Kentucky proposal seeking to update net metering laws draws support from utilities
Kentucky legislators are preparing to debate a proposal to lower the amount paid to homeowners for their excess solar power and require them to pay what advocates say is a fair share to maintain the regional electric grid.
Opponents argue that the measure will add costs and reduce incentives for customers to invest in solar power and that it is part of a larger effort to crush the emerging solar industry.
The legislation highlights a controversy that has been churning across the nation as power providers are asked to accommodate the growth of renewable energy, including wind and solar, at the expense of traditional fossil fuels, such as coal and oil.
Regulated electric utilities have been caught in the middle as they’ve been asked to accept rooftop solar electricity on their systems without changing the formula for recovering the costs to maintain the regional electric system to which all customers are connected.
This bill would prevent solar customers from sidestepping those costs.
The proposal in Kentucky would amend the state’s 2004 net energy metering law, which sets the rules for how much electric utilities pay customers for the excess power their solar panels send to the grid, the extra kilowatt-hours above what the customers use in their homes.
The debate in Kentucky is noteworthy because the state’s coal mining industry has been battered by the demise of the nation’s coal-fired power plants and Republicans, who now firmly hold the reins of power in the state, have pledged support for the coal industry.
Republicans gained control of the state House in the 2016 election, on top of already controlling the state Senate and the governor’s office. At the federal level the GOP holds both U.S. Senate seats, including one by Majority Leader Mitch McConnell. Republicans also hold five of six seats in the U.S. House.
President Donald Trump has gone to bat for coal jobs, seeking to end the Obama administration’s Clean Power Plan, which limited carbon emissions from coal-fired power plants. And, just recently, in a huge setback for the solar industry, Trump imposed tariffs of up to 30 percent on imported solar panels.
In Kentucky, net metering customers are paid the same retail rate they are charged when they buy power from the grid.
Bundled up in that rate, however, are dollars utilities say they need to maintain the electric system. These are costs that cover the replacement of broken or aging poles, wires, transformers and other equipment.
Paying those maintenance dollars back to rooftop solar customers pushes the burden of paying for the infrastructure onto the shoulders of the other customers who either can’t afford, or don’t want, a solar system.
This cost shift has occurred even while rooftop customers have remained connected to the grid so they can buy backup power when the sun doesn’t shine and sell to the grid when it does.
As a result, advocates contend that solar system owners who may be more affluent and have the means to buy a rooftop solar system — and benefit by their connection to the grid — are being subsidized by those who don’t.
“That’s just not fair,” said Kentucky state Rep. Jim Gooch (R-Providence), chairman of the House Natural Resources & Energy Committee, who introduced the legislation, House Bill 227. “I’m trying to level that playing field,” he told Daily Energy Insider.
Under Gooch’s proposal, consumers who sell their power onto the grid would be paid an amount lower than the retail rate, one that’s set by the Kentucky Public Service Commission and is close to the wholesale rate.
The rate change would apply to new customers. Customers with existing solar systems would be shielded from the changes for 25 years.
Gooch, a Democrat for decades from the state’s western coal region, said he switched his party affiliation to Republican in 2015 after seeing what he said were Obama administration polices hurt his constituents. “I just don’t want to be associated with it,” he said.
Chris Whelan, vice president of communications for Louisville Gas & Electric and Kentucky Utilities, whose utilities support the bill, said a prior effort in 2017 failed to win enough votes.
But after listening to many stakeholders, she said, this bill has widespread support including those of business and industry, particularly chambers of commerce.
“It assures that everyone, going forward, will more fairly share the costs of maintaining the grid,” she said. “We really do want renewable energy to succeed — and we have our own programs — but we want this to be fair for all customers.”
The solar industry argues that the bill will harm a source of clean, renewable energy.
Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association, said the bill “is a solution in search of a problem.”
He said it will impose new costs on customers who want to invest in solar energy, “inhibiting or in many cases prohibiting customers from doing so.”
Gallagher added, “The result would be exactly as intended — to stymie investment in local businesses that create local jobs, and prevent customers from getting what they want.”
