NewEnergyNews: The Ongoing Fight For The Right Solar Policy


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    Monday, August 24, 2020

    The Ongoing Fight For The Right Solar Policy

    The Q2 2020 50 States of Solar

    July 22, 2020 (The North Carolina Clean Energy Technology Center [NCCETC])

    Executive Summary


    The purpose of this report is to provide state lawmakers and regulators, electric utilities, the solar industry, and other stakeholders with timely, accurate, and unbiased updates on state actions to study, adopt, implement, amend, or discontinue policies associated with distributed solar photovoltaics (PV). This report catalogues proposed and enacted legislative, regulatory policy, and rate design changes affecting the value proposition of distributed solar PV during the most recent quarter, with an emphasis on the residential sector. The 50 States of Solar series provides regular quarterly updates of solar policy developments, keeping stakeholders informed and up to date. APPROACH The authors identified relevant policy changes through state utility commission docket searches, legislative bill searches, popular press, and direct communication with stakeholders and regulators in the industry.

    Questions Addressed

    This report addresses several questions about the changing U.S. solar policy landscape:

    • How are state legislatures, regulatory authorities, and electric utilities addressing fast growing markets for distributed solar PV?

    • What changes to traditional rate design features and net metering policies are being proposed, approved, and implemented?

    • Where are distributed solar markets potentially affected by policy or regulatory decisions on community solar, third-party solar ownership, and utility-led residential rooftop solar programs?

    Actions Included

    This report series focuses on cataloging and describing important proposed and adopted policy changes affecting solar customer-generators of investor-owned utilities (IOUs) and large publicly-owned or nonprofit utilities (i.e., those serving at least 100,000 customers).

    Specifically, actions tracked in these reports include:

    • Significant changes to state or utility net metering laws and rules, including program caps, system size limits, meter aggregation rules, and compensation rates for net excess generation

    • Changes to statewide community solar or virtual net metering laws and rules, and individual utility-sponsored community solar programs arising from statewide legislation

    • Legislative or regulatory-led efforts to study the value of solar, net metering, or distributed solar generation policy, e.g., through a regulatory docket or a cost-benefit analysis

    • Utility-initiated rate requests for charges applicable only to customers with solar PV or other types of distributed generation, such as added monthly fixed charges, demand charges, stand-by charges, or interconnection fees

    • Utility-initiated rate requests that propose a 10% or larger increase in either fixed charges or minimum bills for all residential customers

    • Changes to the legality of third-party solar ownership, including solar leasing and solar third-party solar power purchase agreements (PPAs), and proposed utility-led rooftop solar programs

    In general, this report considers an “action” to be a relevant (1) legislative bill that has been passed by at least one chamber or (2) a regulatory docket, utility rate case, or rulemaking proceeding. Introduced legislation related to third-party sales is included irrespective of whether it has passed at least one chamber, as only a small number of bills related to this policy have been introduced. Introduced legislation pertaining to a regulatory proceeding covered in this report is also included irrespective of whether it has passed at least one chamber.

    Actions Excluded

    In addition to excluding most legislation that has been introduced but not advanced, this report excludes a review of state actions pertaining to solar incentives, as well as more general utility cost recovery and rate design changes, such as decoupling or time-of-use tariffs. General changes in state implementation of the Public Utility Regulatory Policies Act of 1978 and subsequent amendments, including changes to the terms of standard contracts for Qualifying Facilities or avoided cost rate calculations, are also excluded unless they are related specifically to the policies described above. The report also does not cover changes to a number of other policies that affect distributed solar, including solar access laws, interconnection rules, and renewable portfolio standards. Details and updates on these and other federal, state, and local government policies and incentives are available in the NC Clean Energy Technology Center’s Database of State Incentives for Renewables and Efficiency, at


    In the second quarter of 2020, 40 states plus DC took a total of 156 actions related to distributed solar policy and rate design (Figure 1). Table 1 provides a summary of state actions related to DG compensation, rate design, and solar ownership during Q2 2020. Of the 156 actions cataloged, the most common were related to DG compensation rules (54), followed by community solar (36), and residential fixed charge and minimum bill increases (27)


    Five of the quarter’s top policy developments are highlighted below.

    Petition Filed with FERC Regarding Federal Jurisdiction over Net Metering

    The New England Ratepayers Association filed a petition for a declaratory order related to net metering with the Federal Energy Regulatory Commission (FERC) in April 2020. The petition requests that FERC declare that there is exclusive federal jurisdiction over wholesale energy sales from generators on the customer side of the retail meter and that rates for these sales should be priced according to the Public Utility Regulatory Policies Act.

    Arkansas Regulators Issue Decision to Continue Retail Rate Net Metering

    In June 2020, the Arkansas Public Service Commission issued a decision retaining retail rate net metering for residential and non-residential customers without a demand component until December 31, 2022, at which point utilities may request approval of alternative net metering rate structures. The decision also adopts a Grid Charge for non-residential demand component customers, which is initially set at $0.

    Kentucky Power Files Net Metering Successor Tariff Proposal

    As part of its general rate case application filed in June 2020, Kentucky Power requested approval for a net metering successor tariff. The proposed tariff includes two daily netting periods (8 am to 6 pm and 6 pm to 8 am) and credits all excess generation at 3.659 cents per kWh. The proposal also includes grandfathering for existing net metering customers for up to 25 years.

    Hawaii Launches Phase 2 of the Community-Based Renewable Energy Program

    The Hawaii Public Utilities Commission launched Phase 2 of the state’s Community-Based Renewable Energy program in April 2020. Phase 2 increases the size of the existing program substantially, from 8 MW to 235 MW. The first tranche of small projects will use the same credit rates as Phase 1 of the program, while project developers will propose their own credit rates in their bids for larger projects.

    Illinois Commerce Commission Opens Proceeding to Set DG Rebate Value

    In April 2020, the Illinois Commerce Commission opened an investigation to set the value for the residential DG rebate that will eventually replace retail rate net metering in the state, pursuant to the Future Energy Jobs Act. Ameren Illinois claims that it has reached the 3% DG penetration rate, which triggers the required process to set the rebate value. The nonresidential DG rebate is currently set at $250 per kW.


    Broad Opposition to Federal Jurisdiction Over Electricity Sales from Customer Generators

    The spotlight was on the Federal Energy Regulatory Commission (FERC) during Q2 2020, as the Commission considered a petition filed by the New England Ratepayers Association requesting a declaratory ruling that FERC has jurisdiction over electricity sales from customer generators. If approved, this petition would have the effect of dismantling state net metering policies and imposing uniform federal rules for the treatment of excess generation. Stakeholders have expressed broad opposition to the petition, with over 50,000 comments filed in opposition from consumers, state utilities commissions, the National Association of Regulatory Utility Commissioners, the American Public Power Association, the National Rural Electric Cooperative Association, and many others. Relatively few groups filed comments in support of the petition, and no investor-owned utilities filed comments on the petition. FERC dismissed the petition on procedural grounds in July 2020.

    States Establishing Future Triggers for Net Metering Successor Tariff Development

    Rather than making immediate reforms to net metering programs, many states are establishing dates or levels of installed DG capacity (and sometimes both) that trigger the development of a net metering successor tariff. In Arkansas, utilities may propose alternative compensation structures beginning in 2023, while the Iowa Utilities Board will begin to develop a value of solar methodology for compensation after July 1, 2027. In Illinois, the process to determine the value of the DG rebate program replacing retail rate net metering is triggered when a utility reaches 3% installed DG capacity. Still, other states have established dates or capacity thresholds when net metering successors will go into effect.

    States and Utilities Considering Metering and Billing Infrastructure Issues Related to DG Compensation Programs

    As states and utilities consider more granular compensation structures for DG customers, billing and metering infrastructure issues are also being addressed. In Michigan, Indiana Michigan Power requested approval for a temporary modification to its recently approved inflow-outflow tariff that would apply the outflow credits to the entire monthly bill instead of the monthly bill minus the customer service charge. This change was requested in order to give the utility time to update its billing system. Idaho Power also requested approval for a temporary change to its small general service net metering tariff, allowing customers to avoid a second meter investment, as the tariff requirement is likely to be reevaluated soon. In Kentucky, Kentucky Power filed a net metering successor tariff proposal that utilizes two daily netting periods, with the intention of moving toward hourly netting in the future if the utility’s proposed advanced metering infrastructure deployment is approved.


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