Kentucky Power awaits state commission action on net metering reform proposal
The Kentucky Public Service Commission (PSC) on Wednesday finished an eight-day formal hearing on Kentucky Power Company’s net metering rate reform filing.
“Rate cases sometimes run several days, depending on the number of witnesses who will be providing testimony, whether there are a number of intervenors who will be providing cross-examination, etc.,” wrote Kentucky PSC Spokeswoman Karen Wilson in an email to Daily Energy Insider. “The PSC will review the case record, including information that is provided during the hearing, and will issue a final order, by Jan. 13, 2021.”
Kentucky Power Co. (KPC), an operating company in the American Electric Power (AEP) system, one of the nation’s largest investor-owned electric utilities, hopes to persuade Kentucky regulators to allow it to raise the rates it charges rooftop solar customers for the extra electricity they add back to the grid — the practice known as net metering.
The Ashland, Ky.-based KPC, which provides coal-powered electricity to roughly 165,000 customers in 20 eastern Kentucky counties, on June 29 filed for the rate increase with the PSC to raise average customer bills by approximately 16 percent in part to offset the region’s declining reliance on coal as more customers choose clean energy options.
Tammy Ridout, AEP’s policy communications manager, earlier this month told Daily Energy Insider that “net metering reform is necessary to help protect the rest of Kentucky Power’s customers from subsidizing net metering customers.”
Several comments filed with the PSC support KPC’s proposal to modify its net energy metering (NEM) tariff.
For instance, Philip Moeller, executive vice president of the business operations group and regulatory affairs at the Edison Electric Institute (EEI), the association that represents all U.S. investor-owned electric companies, wrote in Nov. 13 comments filed with the Kentucky PSC that the utility’s proposal is consistent with the statutory guidelines of recently enacted state Senate Bill (SB) 100, a March 2019-revised net metering act that requires regulators to determine what rates residential solar customers receive from utilities for selling their excess power back to the grid.
“KPC’s proposed successor tariff is a first step in a longer transition towards a more efficient and equitable rate design for private solar customers,” Moeller wrote in EEI’s filing. “The company’s proposed rate design for NEM is reasonable, based on a verified cost-benefit analysis, immediately reduces the current subsidy paid by other non-net metering customers, and contains netting periods that make sense when considering the company’s lack of AMI meters,” also known as advanced metering infrastructure (AMI), or smart meters.
The EEI filing pointed out that various intervenors suggest that the new tariff would undermine the distributed solar market in Kentucky and diminish customers’ options for generating their own power. In fact, many commenters during the formal hearing expressed such concerns.
However, “there is no hard evidence that supports any of these claims,” wrote Moeller in the filing. “What is apparent, however, is that the economics of full retail NEM not only pays customer generators three times the market value of their excess energy, but was also not overly enticing to customers to date, as demonstrated by the extremely low private solar adoption rates in KPC’s service territory.”
Moreover, and consistent with the requirements of SB 100, current NEM customers will not be impacted by the KPC proposal as they are grandfathered for 25 years and still would receive the full retail credit for excess compensation, according to the EEI filing.
Additionally, 14 other states have recognized the inequities of retail NEM and have started to transition to a different compensation model for distributed generation, according to EEI, which said that KPC’s proposed tariff is in line with other recently decided NEM proceedings, and is fair to participating and non-participating customers because it immediately reduces the current multiple cross-subsidy issue.
“As the PSC evaluates this proposal and seeks to ensure compliance with SB 100, the commission should take this opportunity to eliminate, to the extent possible, the subsidies that have been created to date through retail NEM,” Moeller wrote. “Correcting this inequity is not only better for customers, but also embodies the intent and direction of SB 100.”
Brydon Ross, vice president of state affairs at the national non-partisan, non-profit Consumer Energy Alliance (CEA), also sent a Nov. 13 letter supporting KPC’s case to the commission.
“CEA strongly supports the increased development of renewable energy projects and solar growth, as well as the continued option for consumers to offset their energy use,” Ross wrote in the CEA filing. “The proposal before the PSC keeps with those basic tenets and ensures that all customer costs are being treated fairly. We encourage adoption by the commission.”
