After more than a year of delay, during which time utility companies made up their own tariffs, state regulators finally tweaked definitions, detailed some procedures and spelled out the way Louisiana’s solar industry could realize its long-touted goal of lowering monthly electric bills.
“It means that people who choose solar can have some relief,” said Commissioner Foster Campbell, one of the five elected members of the Public Service Commission, which regulates the privately owned businesses operating as monopolies in their service districts.
Utility companies and the rural cooperatives, which sell electricity to more than 2 million customers throughout most of Louisiana, have never enthusiastically embraced the concept of individual homeowners and businessmen buying solar panels and letting the sun augment their supply independent of the vast grid of utility-owned generating plants, substations and transmission lines.
Utilities want, in Campbell’s words, “to sell you all the electricity. I understand that. That’s what they’re in business for. But (solar power) it’s here. It works, and people ought to be able to benefit from it.”
Solar only works inexpensively when the sun is shining, so owners of the system tap into the grid to turn on the lights at night. But rates are calculated, very generally, by the cost of making and moving electricity plus a guaranteed profit divided by the number of customers. If solar customers buy less electricity, then their portion of maintaining the infrastructure that they use also is less.
Utility companies argued in testimony to the Public Service Commission that the solar customers weren’t paying their fair share of the costs to run the system.
While the commissioners are sensitive to utility desires, they also are politicians and heard from other segments of the voting population, such as the Christian Coalition, which rallied behind the concept of energy independence.
“We believe solar should be a choice available to families,” said Ash Mason, of the Christian Coalition, who testified to the commission. “Solar means not buying energy from overseas. It encourages the entrepreneurial spirit. It can lower electric bills for all families in Louisiana.”
The five regulators have been lurching toward defining how solar power would be regulated for more than a decade with Commissioner Jimmy Field, who retired in 2012, forwarding the first ideas. Public Service Commission Chairman Clyde Holloway developed and pursued a proposition until he died in October.
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Commissioner Lambert Boissiere III, who had been working with Holloway, picked up the mantle. He negotiated and finessed the plan approved by regulators Nov. 17 and issued last week.
The order basically defines “net metering” and sets a policy in place for how utilities compensate individual customers who make their own electricity. It’s the first phase.
A second phase will make the fee structures permanent — but only after the commission has an opportunity to study how well the first phase works. Boissiere expects a six-month to two-year study period to pass before the permanent changes are made.
“We look forward to the start of the next, more comprehensive phase of reviewing Louisiana’s net metering rules and working with stakeholders to develop a revised policy that better balances the needs of all customers,” Michael J. Burns, Entergy’s spokesman for regulatory affairs, said Friday in an email.
“The commission has been back and forth on whether we really wanted it and what it would look like,” Boissiere said Friday of solar regulation.
Holloway’s illness and political campaigns — Campbell is seeking a U.S. Senate seat and Commissioner Scott Angelle, R-Breaux Bridge, is running for Congress — kept a majority of the five commission members from coming together on a single plan. Regulators approved Boissiere’s proposals during the first meeting with five voting members in attendance since the spring. Charlie DeWitt was named to fill out the rest of Holloway’s term.
“In the interim, the companies developed their own ideas and their own programs,” Boissiere said. Essentially, each utility company came up with its own pricing schemes, tariffs and policies.
Roughly 10,000 individual Louisiana homeowners and business owners have installed solar systems to manufacture electricity from the sun for their individual buildings. (That doesn’t include the city of New Orleans, where solar participation is much higher but is regulated by the City Council and not the Public Service Commission.)
“You can have one customer on CLECO across the street from another on SWEPCO, and they have to follow different rules,” said Matt Roberts, of One Planet Solar in Grand Cane. He is one of roughly 50 solar contractors working in Louisiana and testified Nov. 17 to the commission.
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“The utilities have been allowed to do whatever they want with the power that solar users put back to the grid. Some of the policies have been punishing,” said Jeff Cantin, of New Orleans. He is president of the Gulf States Renewable Energy Industries Association, a trade group.
The most common policy was a variation on the idea of charging the retail price for all the electricity a customer used in a given month, said Casey DeMoss, who heads the New Orleans-based consumer group Alliance for Affordable Energy.
The utility company then credited or “bought” the electricity generated by the solar panels at the cheaper wholesale rate. Some utilities companies also charged an additional fee.
For example, if a customer used the 1,250 kilowatt hours of electricity, a typical amount for residential users at this time of year, the total monthly bill would be $116.20 once all the surcharges, fuel costs and fees are added, said DeMoss, using one of the utility tariff structures to explain her example. (Each utility company has different rates, fees, surcharges and a different way of handling solar power).
If that homeowner’s solar panels made 1,000 kilowatt hours of electricity, theoretically the monthly bill would drop to $27.04. But some of the utilities “bought” the solar-made electricity at the wholesale price and don’t discount for the other fees and surcharges, which in this example would calculate total savings at only $13.52.
And then some utilities also tacked on an additional solar fee, leaving the customer who spent about $25,000 on the new solar system with a monthly savings of about $1.50 in this example.
“These are regulated monopolies, and without regulation, they started acting like, well, monopolies,” DeMoss said.
And that’s only one example, DeMoss stressed. Different scenarios under different tariff systems created by the utility companies could mean solar customers actually were paying the utilities more for the right to buy less electricity. The system approved by the commission will replace that patchwork and make the tariffs a little more reasonable.
“It took much longer than we anticipated. But this is a uniform system for all utilities and all customers, who now know what to expect and can plan accordingly,” Boissiere said.”
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