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Rooftop solar industry balks at Florida House’s new plan

The bill’s sponsor in the House added an amendment meant to help find compromise.
Workers prepare to install a rooftop solar water heating unit. Rep. Larry McClure, R-Dover, sponsor of House Bill 741, has added an amendment in an attempt to find a compromise between the rooftop solar industry and the state’s electric utilities. [Douglas R. Clifford | Times (2012)]
Workers prepare to install a rooftop solar water heating unit. Rep. Larry McClure, R-Dover, sponsor of House Bill 741, has added an amendment in an attempt to find a compromise between the rooftop solar industry and the state’s electric utilities. [Douglas R. Clifford | Times (2012)]
Published Feb. 23|Updated Feb. 24

TALLAHASSEE — Florida homeowners and businesses would be given 18 months to install rooftop solar before current financial incentives are reduced under a House proposal intended to find middle ground between the rooftop solar industry and the state’s powerful electric utilities.

But the change to House Bill 741, which was originally written by Florida Power & Light for the House and Senate sponsors, also includes several sweeteners for the utility industry in its effort to revise net metering laws.

For example, the amendment by bill sponsor Rep. Larry McClure, R-Dover, would allow a utility company to ask regulators to allow it to charge all its customers so that it can recover the revenue it loses when some homeowners install solar panels. The amendment was approved by the House Commerce Committee.

Clean energy advocates warned the provision to charge all customers higher fees if the solar market expands could destroy the emerging rooftop solar industry.

“The bill actually cements into law the transfer of lost revenue to all customers, including those of lower incomes,” said Marion Knowles of Rethink Energy Florida, an advocacy group. “Investor-owned utilities are not the victim here. Lost revenue, coming from a customer who reduces their cost either from solar or installing LED light bulbs, is not currently tacked on (as a utility cost) and should not be required to be tacked on.”

Solar installers, who for months have worked with McClure to try to reach a compromise, warned that the provision that allows the utility industry to impose new fees on solar users also could offset any benefits.

“It will, without a doubt, lead to the loss of jobs and the closure of dozens of small businesses all across the state over the next 18 months as the ramifications of this bill hit the marketplace,” said Josh Kerns, secretary and treasurer of the Florida Solar Energy Industries Association.

“These fees are essentially a tax on utility customers and will eliminate any potential savings to homeowners and businesses,” he said. “These fixed fees directly hit the lower-income individuals everyone is stating that they want to protect by passing this bill.”

The bill is based on what solar industry advocates consider a myth and the utility industry says is fact: that homeowners without rooftop solar are subsidizing those who have it.

“What the bill says is we’re gonna get to a zero subsidy,” McClure told the House committee. “So non-rooftop solar customers will not in any way, shape or form subsidize rooftop solar.”

Reducing benefits

Under the amendment, rooftop solar owners will be given a credit at current retail rates for the energy they generate and use. But if they generate excess energy and want to sell it back to the grid for the utility to use and sell to others, they will receive retail rates only through 2024.

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After that, the rate will gradually decline, on what McClure calls a “glide path,” until it reaches a new rate based on the utility’s “fully avoided cost,” which is the cost it would take for the utility to generate or purchase that same amount of energy from another source. It is a fraction of the retail rate.

But Katie Chiles Ottenweller of Vote Solar, a nonprofit advocacy organization, warned that amendment makes a significant change to Florida law, which prohibits utilities from discriminating against rooftop solar customers by imposing additional fees on them.

“This bill will undo that and open the door for utilities to deliberately discriminate against customers because they’re installing solar technologies,” she said.

The amendment includes the following changes from the original bill:

  • Cost recovery: A utility may ask the Public Service Commission to charge all ratepayers more money to “recover, through its fuel and purchased power cost recovery charge, its lost revenues” from “the addition of residential” solar customers. Regulators are given 180 days to respond.
  • Grandfather clause: If a customer has installed their solar panels before 2029, they will be reimbursed at the rate in existence when their panels were installed for 20 years, at which time the advantage will go away.
  • Lower credits: Solar customers that install new panels from 2024 through 2025 will receive energy credits valued at 75 percent of the current rate. Consumers that install solar in 2026 will be credited at 60 percent of the current rate. Consumers that install solar in 2027 through 2028 will be credited at 50 percent of the current rate. After 2029, consumers will be reimbursed at what regulators consider “the full cost of electric service,” which may be less than half the current rate.
  • Market penetration: If the Public Service Commission determines that rooftop solar has reached 6.5 percent market penetration based on “peak load” any time before 2029, regulators can accelerate the pace at which they move to the lower net metering rate. The current market penetration is about 1 percent.
  • New charges: The Public Service Commission may impose new fixed charges on all solar customers, requiring them to pay utilities for things such as base facilities charges, electric grid access fees and monthly minimum bills.

Subsidy or not a subsidy?

Utilities argue that the current net metering arrangement creates an unfair subsidy. Because most owners of rooftop solar have not yet established battery storage systems, they still rely on the grid to receive electricity from utilities at night or when their systems cannot generate sufficient power.

Florida Power & Light argues in a television ad that “outdated Florida laws are forcing FPL customers who don’t have rooftop solar to pay extra every month for the few who do.”

But solar advocates disagree. They argue that there is no evidence that non-solar ratepayers are subsidizing solar users and the expansion of rooftop solar reduces the need for power plants and results in a reduced strain on the utility grid. Solar advocates argue that, in addition to offsetting the demand on the grid, there are societal benefits for all ratepayers, such as reduced carbon emissions and the economic benefits of a robust solar industry in communities throughout the state.

Because those benefits outweigh the costs and are shared by all ratepayers, solar advocates have urged McClure to require an independent data analysis that requires regulators to look beyond the utility costs to determine whether there is net subsidy or a net cost for solar.

“This amendment is a vast improvement over where we started, but it is still fundamentally flawed as it is built on the unfounded and unproven premise,” Kerns told the committee.

McClure said it will be up to regulators to determine whether or not the cost shift really exists or not. He wouldn’t answer why he is not asking for an independent data analysis to do that.

Several of the solar advocates commended McClure’s effort to modify the original bill but said it still provided an unfair advantage to the utility industry.

Dave Cullen of the Sierra Club said that by reducing the value of net metering, the bill will make solar out of reach for most Floridians.

“The claim is that this bill makes costs equitable. What it will do is put rooftop solar out of reach for everyone except Florida’s wealthy,” he said. “Why eliminate thousands of jobs and shutter hundreds of small businesses to limit solar to those with the means when solar can help low-income families get off the monthly bills?”

Legislation could still change

McClure defended the bill language that imposes new fees, telling reporters it is something the Public Service Commission is already allowed to do. But he said he was willing to keep working on it.

“I’m open to having the conversation making sure that we get it right,” he said.

The Senate bill, SB 1024, is awaiting approval of the Senate Rules Committee. One of the major differences between the House and the Senate versions of the bill is the provision that extends the grandfather clause to existing rooftop solar owners. The Senate extends the current rates to those members for 10 years and the House for 20 years.

“It’s the right thing to do in my mind,” McClure told reporters. “It gives predictability to the financiers and, thus, allowing them to deliver on these systems.”

Because 80 percent of rooftop solar consumers are financing their systems, they need predictability. He said he is not willing to back down from grandfathering in current customers for 20 years.

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