October 22, 2010

Proposed solar power regulations cloud savings for consumers

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By Megan Poinski
Megan@MarylandReporter.com

A law intended to strengthen the state’s renewable energy program has been turned on its head by a working group of the Public Service Commission, said Sen. Paul Pinsky, the legislation’s sponsor. The Prince George’s County Democrat is angry about it and so are environmentalists and solar power users.

“Our intent was very clear,” Pinsky said. “We wanted to promote renewable energy. And to allow someone to stand in our way, it is shameless.”

The law was intended to allow Marylanders with their own generation systems to profit if they made more energy than they could use. But the proposed rules scheduled for a hearing Tuesday could wind up costing them money.

Some members of the PSC working group dominated by utility companies — appointed to set the rules for how the law should be enforced — saw it differently. The utility representatives interpreted the law, which they were able to amend in its final stages, so that it will take away much of the cost savings of green energy to those who wish to install it. The new regulations will increase electric bills to those who currently use solar and wind power.

Paul Verchinski, a Columbia resident with solar panels on his roof, was amazed when he learned about the proposal. He’s been spreading the word to solar power consumers, lawmakers, and environmentalists.

“The government thought it was doing us a favor,” Verchinski said. “And utilities are using it to gut the renewables that are already in the system.”

The rules are far from set in stone right now, said PSC Deputy Executive Secretary Donald Eveleth. The PSC will begin holding public hearings next Tuesday to listen to feedback and suggestions on what they should do with the law.
How net metering works

Pinsky and Del. Brian McHale, a Baltimore City Democrat, sponsored the law to improve the state’s net metering incentives.

Net metering allows people with renewable energy systems to earn money or credit from utility companies for energy they produce. These owners of solar or wind power units have electric meters that record energy both used and produced.

At night, a home with solar panels on its roof uses electricity produced by a power plant. During the day, those solar panels produce electricity. After meeting the home’s electrical needs, the power produced goes back into the power grid – and is subtracted from that home’s energy use. At the end of the month, the home receives a utility bill for the amount of energy it used, subtracted from the amount of energy it produced.

During sunnier months, homes and buildings using solar power produce more energy than they use. Maryland law previously allowed this amount of energy to carry over as a credit for a year. If that energy was not used in 12 months, the credit expired.

Earlier this year, Pinsky heard about University Park Community Solar LLC, which is in his district. UPCS is a community-based company that seeks to profit from renewable energy.  The organization has several investors who have helped buy equipment to cover the roof of the University Park Church of the Brethren with solar panels. The church uses some of the energy produced by the panels on its roof—which it purchases directly from UPCS—and the rest goes back into the grid.

“This is a good cause, and a way to make sustainable energy in a for-profit way,” said UPCS President David Brosch. “If we could create a model for how this is done, more people could follow our lead.”

The legislation adds a section to renewable energy producers’ bills that tells them how much the excess energy they produced is worth. After 12 months, someone with a balance of credits could request to be paid for them.

“If we want our state to move forward on environmental issues, this is the kind of thing we have to do,” said Alana Wase, conservation program coordinator for the Sierra Club Maryland, which strongly supported the legislation.
Utilities amend the bill

When the bill was nearing passage, Pinsky said several amendments were added to the bill at the prompting of utility companies. He only noticed the consequences months later.

“Did they put in enough language to blur the intent? Yes. Am I pleased? No,” he said.

After Gov. Martin O’Malley signed it, the new law went to the Public Service Commission, which set up a working group to discuss how to enforce it. The working group was made up of PSC staff, representatives from the Office of People’s Counsel, the Maryland Energy Administration, six solar and renewable energy companies and the six major utility companies serving Maryland.

The public representatives and solar companies interpreted the law as its sponsors intended. The dollar value of any extra energy would be shown on a monthly bill, but those energy credits would be carried forward as credits – not money to offset future bills.

The utility companies proposed calculating the dollar value of excess energy each month, and carrying forward that dollar amount on a customer’s bill. The credits would be valued at “prevailing market prices,” which varies by location, time of year, and time of day.

Automatically converting excess energy to dollars could mean that people using renewable energy might actually lose money. Analyses performed by the working group showed that depending on how the excess energy valuation was calculated, annual residential electric bills for solar users could increase by as much as 842%, and commercial bills could increase in a year by as much as 649%.

The analysis written by the state energy administration and submitted to the PSC states that under the electric companies’ plan, “The cost increase was present for all analyzed customer types, with both solar and wind generation, and worsened dramatically as the size of the renewable installation increased.”

The comments submitted by the electric companies say that their proposal strictly adheres to the law as actually enacted. They also hint that renewable energy hurts their bottom line.

“The banking of kilowatt-hours causes inequities, and ultimately subsidies, in the services of generation, transmission, and distribution,” the group’s comments state.
Environmentalists shocked

Several environmental groups were shocked.

Wase said that the Sierra Club expected opposition to the new law from the utilities. They did not expect that the rulemaking team “would be skewed,” with too many utilities represented and not a single person or business that currently uses renewable energy.

In Pinsky’s written comments to the PSC, he underscored the legislature’s intent as written in the bill: “The General Assembly finds and declares that a program to provide net energy metering for eligible customer-generators is a means to encourage private investment in renewable energy resources, stimulate in-state economic growth, enhance continued diversification of the state’s energy resource mix, and reduce costs of interconnection and administration.”

Brad Heavner, state director of Environment Maryland, said that the utility companies want the law to do just the opposite. “I think if that’s the way it ends up, we’ve taken a step backward.”

Utility representatives either did not respond to requests for comment or did not wish to comment beyond the comments already filed in the docket.
Commissioners can change draft

Earlier this month, PSC staff released their first draft of possible regulations. This draft states that extra energy generated will be expressed in dollars determined by electric commodity rates for similar customers, and directs electric companies to come up with repayment methods.

The PSC’s Eveleth said these potential regulations will be tweaked by the commissioners based on the comments made in writing and at the public hearing. He said there are likely to be other hearings to determine the best way to draft the rules.

Wase said that she hopes the PSC, which is supposed to be representing the citizens, will do its part to respond to the people and ensure the law serves them.

Pinsky said considering O’Malley’s push toward green energy, he hopes the PSC will make the regulations favor expanding renewables.

“If it goes the way the electric companies want, I will have to review it – then make changes to the law next year,” said Pinsky, who is unopposed for reelection.