The growing power of the people in Kentucky could dwindle – literally – in the new year.
On January 1, 2020, the Net Metering Act will go into effect, which may change the way Kentuckians who invest in small-scale solar are credited for energy production. This new law could burden those who want solar, and a growing workforce installing solar, by making it harder to evaluate the energy cost savings realized by investing in solar.
On Wednesday, November 13, the Kentucky Public Service Commission (PSC) held a public hearing, seeking comments about these upcoming ratemaking changes at the PSC office building in Frankfort.
Together with other solar advocates, we made our voice heard at this hearing.
Net metering is a policy that allows homes or buildings with solar to get a one-for-one credit on their electric bill for the energy they produce from their system that is then delivered to their utility’s meter. Buildings with solar systems that generate a sizable portion of their electric use, will on occasion deliver some of that electricity to their utility’s meter. Under Kentucky’s current statute, that delivered electricity is credited at a one-for-one retail rate for use later when solar production drops below that building’s consumption.
Under the new Act, however, people with solar could receive a lower compensation rate for what they deliver. These rates will be set by the PSC in proceedings for each utility in the state.
Ultimately, this could mean anyone wanting enough solar to generate as much electricity as they consume will find themselves burdened by new electric bill charges, making it nearly impossible to reap all of the financial benefit of their investment. Now, some of that benefit could go to their utility.
in summer 2019
Changes to rates from one-to-one to something else adds complexity to the financial evaluation, challenging solar installers from being able to quantify savings for potential customers. This change in policy not only threatens the adoption of new solar installations, but also threatens the current growth of a small, but exciting, industry of solar vendors and installers across the state. Net metering is essential for the continued growth of the renewable energy contractor workforce in the state. (Read an energy expert’s analysis and comments prepared for the hearing here.)
Organizations like MACED see this first-hand through our support and facilitation of energy-efficiency and renewable energy solutions for Kentucky communities. To date, we have financed more than $600,000 in commercial net-metered solar power systems in Eastern Kentucky, and we have $1,000,000 in the pipeline to finance enterprises going solar in the next several months.
As MACED expressed in its initial written public comment to the PSC in October 2019, drastic changes in rates or the introduction of complex rate designs could result in barriers to new investments in solar.
We are urging the PSC to strive for simplicity, consistency, and avoid radical departure from the current net metering rate of one-for-one.
With each solar investment we help finance, we are seeing for-profit and nonprofit enterprises reduce their operating expenses and level out their seasonal electric bills. We see monthly cost, in interest plus principal combined, for investments in solar exceeded by monthly electric bill savings. Without one-for-one crediting, we struggle to quickly and accurately evaluate savings that could be realized.
Earlier this year, we worked with three organizations in Letcher County to invest $500,000 in solar installations. Hemphill Community Center, Housing Oriented Ministries Established for Service, Inc. (HOMES, Inc.), and Appalshop are all part of the Letcher County Culture Hub, a network of community-led organizations that work to create new opportunities in the region. These installations helped offset rising utility rates, keeping the organizations focused on providing critical resources for the individuals, community and region they serve.
We also recently worked with Print My Threads – an Eastern Kentucky-based apparel screen printing company seeking to go net zero in its carbon emissions – to help secure two USDA Rural Energy for America Program (REAP) grants totaling $40,000. The business is using those grants to install solar panels and make energy efficiency improvements at their facility. The company is now on track to save $6,800 a year in reduced energy costs.
The simple truth is that solar and other renewable projects are good for our state. Installations bring vital energy savings to struggling enterprises and homeowners. Planning, building and maintaining these systems requires high-skilled, good-paying jobs — jobs that many hardworking Kentuckians desperately need.
We believe drastic changes in net-metering compensation would present undue challenges to the growth of the renewable energy sector as a source for both economic development and savings for Kentuckians.
A simple net-metering structure puts power into the hands of the people of Kentucky, allowing us to reduce our monthly electric bills and get a handle on long-term energy costs.
