Solar PV panels installed on the Belfast landfill by ReVision Energy (Photo Courtesy ReVision)
Solar PV panels installed on the Belfast landfill by ReVision Energy (Photo Courtesy ReVision)
In December, the state of Nevada became ground zero in a nationwide political war between investor-owned utility companies and solar energy producers. In a controversial move, Nevada state regulators slashed the value of credits solar power users earn for generating excess energy, jacked up monthly service charges on solar customers and made the service charges retroactive, according to the Las Vegas Sun. Three major solar installers in the state shut down operations in protest, idling thousands of workers. In early February, Maine Senator Angus King and Senator Harry Reid of Nevada responded with an amendment to an energy bill in Congress that would protect customers that have existing agreements with their electric utility for rooftop solar from “unjustified and abusive rate hikes or new fees.” 

Taking the Fight to Maine

While Nevada is an extreme example, several other states, including Maine, are struggling with the same question of how to balance the increasing demand for solar with monopoly utilities’ need to make a profit. Once a marginal sector of the energy market, the number of distributed solar arrays has jumped from 7,000 rooftops in 2005 to more than a half million today. 

The precipitous drop in solar prices is linked to the policy of net energy billing, which allows homeowners and businesses with grid-tied solar arrays to receive credits for the excess energy they send to the grid. 

In Maine, these unused credits go into a “bank” and are used to purchase additional power from the grid for up to a year. Although solar producers don’t get paid for sending power back to the grid, they can feasibly reduce their electric bills to “net zero” by banking credits when the sun is shining and redeeming them when it’s not. 

The problem for utilities, says Central Maine Power spokesman John Carroll, is that grid-tied solar users still use the grid’s transmission and distribution infrastructure, which ratepayers pay to maintain. Carroll said that the company’s losses in revenue due to net energy billing increased from $425,000 in 2012 to $1.3 million in 2015. 

“What we just want to make sure is that there are recognized and understood costs to maintaining this infrastructure,” said Carroll. “As a matter of fairness, all people need to contribute to its upkeep, because as some groups start paying less and less through things like net energy billing, those costs still have to be paid in the grid.” 

It’s a common refrain across the country as investor-owned utilities and corporate-funded political groups like the American Legislative Exchange Council (ALEC) work hand-in-glove in state capitols to hike rates on solar users, whom they characterize as “free riders.”  

But solar advocates point to a 2015 Maine PUC-commissioned study that determined the value of solar power produced in Maine to be worth twice the standard retail rate per kilowatt-hour, which is what solar producers currently receive for their power. The study found that solar is much more valuable than other forms of energy because it displaces more expensive fuel sources, creates less air and climate pollution, adds more price stability and energy security in the state’s energy portfolio, and reduces the need to build more power plants to meet certain peak electricity demand times.

Nevertheless, Maine still lags behind the rest of New England in solar installations due to a lack of state incentives and net energy billing accounts represent only one percent of Central Maine Power’s annual peak demand. ReVision Energy co-founder Fortunat Mueller argues that cost shifting to other ratepayers might justifiably become an issue when the number of net energy billing accounts is closer to 20-percent penetration.  

“If there is a cost to net energy billing today, at the level of penetration we have in Maine, it’s almost vanishingly small,” said Mueller at a recent forum in Hallowell sponsored by the Environmental & Energy Technology Council of Maine. “So I don’t think there’s anyone who thinks that net energy billing at sort of the half-percent or one percent penetration creates any sort of inequity or cost-shift problems.”

Mueller ‘s company contends that utility companies have enjoyed a monopoly on the sale of electricity for the past 100 years, which has created a large centralized power grid that made sense 50 years ago, but no longer works for the 21st century. Rooftop solar, they say, threatens the investor utility model by allowing consumers to generate their own electricity themselves. CMP vigorously disputes that they view solar as a “threat” because, in the absence of high-capacity battery systems, solar producers aren’t disconnecting from the grid. They’re using it to store excess power.

“The way we look at our relationship between distributed energy and our systems is that really our systems enable that technology to work,” said Carroll. 

In 2014, Maine solar advocates and businesses managed to turn back a proposal by CMP to raise fees on solar users. But in August 2015 CMP requested that the Public Utilities Commission review the policy after net energy billing accounts hit the one-percent. Given the LePage administration’s hostility toward renewable energy, and because all three of the current PUC commissioners have been appointed by Governor LePage, solar advocates fear that the PUC might decide to make drastic changes to the program or scrap the policy altogether. 

 


The Public Advocate Plan

 In order to avoid a showdown, last year the Legislature passed a measure to set up a special stakeholder group made up of solar advocates, environmental groups, industry groups, and utilities to come up with an alternative rate plan to net energy billing. Maine’s Office of the Public Advocate has since developed a proposal to require utilities to compensate solar producers based on a 20-year contract for their electricity rather than the current 1:1 retail rate. Figuring in the projected declines in future solar costs, the average compensation for solar would gradually decline until it reaches the same level as wholesale prices. The plan would also open up the market to large grid-scale solar projects, industrial users, as well as community solar projects and municipalies that currently face barriers due to the rate structure and regulations on net metering. The  Public Advocate’s plan aims for the goal of building 250 megawatts of new solar in the state over the next five years. Currently, there are 20 megawatts. 

Speaking in Hallowell on February 3, Public Advocate Tim Schneider said the proposal would create more rate certainty for solar investors and more transparency of the costs of solar. He added that while the PUC study found solar reduces the need for more transmission infrastructure, over time net energy billing doesn’t capture the value for all rate payers very well.

“If I can build a transmission line for $16 million and 

I can pay for $16 million worth of solar to offset the need for that transmission line, we actually haven’t done anything for ratepayers,” said Schneider. “But if I can have a transmission line and avoid building that $16 million transmission line by building $3 million worth of solar, that’s a good thing. We should take that deal.”

Schneider said that the plan would also provide more value to all ratepayers because it allows larger grid-scale installations to enter the market to sell wholesale power, which he said are more cost-effective than residential solar due to economy of scale. He said that with long-term, fixed-price contracts, solar companies and utilities can avoid a fight every time they hit a certain threshold of solar generation.

“The policy vision presented here strikes a balance between stakeholder interests with a unique focus on producing benefits for all of Maine’s ratepayers,” wrote the Public Advocate’s Office in its white paper. “With the correct structure in place, economic development benefits follow, large political fights can be diffused, customer options multiply, and innovation occurs.”

However, there is stark disagreement amongst stakeholders on the rate plan for residential and rooftop solar, which represents most of the solar market in Maine. 

Last week, the newly formed Solar Energy Association of Maine delivered nearly 4,000 signatures to the Legislature, calling for lawmakers and state utility regulators to preserve net energy billing as a side-by-side option for solar producers. 

“If Central Maine Power influences the Public Utilities Commission or Legislature into eliminating net metering, we will be forced to lay off our workers and Maine residents will lose the opportunity to own their power,” said Chuck Piper, founder of SunDog Solar in Searsport, in a statement. 

The group estimates that 50 solar businesses and 400 jobs in the state would be put at risk if net energy billing were scrapped in favor of an alternative plan. 

Meanwhile, Mueller of ReVision Energy said the environmental costs of not investing in solar are being lost in the debate. 

“The carbon pollution effects might be the same regardless of how you do it,” said Mueller. “We don’t believe that Maine policy ought to make solar the exclusive domain of large corporations and investment banks.… One of the wonders of the sun is that it is ubiquitous and available to everybody, and we think that the policy that we make here in Maine ought to mirror that.”