March 3rd, 2016 by Peter Allen
There is a bill making its way through the Maine state house that could harm the emerging solar industry by making major concessions to monopoly utilities. Sound familiar? That’s because it’s a common theme in states across the nation. Sensible and proven market structures, designed to protect rooftop solar consumers and jobs, are constantly under attack from lobbyists and lawmakers who refuse to read the writing on the wall when it comes to forging a more sustainable energy future.
As usual, the target in Maine is net energy metering (NEM). Under NEM, Maine’s utilities currently provide fair one-to-one credit to customers on their bills for power they generate and feed back into the grid. There is no zeroing out your bill in Maine – everyone still pays a minimum access charge. Net metering is a proven policy in 42 states that protects consumer choice. But Maine legislators and the state’s anti-renewables Governor, Paul LePage — who recently endorsed Donald Trump for President — want to replace NEM with an untested version of a Value of Solar Tariff (VOST).
VOSTs are generally a “buy-all, sell-all” approach in which solar owners sell the energy they produce back to the utility for a certain price, and then buy the energy they need back from the same utility at a different price – often much more. This creates taxable revenue for the system owner, which potentially wipes out the benefit of the federal Investment Tax Credit or the benefit of the solar array altogether. Enacting a VOST while at the same time eliminating a side-by-side NEM policy could stop Maine’s rooftop solar industry in its tracks. Although the policy may have good aspects for large-scale businesses and other market segments, it would seriously jeopardize residential and small commercial investments.
As currently written, the Maine bill has far-reaching consequences that could devastate local solar companies. If passed, it would eliminate NEM, deny full grandfathering to existing solar owners, expose consumers to discriminatory taxes, allow monopoly utilities to throttle private investment in solar by controlling rates for a competitive product, and create extreme market instability and uncertainty. It would also shift the entire risk of the problem onto customers – whereas NEM only eats into utility investor profits. Ensuring a smooth transition to a clean energy future requires keeping the stable policy of NEM as an option.
For an example of what not to do, Maine lawmakers would be wise to look west to Minnesota, where a battle over this same turf erupted two years ago. In the end, while Minnesota lawmakers created a VOST, it has yet to be implemented. Fortunately, legislators from Minnesota – the first state to adopt net metering – maintained net metering as an option for customers. Had the state not maintained NEM as a consumer option, the years of debate over the Value of Solar price and structure could have destroyed the Minnesota solar industry. Under a VOST-only system, utilities are no longer encouraged to provide a fair value to solar customers. That’s because without the proven policy of net metering in place, utilities have all the leverage to bog down regulatory processes and undercut solar competition.
NEM as a side-by-side option is the right choice for Maine. That’s probably why most major pro-solar stakeholders have filed joint comments in Maine endorsing a NEM side-by-side option, including NRCM, ReVision Energy, the Sierra Club, UCS, Insource Renewables, and many others. These groups thoughtfully and correctly suggested running NEM as a side-by-side option with the new program for a period of time, then reviewing the new program to see if it’s working. At that point, lawmakers can decide if further changes need to be made, or if a VOST, NEM, or both are worth continuing. This will ensure that Maine’s solar market continues to grow without risk to private investment and the economic security of both solar and non-solar customers.