Kentucky PSC allows more time for comments on new net metering rates for electric utilities

The Kentucky Public Service Commission (PSC) said this week it will allow more time for comments on implementing a recently passed law that would change how electric utilities bill net metering customers for their services.

Earlier this year Kentucky Gov. Matthew Bevin signed into law Senate Bill 100, legislation that alters the way utilities will credit retail customers who generate electricity from renewable resources like solar panels. The law goes into effect on Jan. 1, 2020.

According to the PSC, the new law states that an electric utility is “entitled to implement rates to recover from its eligible (net metering customers) all costs necessary to serve” those customers, independent of the rate structure for all other customers.

The original net metering statute provided credits at the full retail rate, using a bi-directional meter that reflected whether a customer was producing more or less electricity than was being used, the PSC said. The customer bill reflected the net usage. Utility companies have argued that non-solar customers have been essentially subsidizing net metering customers.

In an order issued last week, the PSC granted a request by Kentuckians for the Commonwealth to allow more time for comments that would be useful in future rate cases that determine net metering rates for utilities. Written comments in the proceeding now are due by Oct. 15, 25 days later than the original deadline, and the PSC will hold a public hearing on Nov. 13.

“Under the revised statute, utilities can request an adjustment to their net metering rate to something other than the current system which compensates customers for excess energy at the full retail rate,” said Andrew Melnykovych, director of communications and public information officer with Kentucky Public Service Commission. “It will be up the PSC to determine the new rates.”

Anyone who installs solar panels before the law goes into effect will be grandfathered in for 25 years unless they sell their property.

Kentucky utilities Louisville Gas & Electric and Kentucky Utilities (LGE-KU), subsidiaries of PPL, supported SB 100 “because it more fairly distributes customers’ contribution to maintain the infrastructure that all of our customers depend upon and it protects current net metering customers and their financial decisions by grandfathering their arrangement for 25 years,” said Chris Whelan, vice president of Communications and Corporate Responsibility with LGE-KU. “Senate Bill 100 accomplishes those two things in a fair manner by empowering the Kentucky Public Service Commission to sort out the costs and benefits and assign value to the excess generation net metering customers place on the grid.”

A utility’s particular circumstances will help establish their net metering rate. This will include a number of factors.

“The new statute allows utilities to present evidence regarding their cost of providing service to net metered customers. The ultimate decision on rates rests with the PSC,” said Melnykovych. “Utilities likely will present evidence regarding the cost of providing service to customers that allows those customers to feed power to the grid if their solar arrays produce power in excess of what the customer needs at that time.”

LGE-KU believes the new rules will also help ratepayers “be treated in a fair manner,” said Whelan. “The previous net metering law required utilities to pay a 300 percent premium for the excess energy private solar net metering customers sold back to those utilities, so customers who did not want or who could not afford private solar were subsidizing those who did.”

“HB 100 grandfathers existing private solar net metering customers in for 25 years. It increases the size of the systems from 30 kilowatts (kW) to 45 kW and it allows the Kentucky Public Service Commission, which sets all other utility rates, to determine the fair value of the excess energy.”

Other investor-owned electric utilities in Kentucky that will be affected include Duke Energy Kentucky and Kentucky Power Co.