Formal hearings get under way on Kentucky Power’s net metering reform request
State regulators this week began a series of formal hearings on a first-of-a-kind filing by Kentucky Power Company, which seeks net metering rate reform.
Kentucky Power, an operating company in the American Electric Power (AEP) system, one of the nation’s largest investor-owned electric utilities, will partake in four formal hearings being held this week by the Kentucky Public Service Commission (PSC), beginning Tuesday and running through Friday. The Ashland, Ky.-based power company hopes to persuade 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.
“Under Kentucky’s existing framework, net metering customers are paid three times the market value of energy for their generation,” Tammy Ridout, AEP’s policy communications manager, wrote in an email to Daily Energy Insider. “Net metering reform is necessary to help protect the rest of Kentucky Power’s customers from subsidizing net metering customers.”
Kentucky Power, 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 help offset the region’s declining reliance on coal as more customers choose clean energy options.
“As rooftop solar becomes more affordable and adoption rates increase, net metering reform is needed to help protect more vulnerable customers who may have difficulty paying their bills and do not have access to rooftop solar,” explained Ridout.
The Kentucky PSC earlier this year started accepting rate cases under the March 2019-revised net metering act, state Senate Bill (SB) 100, which requires regulators to determine what rates residential solar customers receive from utilities for selling their excess power back to the grid.
Kentucky utilities previously paid the same rate for that additional power as what they charged non-solar residential customers, but under SB 100, they now may recover all associated costs to serve their net metering customers, according to the law, which is supported by the Consumer Energy Alliance (CEA).
“We believe and understand the [Kentucky Power] proposal keeps with the bipartisan legislation that was passed (SB 100) and the standards and rules set by the PSC,” Brydon Ross, CEA’s vice president of state affairs, told Daily Energy Insider. “This reform ensures that all customer costs are being treated fairly whether they are solar or non-solar and still provides an incentive structure for excess solar generation for new net metering customers.”
At the same time, Ross said that CEA “strongly supports” the increased development of renewable energy projects, continued solar growth, and the ongoing options being provided for consumers to offset their energy use.
Ross also called Kentucky Power’s net metering reform request important because it is the first proposal being considered by the Kentucky PSC since the passage of SB 100.
“Each state is going to be different in the way in which it treats solar incentives so it is hard to gauge how others might glean lessons from this proceeding,” he said. “However, Kentucky’s reform efforts to modernize its net-metering policies offer some good common ground. It grandfathers in old customers, expands the size of eligible solar systems, and still provides a new incentive structure for new net-metering customers.”
Current solar power users and the solar industry, on the other hand, think the proposed rate changes could disincentivize more potential solar energy customers. But AEP’s Ridout said that Kentucky Power has included many customer benefits in its rate review request.
“We are proposing to delay potential rate increases by a year, until January 2022, by using accumulated tax benefits,” she said. “We also have proposed the addition of advanced metering technology and a flexible pre-pay option to help customers better manage their energy use and their bills.”
Kentucky Power also filed earlier this year for debt forgiveness for past-due customers.
“Although the commission did not approve the debt forgiveness proposal, it has indicated that debt forgiveness could be considered as part of the general rate case,” said Ridout.
And, she said, Kentucky Power’s net metering proposal would grandfather existing net metering customers for a period of 25 years.
