Subsidize, or not to subsidize, that is the question.
Over the past few years the issue of net metering has risen in prominence as the roll-out and installation of residential roof-top solar panels has become more popular, and comparatively affordable. The idea is that customers who can afford the upfront costs, or have a high enough credit rating to secure financing, for solar panels can sell back to their utility company any excess energy that goes unused beyond what they generate. The practice of net metering has become controversial because solar-using customers are given the opportunity to receive payment back for their energy non-use at the same time that they escape paying costs associated with still being connected to and using the conventional electric grid.
As noted in FitchRatings: Solar Panels Cast Shadow on U.S. Utility Rate Design, “net metering allows customers to buy and sell supply to and from the utility. It can create pricing incentives to benefit one utility customer class over the majority of the customer base.”
Trying to find its way forward on how best to address this issue, the Maine Public Utility Commission recently issued a new rule that locks in place net metering rates for current solar customers for the next 15 years, and applies a diminishing scale of returns for customers who install solar panels after January 1, 2018.
Since the MPUC’s decision, the Commission has been at odds with Governor Paul LePage, who “suggested that the PUC’s recent decision to continue offering financial incentives for rooftop solar panels will benefit only solar energy customers and the solar industry, not the average ratepayer,” according to reporting done by Kevin Miller for the Portland Press-Herald. LePage is also at odds with the solar industry, which is supportive of MPUC’s decision. Solar advocates think the Commission decision didn’t go far enough to help solar users offset the costs associated with photovoltaic panel installations.
Comparatively, solar energy production makes up a small percentage of electric generation in Maine. According to Miller, “as of last year, New England had roughly 1,774 megawatts of installed solar capacity, led by Massachusetts with 1,241 megawatts, Connecticut with 273 megawatts and Vermont with 154. Maine had by far the least of the six states, at 20 megawatts.” Despite low solar production, the state maintains the 11th highest retail rate for compensating solar owners in the country. That rate gets rolled over to the bills of all consumers, whether they have solar panels themselves or not. The exact financial toll varies as between estimates made by Governor LePage and the solar industry/advocates. The estimated annual cost to consumers ranges anywhere between $1.3 million and $7 million.
While the MPUC, solar industry and solar advocates argue that solar energy provides an array of environmental and societal benefits, Governor LePage warns “you are building an industry that doesn’t pay for itself,” noting that growth of the solar industry only yields temporary construction jobs and unfairly shifts electricity costs to people who are not financially able to afford rooftop solar installations.
The MPUC decision is narrowly focused on residential rooftop solar. Maine’s legislature is currently looking to address how utility-scale and community solar projects should be treated.