Over the weekend the Alliance has been made aware of some half truths about solar policy that are floating around. We break them down for you right here.
First, what is “full” Net Metering? This is valuing every unit of energy (kilowatt hour or kWh) that goes to the grid from a solar installation at the same value as a resident (or business) pays for a unit of energy. 1 for 1. On your bill at the end of the month, the kilowatt hours pushed to the grid are “netted” against the kilowatt hours pulled from the grid. Simple, and 40 states + Washington DC use this policy. Most solar customers in Louisiana have this valuation and if there are extra kwh generated by their solar panels in a given month, those roll forward to the next month, at the same value.
Since 2016 new solar customers in Louisiana have net metering inside the month, meaning they can still net their energy usage from the utility against the energy they push to the grid. However, if their panels pushed more kwh to the grid than they used, they do not get to roll those forward at 1 for 1 value. Instead they are credited at wholesale rate for the “excess.” Some people call this net metering 2.0. This is a way to ensure that customers who over built their systems are fairly credited, but don’t get over-credited.
The policy on the table for new solar customers as of January 2020 (4 months from now) would reduce the value of every kilowatt hour that is pushed to the grid by about 66%. This would no longer allow customers to “net” their usage against what they’ve transferred to the utility. This goes by a few different names. Utilities call it “two channel billing” and Maine called it “net billing,” until their legislature scrapped the policy in favor of full net metering in January of this year.
Unfortunately, and confusingly, Mississippi calls this "two channel billing" that is being considered in Louisiana “net metering.” It is not, and anyone who attempts to re-define net metering is not telling the whole truth.
Another half-truth is the idea that the LPSC or utility can allow “retail credit for any electricity consumed inside the home” from a solar installation. In fact, the LPSC or the utility have no idea how much electricity is generated or used by a solar installation on your property, and have no right to say what that value is. Think of it this way: if you grow tomatoes in your home garden, no one gets to tell you what those tomatoes are worth if you eat them yourself. They are your property. If your utility came to your house and said “aren’t we nice for giving you the full value of those tomatoes you grew yourself” you’d laugh them off your property.
We mentioned Mississippi earlier, and their “two channel billing” system. One thing that makes Mississippi better than the proposed new Louisiana policy is that it does acknowledge some of the value of distributed solar, and doesn’t just credit customers at “wholesale,” but add 2.5-3.5 cents per kwh. The fact is, the energy generated on homes and businesses by distributed solar is more valuable than wholesale.
First, a wholesale value doesn’t acknowledge the value of the capacity of the installation itself. Utilities get to recover those costs from you, but they don’t think you should receive that value. Every bit of that capacity that homes and businesses install with their own money reduces number of power plants for which the utility would otherwise charge all of its customers.
Another is the value of energy losses that don’t happen with solar. When a utility moves energy from far away across power lines, some of that power is lost, but we all pay for it, even if it never makes it to anyone. When energy is distributed, like on rooftops, that power is used by the closest next customer, right next door, and those losses never happen. That’s money saved for everyone.
Finally, solar energy has no associated “environmental” costs. You may have noticed your energy bill includes an “environmental costs” line-item (sometimes EAC). That is just one way that utilities pay for the emissions and clean up from coal and gas. By reducing those overall costs to the utility, solar customers are reducing emissions and the costs that are otherwise passed on to all consumers.
One of the other big issues on the table is “grandfathering,” which is how current solar customers, who have already invested their own money in solar, will be treated under the new policy. These folks invested with a reasonable presumption that they will receive a fair credit for the energy they generate. The Commission is considering “grandfathering” them will full net metering for 15 years. This is a good start, but our concern is for the customers who have invested in the last 5 years who either took out 20 year loans or have 20-year contracts on the systems. These customers would not have the opportunity to fairly recoup the value of their investment when the proposed grandfathering period is over. These customers deserve a full 20 years to recoup their investment.
It is for these reasons the Alliance has advocated that the LPSC require utilities to acknowledge the additional value associated with distributed solar energy. In the handful of states that have moved away from full net metering, regulators have worked hard to uncover and acknowledge these values so that solar customers are not subsidizing non-solar customers. We are simply asking for a fair policy that supports private investment in clean energy, supports consumers rights, and can help Louisianans control their energy costs.
Click HERE to read the proposed rule.