Before an unusually crowded audience, Louisiana regulators approved Wednesday, as expected, changes in billing and protocols for individuals who have installed solar panels to make their own electricity.
On a 3-2 vote, the five-members Louisiana Public Service Commission adopted new rules that lowers the amount traditional utility companies pay individuals for the electricity made by rooftop solar panels.
PSC staff drafted changes to the rules regarding solar panels installed by individuals
The 14-point modification of existing rules essentially relieves the traditional, investor-owned utilities from paying the retail rate for electricity sold to them by individual consumers who have installed solar-powered panels. Utilities instead would pay what is called "avoided cost" or the amount they pay to make electricity on their own.
The 18,308 Louisiana homeowners with solar panels and those who install panels before Dec. 31 would continue selling their electricity at the higher retail rate for the next 15 years under the new rules. Just those who install solar panels starting on Jan. 1 would be paid at the avoided cost. (Other solar panel homeowners living inside the New Orleans city limits are not impacted as they are regulated by the City Council and not the PSC.)
Solar customers consume, on average, about 80 percent of the energy they produce, leading to a savings of about $53 per month or about $600 per year, according to PSC staff. Even under the new rules, all customers will receive full retail value of the electricity they consume.
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Customers receive about $10 per month, on average, from selling excess power back to the utility, according to the PSC.
Utility companies argue that buying excess electricity from solar customers at the higher retail rates essentially requires all their customers to pay more for the electricity they consume. Only about 1 percent of the state’s 2 million utility customers have solar panels.
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PSC Chairman Mike Francis, R-Crowley, said owners of rooftop solar panels who end up selling back to the grid make the electricity for about 4-cents per kilowatt hour but sell it to the utilities at the retail rate of about 10 cents. That amounts to about $2 million per year. "This is a fact that we need to understand. Someone is providing that $2 million," Francis said, and its the other customers.
As solar panels work only when the sun is shining, owners of solar panels remain connected to the grid operated by traditional utilities, which are owned by shareholders and are allowed to operate in their territories as monopolies. But during sunny hours, the panels often make more electricity than can be used. “Net metering” allowed regulators to require the utilities to buy the electricity during sunny times at a set rate and credit that against power needed during dark hours.
The new rules, essentially, change the “net metering” pricing paid by the utility companies.
Monique Harden, of Deep South Center for Environmental Justice, testified that the new rules represent a 66 percent cut in what individuals make now by selling electricity made with solar panels back to traditional utilities. Using retail rates was an incentive to entice homeowners to install solar panels, which produces no pollution and takes relieves utilities from some of its load obligations.
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Jessica Hendricks with the Alliance for Affordable Energy, a New Orleans consumer group, testified that the rules effectively would allow utility companies to buy electricity from solar panel owners at about 3 cents per kilowatt hours and sell it back to other consumers at about 9 cents. A typical residential customer in Louisiana buys about 1,300 kWh per month.
PSC Commissioner Craig Greene, the Baton Rouge Republican widely seen as the swing vote, called the 15-year delay in lowering the rates for existing solar owners a compromise between customers who invested in solar and those who did not. He said the new rules “brings certainty and predictability to the residential solar market.”
PSC Commissioner Lambert Boissiere III, D-New Orleans, said proponents of the new rule were using the word “subsidy” as a pejorative “to sow hate and distrust.”
“There is no greater subsidy than having a monopoly,” Boissiere said, looking at Phillip May, the head of Entergy Louisiana. The effect of the new rules, which removes many of the financial percs for trying the new solar technology, will be fewer sales and then fewer jobs. And all this is happening as the big utilities start expanding their solar efforts, he said.
Entergy is looking to build a solar-fueled plant as part of its renewable energy portfolio.
“If this is such a bad deal, how come y’all like it so much?” PSC Commissioner Foster Campbell, D-Bossier Parish, asked the utility executives also at the meeting Wednesday. He said talk about subsidizing solar panels is hypocritical given that oil and gas plants received about $5 billion in tax subsidies and nuclear power producers have a similar amount.
“You see who the big dogs are,” he said.
Usually PSC monthly hearings host a few dozen sharply dressed lawyers, lobbyists and corporate executives. Though utilities are the second or third largest monthly bill for most homeowners, the goings on at the PSC, which sets those monthly rates, is widely ignored by consumers and the media.
For Wednesday’s hearing, however, commissioners increased the size of the hearing room and called in extra security.
Solar panel owners and installers, many of whom wore green “Don’t take Louisiana residents rights to choose solar” t-shirts stood along the sides of the room and applauded loudly at the string of mic drop opposition arguments. Only one of about 50 witnesses spoke in favor of the new rules.
The rest raised worries of the new rules would cause.
Arthur Simmons, of Metairie, who recruits workers for PosiGen Solutions, one of the nation’s larger companies handling the solar panel installation, said the proposed rules would chill the solar industry and lead to lay offs.
Simmons said PosiGen has about 400 employees, 200 of whom are located in Louisiana. The entire industry employs about 3,000 workers in Louisiana.
The jobs pay an average of $40,000 per year, though some make six figures. All the jobs are full time, have benefits and hire from Louisiana, rather than bringing people from other states.
“Why not take care and do the right thing for PosiGen? Amen?” Simmons said advocating for the PSC to refuse the changes.
Voting for the new rules: PSC Chairman Mike Francis, R-Crowley; Commissioners Craig Greene, R-Baton Rouge; and Eric Skrmetta, R-Metairie.
Voting to keep the current rules and pricing scheme: PSC Commissioners Lambert Boissiere, D-New Orleans; and Foster Campbell, D-Bossier Parish.
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