PUC to Decide Fate of Net Solar Metering

May 10, 2016

After a big legislative fight over regulations for mid- and small-scale solar power projects in Maine, a key issue affecting the solar industry now heads to the state’s Public Utilities Commission.

Solar installers and customers are wondering whether a major shift in the regulatory climate is underway, and whether it could dim the prospects for a sector whose future once seemed so bright.

For three decades, the solar power industry here and in most states has depended on a regulatory policy called “net metering.” It allows residences and businesses that use solar power to send extra electricity they make back to the grid and to get a credit for it on their electric bills.

At the Maine Beer Co. on Route 1 in Freeport, net metering is a small but essential part of the economics behind the installation of a roof of solar panels and two big, pole-mounted arrays that keep their faces to the sun, like giant, gleaming techno-daisies.

“Right now we’re putting out 40 kw,” says Rob Taisey, co-owner of North Yarmouth installation company Assured Solar, which put the $200,000 project together a year ago.

40 kw, or kilowatts, can juice a lot of Maine Beer’s machinery.

“They’ve got these chillers, they’ve got air conditioning units, they’ve got pumps, they’ve got a centrifuge that’s almost 15 kw of instantaneous power, so they use a lot of power and it’s about 50 percent,” of the company’s electricity draw that it simply doesn’t have to buy, he says.

And when the sun is shining strong and a few of those beer-making machines are offline? That’s when Maine Beer puts electricity back onto the grid, earning net metering credits that will reduce its bills even farther.

Those kind of fiscal mechanics help solar projects pay for themselves within 15-20 years, and to secure loans that can reduce upfront costs.

But right now, after a failed attempt at legislative action, net metering is up for review by state regulators at the Public Utilities Commission.

Its future, Taisey says, is uncertain at best.

“It’s just hard to even talk to customers about it. Because we don’t know what the policy will be,” he says. “What I tell people is that the sun is going to come up, we’re still going to make kilowatt hours, and doing it now is a little bit of an act of faith.”

The financial community is concerned too. John Egan heads loan making at Coastal Enterprises Inc., which has financed more than a dozen solar projects that rely on net metering to provide value that steadies loan repayment plans.

“When you have certainty, even if it’s not what you wanted, it’s predictable and you can manage your financial arrangements around that,” he says. “So I’d say it’s the uncertainty right now of what’s going to happen that causes people to really think twice about moving forward with this until the dust has settled.”

It’s unclear just how broadly or narrowly regulators response might be. The net metering statute is pretty short and even vague.

Tim Schneider, the state’s public advocate, says the Public Utilities Commission will face some pretty basic choices: keep net metering as it is, lower the rates solar generators get for electricity they put on the grid or do away with net metering altogether.

“The commission has clear statutory authority to do net metering as it exists now,” he says. “And they have pretty clear statutory authority to pay small-scale generators wholesale rates. But if you start doing anything trickier than that, then they end up in a much grayer area.”

One question is whether Maine regulators will follow the lead of their counterparts in Nevada. Earlier this year that state reduced the rates that solar generators could get for excess energy, not only for new installations but also for the thousands of residential units that were previously built under assumptions of a better return.

Gov. Paul LePage’s energy chief, Patrick Woodcock, says he does not want to see quite that kind of outcome in Maine.

“This is going to be within the commission’s discretion,” he says. “I would not see a huge amount of value in disrupting existing customers very quickly. I don’t see a huge amount of value with that.”

A spokesman for the Public Utilities Commission says the panel will decide what process it will establish to consider the issue “in the near future”.

Solar installers like Taisey say action can’t come quickly enough — that they need to know, at the least, whether customers who install solar now can count on the financial mechanics into the future.