Monday’s Study: The Fight For Solar In 2020

The 50 States of Solar: Q4 2020 & Annual Review

January 27, 2021 (North Carolina Clean Energy Technology Center)

Executive Summary

2020 SOLAR POLICY ACTION

State and utility solar policies continued to undergo review in 2020, with nearly every state in the country considering policy or rate design changes – a trend which has continued over the past several years and is likely to continue through 2021 and beyond. Table 1 provides a summary of state actions related to DG compensation, rate design, and solar ownership during 2020. Of the 257 actions identified, the most common were related to DG compensation policies (92), community solar policies (55), and residential fixed charge and minimum bill increases (48). The actions occurred across 46 states plus DC in 2020…

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TOP TEN MOST ACTIVE STATES OF 2020

While nearly every state in the country took some type of action on distributed solar policy or rate design during 2020, some states were particularly active, taking many different actions or especially impactful actions. The following states stood out in 2020 for their solar policy activity:

1. Virginia Virginia lawmakers considered several bills related to net metering, community solar, and thirdparty ownership during the 2020 legislative session, enacting bills adopting a shared solar program, expanding third-party ownership options, increasing the net metering aggregate cap and system size limit, and establishing a plan for the development of a net metering successor tariff once the new aggregate cap is reached. 2. South Carolina Work continued in 2020 to develop a net metering successor tariff in South Carolina, pursuant to legislation enacted in 2019. In September 2020, Duke Energy announced an agreement it had reached on a tariff design with stakeholders, and in December, Dominion Energy filed its proposed tariff design. Both tariffs include time-varying credit rates, while Duke Energy’s also includes a minimum bill and Dominion’s includes a monthly subscription fee based on system capacity and an increased fixed charge.

3. Arkansas The Arkansas Public Service Commission issued a decision in June 2020 on a net metering successor tariff, maintaining retail rate net metering for the time being while authorizing a new grid charge (initially set at $0) for larger customer-generators. The Commission will allow utilities and other stakeholders to propose alternatives beginning in 2023. Regulators also worked to implement legislation authorizing solar leasing and service agreements, and decided to open a new proceeding to consider community solar.

4. Kentucky Kentucky Power, Kentucky Utilities, and Louisville Gas & Electric proposed net metering successor tariffs as part of their general rate case applications filed in 2020. All three utilities proposed net billing tariffs, with Kentucky Power’s using two daily netting periods and Kentucky Utilities and Louisville Gas & Electric’s tariffs using instantaneous netting. Each tariff uses avoided cost rate compensation for excess generation.

5. New York The New York Public Service Commission issued a decision in July 2020 establishing a net metering successor tariff for mass market projects interconnected after January 1, 2022. The tariff continues retail rate net metering with the addition of a monthly customer benefit contribution based on system capacity. The Commission also worked to establish a community benefit program for residential customers of municipalities that host major renewable energy facilities.

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6. Connecticut Connecticut regulators worked toward the development of a net metering successor tariff during 2020. The Department of Energy and Environmental Protection and the Public Utilities Regulatory Authority filed a draft value of distributed energy resources study, and several parties filed joint comments on what the successor tariff structure should include. The Authority also considered issues related to the implementation of the state’s shared clean energy facility program.

7. California The California Public Utilities Commission opened a new proceeding in 2020 for the development of Net Metering 3.0 tariffs. The Commission released a draft study examining the costs to serve net metering customers in the state. Meanwhile, the Sacramento Municipal Utility District continued a stakeholder process to develop a net metering successor tariff and released a study examining the costs and benefits of net metering.

8. Idaho The Idaho Public Utilities Commission has been considering a number of net metering proposals from utilities. In 2020, the Commission approved Idaho Power’s proposal to make new large customer-generators subject to future net metering tariff changes. Regulators also approved a change to make new customer-generators in PacifiCorp’s territory subject to future net metering changes and directing the utility to conduct a study of on-site generation before tariff changes are considered.

9. Utah In Utah, the Public Service Commission issued a decision on Rocky Mountain Power’s proposed net billing tariff in October 2020, concluding a three-year process to develop export credit rates. In February 2020, Rocky Mountain Power filed its proposal, which included time-varying credit rates based on the avoided cost rate. The Commission approved higher export credit rates that vary seasonally, but not with time of day.

10. Michigan Michigan regulators approved net metering successor tariffs for Indiana Michigan Power and Consumers Energy in 2020. The Public Service Commission previously approved an inflowoutflow tariff structure, which is being implemented in individual utility rate cases. The Commission also directed the Commission Staff to conduct a value of distributed energy resources study, with a kick-off meeting happening in the first quarter of 2021.

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TOP SOLAR POLICY TRENDS OF 2020

Utilities Proposing Additional Fees Based on System Capacity

For distributed generation (DG) rate design, attention has shifted dramatically from demand charges to charges based on a customer’s DG system capacity. The New York Public Service Commission approved a net metering successor tariff including a monthly customer benefit contribution based on DG system capacity. Both Evergy in Kansas and Dominion Energy in South Carolina proposed new fees based on DG system capacity during 2020.

States Adopting Unique Net Metering Successor Policies

States continue to operate as laboratories of innovation, adopting a wide array of net metering successor policy designs. In 2020, Arkansas and New York regulators opted to maintain retail rate net metering for at least certain customers and approve new monthly fees. The Utah Public Service Commission established net billing credit rates compensating customer-generators at a rate between retail and avoided cost for exported energy. Iowa lawmakers chose to move forward with a value of solar approach, with rate changes not occurring until at least 2027.

States Facing Challenges with Low-Income Community Solar Participation

Although the majority of state community solar policies include special provisions to encourage participation by low and moderate income customers, many states are still facing challenges in achieving this participation. In New Jersey, regulators are considering rule changes to streamline the income verification process, and in Oregon, the Commission delayed the requirement for community solar project managers to reach the state’s low-income subscription target.

Net Metering Successor Tariffs Being Considered on a Utility By Utility Basis

In several states, regulators are considering net metering successor tariff designs on a utility-byutility basis. In Kentucky, three utilities filed tariff design proposals in 2020 as part of general rate cases, and in Michigan, regulators approved DG tariffs for Indiana Michigan Power and Consumers Energy. In South Carolina, Duke Energy and Dominion Energy have both filed successor tariff proposals, which are significantly different. Arkansas regulators are allowing utilities to propose net metering alternatives beginning in 2023.

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States and Utilities Considering Time-of-Use Crediting for Net Metering Customers

States and utilities are increasingly considering time-varying compensation for DG customers. In Utah, Rocky Mountain Power requested approval for time-varying credit rates for its net billing tariff, although the Commission did not approve the proposal. Both Duke Energy and Dominion Energy filed net metering successor tariff proposals that include time-varying crediting in South Carolina.

Utilities Continue to Propose Fewer and Smaller Residential Fixed Charge Increases

In 2020, utilities continued to propose significantly fewer residential fixed charge increases than in the last several years. Only 19 utilities proposed residential fixed charge increases, compared to 31 in 2019, 34 in 2018, 41 in 2017, and 47 in 2016. The increases being proposed are also smaller than in past years. The median increase proposed in 2020 was $2.47, compared to $3.00 in 2019, $3.87 in 2018, $4.00 in 2017, and $4.07 in 2016.

Interest Growing in Minimum Bills as a Distributed Generation Rate Design Element

Utilities and other parties are growing increasingly interested in minimum bills as a DG rate design element, particularly as an alternative to demand charges, capacity based charges, and fixed fees. In South Carolina, Duke Energy and solar stakeholders filed a net metering successor tariff proposal including a monthly minimum bill, while Virginia regulators authorized a minimum bill for shared solar customers. In Kansas, Evergy proposed a minimum bill as an alternative to a DG capacity-based charge.

States Considering Expansion of Existing Community Solar Programs

A number of states considered the expansion of existing community solar programs during 2020. In South Carolina, regulators reviewed existing community solar programs and directed utilities to make filings for new programs. In Virginia, lawmakers enacted bills establishing a shared solar program and a multi-family shared solar program, building on the state’s utility-led community solar program. New Jersey legislators also considered a bill making the state’s pilot community solar program a permanent program, with the Senate passing the bill during the year.

Strong Movement Away From Mandatory Residential Demand Charges

No investor-owned utility proposed a mandatory residential demand charge in 2019 or 2020, indicating strong movement away from demand charges as a rate design feature for residential DG customers. The Kansas Supreme Court also ruled in April 2020 that Evergy’s mandatory DG customer demand charge was in conflict with state law. Evergy was the only investor-owned utility with a mandatory DG customer demand charge in effect.

States Establishing Timelines for Net Metering Successor Transitions

Many states are setting specific dates or aggregate capacity thresholds for the consideration or implementation of net metering successor tariffs. Virginia lawmakers enacted a bill increasing the net metering aggregate cap and directing regulators to develop a net metering successor when a certain installed capacity threshold is reached. In Arkansas, regulators authorized utilities and other stakeholders to file net metering alternatives beginning in 2023, and Iowa legislators enacted a bill directing regulators to develop a value of solar methodology for future tariffs in 2027.

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LOOKING BACK: 2015 – 2020

Despite the COVID-19 pandemic, distributed solar policy activity remained at a high level in 2020, with the total number of actions roughly on par with the last few years. States and utilities took a total of 257 actions in 2020, as compared to 265 actions in 2019, 264 actions in 2018, 249 actions in 2017, 212 actions in 2016, and 175 actions in 2015. Figure 4 shows the total number of solar policy actions taken in each year, by category, while Figure 5 displays the number of states taking action in each category. Note that several actions were considered over multiple years.

In 2020, distributed generation (DG) compensation, DG valuation, community solar, and thirdparty ownership activity increased, while actions related to residential fixed charge increases, demand and solar charges, and utility-led rooftop solar declined. The most dramatic change was in residential fixed charge actions, which decreased by 18% over 2019, continuing a strong trend of utilities proposing fewer of these fee increases.

The number of states taking solar policy actions decreased slightly in all categories except community solar. Overall, a total of 46 states and DC took actions considering changes to distributed solar policy and rate design during the year…

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