Earlier this year Kentucky’s legislature approved changes to Kentucky’s net metering law, undermining access to solar power for many Kentuckians.
The new law makes it harder for people to use solar power to reduce their energy bills and threatens the viability of Kentucky’s small solar businesses. Traditional net metering enables customers to connect solar panels to the utility grid and receive credits for any excess power they supply to the utility. With this one-for-one credit, one solar kilowatt-hour produced by the customer is equal to one kilowatt-hour bought from the utility.
Net metering credits can be accumulated on sunny days and used to offset future consumption. Net metering customers are never paid for the power they produce; they only receive kilowatt-hour credits. This simple system gives people the ability to control their long-term energy costs, reduce their energy bills and produce their own power.
The new law directs the Kentucky Public Service Commission (PSC) to consider changes to how net metering customers are compensated for power they feed back to the utility, potentially ending the one-for-one kilowatt-hour credit. It gives utilities a chance to impose new fees on net metering customers, allowing utilities to recover “all costs necessary to serve” net metering customers, but does not specify consideration of the benefits provided by net metering. However, the commissioners have written to the legislature and stated that they would account for those benefits during this process.
The new net metering law “grandfathers” existing net metering customers, allowing them to continue with traditional net metering for 25 years. The changes to net metering do not apply to municipal utilities, such as the Frankfort Plant Board, and utilities served by the Tennessee Valley Authority in western Kentucky, because they are not regulated by the PSC.
The utilities lobbied hard for three years to pass this legislation to end net metering, spending hundreds of thousands of dollars on lobbying and campaign contributions in the process. It’s still surprising that a Republican legislature and governor passed this bill because it is contrary to so many conservative principles.
Traditional net metering provides a simple set of rules that empowers people to make investments to control their energy costs. It gives people the freedom to produce their own energy and to benefit from their investments. The new law uses regulations and bureaucracy to undermine customer ownership of solar power. It replaces a simple, consistent system with a complicated bureaucratic process that will cost solar businesses, taxpayers and ratepayers hundreds of thousands of dollars to litigate before the PSC. It replaces a transparent, predictable system with uncertainty and instability.
The new law has allowed monopoly electric utilities to smother competition from small solar businesses, while the utilities build their own large solar facilities and take control of the solar market.
Net metering could have been the seed for a new economic sector in Kentucky. The U.S. solar industry has grown exponentially in recent years, with states like North Carolina adding tens of thousands of jobs to serve the demand for solar power. U.S. employment in solar now exceeds 250,000.
Kentucky’s solar industry is still very small, with net metering accounting for less than 0.1% of total electricity production in the commonwealth. A few smart policy changes to our previous net metering law could have triggered rapid growth in Kentucky’s solar industry and brought its benefits to counties throughout the state. Instead, the legislature chose to end net metering and stifle the growth of rooftop solar.
Utilities have argued that net metering customers aren’t paying their fair share for use of the electric grid and shift utility costs onto other ratepayers. However, the utilities have provided no evidence of this and the facts do not support this claim.
The Kentucky Resources Council has analyzed data provided by utilities to the U.S. Department of Energy. The group's analysis found that the potential cost-shift onto other ratepayers by net metering is less than 1 cent per month, and that’s if you disregard all the benefits net metering provides to the utility and other ratepayers. These many benefits have been well-documented in numerous studies across the U.S.
Sometime after Jan. 1, utilities may go before the PSC to request changes to net metering. Prior to this the PSC is accepting public comments on the issue. The deadline for submitting written comments is Tuesday and there will be a public hearing on Nov. 13 at 9 a.m. at the PSC offices in Frankfort. For more information and to submit comments, visit kftc.org/PSC-comments.
Andy McDonald, a member of the Kentucky Solar Energy Society, lives in Frankfort. His email address is email@example.com.