Arkansas' New Net-Metering Policy: Solar Industry vs. Utilities

To Douglas Hutchings, the new net-metering credit for excess solar power that customers put onto the grid simply gives most of that power’s value to the customer’s utility company.

To Heather Kendrick, the new net-metering policy, mandated by state law for new solar arrays connected to the grid after Sept. 30, simply corrects a too-generous “subsidy” to solar owners.

It may not surprise you that Kendrick is a spokesperson for the state’s largest electric utility, Entergy Arkansas, and Hutchings is president of a solar developer, Delta Solar of Little Rock.

Solar power systems that have their interconnection documents in place by Sept. 30 are granted legacy status and will be “grandfathered in” at the old net-metering credit rate. That is basically the retail rate that consumers pay for electricity on their monthly bills, slightly over 10 cents per kilowatt-hour.

For systems that miss the deadline, owners’ credit will be about 4 cents per kilowatt-hour.

The change benefits power companies, not consumers or the environment, said Hutchings, whose company expects to lose its market for solar arrays on the farm. He said the state Public Service Commission, which oversees utilities in Arkansas, can’t get utilities to prove that an attractive net-metering credit gives array owners too much.

Kendrick told Arkansas Business that Entergy Arkansas’ current rates are 22% below the national average, and the investor-owned company is proud of that. “Our work to keep our rates more affordable has produced millions in savings for the Arkansas schools we serve and for our other customers,” she said.

Entergy favors net metering, she said, but the policy change “helps restore economic fairness for all customers who receive service,” those with and without net metering.

“It is unfair and inappropriate for all other customers to be forced to subsidize net-metering facilities through utility rates, nor require customers to pay a premium because those resources cannot be depended on to serve other customers,” Kendrick said.

In response, Hutchings suggested a serious look at comments on the PSC’s net-metering dockets.

“Something like five paid utility people talk and then 95 people ask them to provide data to back up their claims,” he said. “The data is never produced, so we can’t really have a productive conversation about what policies achieve the right balance of rewarding utilities for their investments while allowing Arkansans to claim some independence on how they produce and consume electricity.”

Hutchings said he’s seen data showing that demand-metered customers (generally commercial accounts) pay more than their fair share of infrastructure and maintenance costs even under the current retail net-metering rate. “Personally, I would love to see a lot more consumer protection on the residential side.”

Delta Solar has fewer than 25 employees. “We have always grown very intentionally with the goal of never having to negatively adjust to temporary disruptions,” Hutchings said. That served the company well when net-metering rules fell into limbo two years ago and Delta “couldn’t, in good faith, sell someone a solar array until there was clarity.”

He calculates the company would have doubled in size without the net-metering rule change.

Entergy companies have about 2,700 employees in Arkansas, and the utility clearly sees the value of the solar power it generates itself.

The utility has 281 megawatts of solar generation in place, 530 megawatts scheduled to come online later this year, and another 400 megawatts approved to start generating in 2025 “with more planned in the coming years,” Kendrick said.