A generous tax credit aimed at boosting the solar energy industry is coming under fire and will be the subject of much discussion over the next couple weeks, as efforts are made to trim back the program.
“It’s going to be one those issues that are going to be widely discussed and I wanted to be part of that discussion,” said state Sen. Danny Martiny, R-Metairie, who filed one of four bills that would dramatically change the state tax credit. The credit that, when coupled with federal incentives, saves homeowners and businessmen 80 cents on every dollar spent installing solar panels that make electricity.
Opponents say the tax credit costs too much and primarily benefits rich people.
Supporters say that’s untrue, the credit is used by all, puts money in the pockets of consumers and creates jobs.
Martiny’s Senate Bill 231 would cap the state tax credit and phase it out by December 2020.
But that’s not good enough, says Clyde Holloway, a member of the state Public Service Commission. The PSC regulates utility companies.
Holloway said he’s trying to find a legislator who would sponsor a bill to end the tax credit immediately.
“With the state having a deficit, it looks like a very likely place for me, the governor, the Legislature, to do some trimming,” said Holloway, of Forest Hill.
“Most people that was on solar, they were all upper middle class or wealthy people. If they were doing it for the right reason, I think they will continue to do it,” without a tax credit, Holloway said. Under current law and regulations, he contends that middle-class and lower-income homeowners, who can’t afford solar systems even with the tax credits, are subsidizing those who can, he said.
In the meantime, Holloway is planning to debate at the PSC’s April 17 meeting a rules change that would limit the benefits solar power users receive from the utility companies. He needs three votes on the five-member panel.
The fiscal note attached to the bill that became Act 371 of the 2007 Legislature, stated that the annual revenue losses from the credit “are likely to be less than $500,000.” Entergy Corp. estimated in its February filings with the PSC that the credit has cost the state of Louisiana about $46.6 million in revenue for the fiscal years 2009-2012.
State Rep. Roy Burrell, D-Shreveport, said he wasn’t picking on solar in particular in his House Bill 444, but that is the kind of tax credit escalation that catches his attention. His measure would sunset automatically a number of tax credits, including the one for installing solar equipment, unless supporters could persuade legislators with figures that justify continuing the program.
Tucker Crawford, a spokesman for the solar industry in Louisiana, says they have those statistics. The solar tax credit is directly responsible for helping establish more than 200 licensed, small businesses that employ more than a thousand workers in good-paying jobs with benefits, Crawford said.
He owns a solar installation company in Metairie that employs 40 people. He said no study has been done that counts the income levels of the homeowners receiving the solar tax credit but his experience has been that people of every income level have taken advantage of the credit.
Crawford also is the head of the New Orleans-based trade group Gulf States Renewable Energy Industries Association.
The trade group supports Martiny’s SB231. “It’s controlled enough that we as an industry, which is socially responsible, can show that we’re going to wean ourselves off the credit,” Crawford said.
Casey DeMoss Roberts, executive director of the Alliance for Affordable Energy, compares the solar tax credit to the $1.3 billion Louisiana taxpayers spent in 2010 to create incentives for the in-state oil and gas industry.
But unlike the state government aid given to oil and gas and other industries, the solar tax credit goes directly to the consumer’s pocket. Consumer spending is creating a market for a new industry that eventually will become competitive and lower costs, said Roberts, whose New Orleans-based group advocates for cheaper and cleaner energy.
Trevor Ledet, of Thibodeaux, said he would not have installed 27 solar panels on the roof of his house in August 2011 if the tax credit had been unavailable. His system would have cost more than $35,000 to buy and install, he said. But with the credits, his out-of-pocket costs eventually will be about $9,000, which was financed.
Savings on his monthly utility bills will pay for the solar system in about a decade, provided the PSC doesn’t change the rules later this month, he said.
“I’m not an eco nut-job. I don’t believe in any of that global warming, climate change crap,” said Ledet, who works for a trucking company. “We bought it at the time because I expected to save $900 to $1,000 a year.”
Electricity must be used immediately. Because solar only produces during sunshine hours – Entergy says its research indicates primarily between 10 a.m. and 3 p.m., when most people are at work – the individual systems add power to the utility’s grid of electricity. At night, they draw power from the grid. Owners of solar panels are “paid” for the power moved onto the grid during the day and those credits reduce the amount they have to pay for the electricity used at night. The system is called “net metering.”
Holloway proposes to lower the amount utility companies pay for the electricity they buy from the people who own solar power equipment.
Entergy Gulf States Louisiana and Entergy Louisiana reported serving slightly more than 1 million customers in 58 parishes across the state in December 2012. Between 2008 and December 2012, the two Entergy subsidiaries reported installing 1,232 net meters.
Entergy Gulf States and Entergy Louisiana reported to the PSC that, combined, they gave credit for purchasing 4.5 million kilowatt hours of electricity from solar owners between 2008 and December 2012.
In December 2012, Entergy Gulf States, alone, billed its customers for 1.7 billion kilowatt hours of electricity for one month, according to company filings with the PSC.
Entergy New Orleans, which is regulated by the New Orleans City Council, has about 165,000 electricity customers and has reported installing slightly more than 1,000 net meters. Other utility companies around the state have reported installing about 800 net meters.