Adverse solar bill advances after heated subsidies debate

Lawmakers on Tuesday advanced a bill authorizing regulators to set reimbursement rates for home-generated solar power and requiring them to “prevent subsidization” of small renewable-power installations.

Supported unanimously by the Senate Corporations, Elections and Political Subdivisions Committee, Senate File 16 — New Net Metering Systems represents the third time in 18 months legislators have sought to cut the amount paid to customers who generate more solar electricity than they use.

The bill reignited a debate over subsidies, who controls rates, how utilities balance infrastructure and power costs, whether photovoltaic generators should be credited for hard-to-define benefits and the future of the fledgling roof-top-solar industry. 

SF 16 would give the Public Service Commission — the state’s utility rate-setting panel — authority over the rates utilities pay solar-installation owners for the electricity they contribute to the power grid. The governor appoints members of the three-person panel.

The measure ensures there will be “experts putting on expert evidence before an expert panel” in small-scale solar rate-making, said Bryce Freeman, administrator of the Office of Consumer Advocacy under the PSC. The PSC would study, then regulate, solar payments that today are set by law.

But the bill calls for a “very narrowly constrained and biased description of a study,” Steff Kessler, program director for the Wyoming Outdoor Council said after the meeting. The measure would exclude consideration of socio-economic values, for example, or other benefits “that might outweigh the costs,” she said. Lawmakers require that socio-economic factors be used in the evaluation of coal-fired plants, she said.

The bill could cut payments to small solar generators by a factor of five, critics said, dooming a fledgling industry that’s creating new jobs in Wyoming. If subsidies do exist in the existing repayment system, which is codified in state law, those are insignificant and don’t affect consumers, bill opponents said. 

Subsidizing home solar?

The question of subsidies arises from a nuance of the conventional rate structure of utility bills. Bills have an energy charge for the power used and a “base” charge to cover infrastructure and all of the overhead that goes into operating an electrical utility.

But those charges don’t apportion fees according to real costs. Some of the fixed or base costs are recovered through power charges, PSC attorney Petri told the committee.

Thus, customers who purchase less power from the utility — like households that generate their own electricity — benefit from being connected to the grid, but don’t pay a full share of the fixed or infrastructure costs. Today’s law allows solar generating customers to avoid payment “of the full cost of maintaining the system,” said Chris Petri, an attorney with the PSC.

It is this infrastructure-cost-share disparity that bill proponents describe as a subsidy.

The issue has drawn significant attention with the committee receiving close to 1,000 emails, committee Chairman Ogden Driskill (R-Devils Tower) said during the Zoom meeting, which was attended by at least 120 viewers. “You are being listened to,” he told the audience. The legislative topic has produced eight hours of hearings involving 75 witnesses or commenters, one attendee said.

SF 16 would replace today’s “net metering” law that requires utilities to reimburse — at retail rates — small-scale solar generators for the excess power they produce. The measure applies only to installations that generate fewer than 25 kilowatts. Bill backers say power companies should instead pay back only at wholesale rates, which are one-third to one-fifth the amount of the existing retail payback.

Subsidies to small-scale solar owners disadvantage lower-income households that may not be able to afford solar arrays, Bryce Freeman, the state’s top consumer advocate, told the committee. “It’s hard to put a solar array on a mobile home,” he said.

Thirteen states are acting or have acted on the rooftop solar issue, he said, worried that more installations will increasingly burden other consumers.

“I wouldn’t argue that we’re there yet,” Freeman said of that point where the impact would be unbearable. But, “at some point you just can’t raise rates fast enough and high enough,” to cover the perceived solar subsidy.

The bill is wanting, however, solar installer Scott Kane of Lander told the committee. “It pre-supposed there is a subsidy,” the co-founder of Creative Energies Solar said.

Even though the issue will go to the PSC for investigation of electricity rates and solar payments, “that [subsidy] conclusion is already written into the bill,” he said. He proposed changing “subsidy” to “fairness.”

Changing the wording would allow consideration of other benefits accruing from small-scale solar. But Rocky Mountain Power Vice President Jon Cox called Kane’s substitute language “a little squishier” than what’s in the bill. The committee stuck with “subsidy.”

Other subsidies

Subsidies abound in the existing system regardless of solar paybacks, bill critics said. The frugal consumer, who keeps his or her power usage low, for example, doesn’t pay a full share of the fixed costs regardless of whether he or she has a solar installation.

Committee member and bill backer Sen. Charlie Scott (R-Casper) found that cost shift acceptable for his retired constituents in north Casper living on fixed incomes who might closely guard their power usage. This conventional billing in which some consumers shoulder the burden for others “has a certain fairness,” Scott said.

“The people who use more electricity contribute more to the peak,” he said, requiring the construction or larger power sources and transmission lines. Raising the base rate for infrastructure to reflect actual costs would hit fixed-income consumers “especially hard,” he said.

Critics said other subsidies permeate today’s utility billing methods that are routinely approved by the PSC. Today’s billing structure, for example, benefits rural residents who need more power-line infrastructure compared to urban residents, said Johnny Ziem, assistant public works director in Jackson. Conventional billing favors single family homes over multi-family ones, he said. 

“Why would we just focus on net metering and not focus on other subsidies?” he asked.

Wyoming provides various subsidies, Rep. Jim Roscoe (I-Wilson) told the committee as he opposed the bill. The state uses public money to build dams for private irrigators, he said pointing to one example. 

“It helped grow the agriculture industry in Wyoming,” Roscoe said 

Not yet a problem

Industry experts say rooftop solar and net metering don’t affect the conventional grid until they reach perhaps 5% of the power in a system, Kessler said in an interview. In Wyoming today, it amounts to 0.06% of the power used in the state, she said.

“It’s de minimis,” she said of rooftop solar. “It’s too small to matter.”

Whatever cost-shifting exists with rooftop solar, it “is not tangible today,” Powder River Basin Resource Council Community Organizer Monika Leininger told the committee. “What is tangible today is the jobs created by the industry.”

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The bill jeopardizes a plan to move two dozen jobs from the D.C. area to Wyoming, said J.R. Twiford, a small businessman in Sheridan who is installing a solar array.

Twiford agreed with Roscoe, who told the committee the new net metering bill is “taking us backwards.” The early 20th century model of centralized power production and vast distribution networks, Twiford said, “is on its way out.”

This article was corrected to note that J.R. Twiford is not in the solar business but is installing a solar array — Ed.