requested a rehearing after the PSC implemented the new rooftop solar policy.

“The current law has resulted in net metering policies that force our customers who cannot afford or choose not to have private net metering systems to pay a premium to subsidize the customers who have private net metering systems and are not paying their fair share of the cost of our electric system that serves them,” said Hinkle.

But Arkansas Advanced Energy Association (AAEA) Executive Director Lauren Waldrip said current PSC policy allows Arkansans to reduce energy costs on their homes and businesses by producing their own power.

“We are pleased to see this topic receiving the notice it deserves and commend Rep. Meeks’ attention to renewable power generation,” Waldrip said after Meeks filed HB 1047. In the 2019 session, AAEA was one of the key negotiators in getting lawmakers to approve Act 464.

Fite noted that former PSC Commissioner Ted Thomas promised lawmakers during negotiations over Act 464 in the 2019 legislative session that he would phase out the 1:1 credit after six to eight months. But he didn’t do that, Fite said.

“We’ve had great growth, I will admit that, but it comes at an expense for people who don’t have solar. And the best I can tell, and I have been researching for a while on this, is that we have the most liberal (net-metering) policy in the nation. More liberal than New York and California – and they have abandoned the 1:1 credits.”

Non-residential solar

HB 1370 also will drive up costs for businesses and others who use renewable energy by creating a new “grid charge” and reduce the maximum size of a solar facility by 95%, said Glen Hooks, policy manager for Arkansas Audubon Delta.

“Enacting these changes will hurt business and industry across the state and make the switch to solar a much less affordable option,” Hooks said, noting that HB 1370 changes rules and rate structures and applies them retroactively to existing solar customers. 

“This is a wildly unfair way to treat Arkansas families and businesses who made significant investments and are now having the rules changed on them unilaterally for no reason other than to protect monopoly utilities.”  

Besides net metering, Act 464 also opened the door for third-party financing of solar projects, which allowed tax-exempt organizations and government entities to take advantage of federal tax incentives for installing solar panels. Over the past three years, dozens of Arkansas municipalities, school districts, counties, churches, nonprofits and small businesses used the law to sign leasing agreements with third parties that install solar power systems.

According to the most recent data from the  U.S. Energy Department’s Energy Information Administration (EIA), the number of residential net metering customers in Arkansas spiked 213% from 2,098 in 2019 to 6,562 at the end of 2021. In 2010, the first year that the Energy Department began compiling such data on renewable energy generation, there were only 117 net metering customers in Arkansas.