Thanks to our high latitude and the tilt of the Earth, Alaska has summer days when the sun barely sets and winters when it barely rises. As daylight stretches out, home solar owners are now entering their most productive time of the year.
At the peak of summer, some solar homes can meet their entire monthly electrical demand with their panels. In the sunniest months, their solar might generate more electricity than they need. Under state net metering rules, utilities purchase their excess power on a monthly basis at the avoided cost rate, which is the cost the utility would have incurred to generate the same kilowatt-hours itself. Here on the Railbelt, that means the avoided cost of generating with gas. This is about a third of the rate at which the owner saves when using solar electricity for their own use, since about two-thirds of the electric bill pays for non-fuel costs, such as maintaining the poles and wires of the transmission and distribution system.
During the darkest winter months, solar panels may barely produce any energy at all. Being able to offset the lack of production in winter with overproduction in summer could incentivize more homeowners to install solar by lowering the payback period, and incentivize larger, more productive solar systems. Everyone would benefit from the resulting conservation of natural gas, and upfront investment costs would be distributed among the homeowners who install the panels.
A pair of bills in the legislature introduced by Gov. Mike Dunleavy – House Bill 164 and its twin Senate Bill 150 – would make net metering annual rather than monthly by letting excess kilowatt-hours produced in one month roll over as bill credit in the next, rather than being purchased by the utility at a lower rate.
HB164 and SB150 would also end the regulatory catch-up game of the net metering “cap.” In 2010, the state statute set the minimum net metering that utilities must allow on the grid at 1.5% of their average annual demand. This precaution has outlived its usefulness. All the utilities have passed this, seeking ad-hoc permission from the RCA as they continue connecting net metering members. The new bills would uncap net metering – If utilities want to restrict it, the responsibility will be on them to show how it harms reliability, rates, or fairness.
The bill has rough spots, which will hopefully be amended in the legislative process. It creates a fund to compensate utilities for claimed revenue losses due to net metering, but leaves it up to the Regulatory Commission of Alaska (RCA) to decide what counts and puts the legislature on the hook for the costs. This would be a weight around the bill’s neck in any legislative session, but in the midst of deficits and cuts to public services, it’s an especially heavy one. But it isn’t clear why such a fund is needed.
The 15 years of net metering in Alaska have been rife with claims that it will endanger reliability or redistribute costs (more than any home energy conservation inherently does) to put an unfair burden on non-users. But these stories are backed up by little more than inapt comparisons to net metering issues in places like California, with much higher populations and much more sun. The bill’s loose idea for compensation reflects this incoherence – depending on what regulators decide “losses attributable to net metering” are, every kilowatt-hour produced by a home solar system (and therefore not bought from the utility) could be up for reimbursement from the state. This is as absurd as a grocery store claiming a revenue loss on every egg your chicken lays, because that’s an egg you didn’t buy from them. Yet Matanuska Electric Association made this claim to the RCA in November.
We hope amendments to the bill will at least put guardrails around what “losses attributable to net metering” aren’t. Annual net metering is a goal worthy of support, and we hope the bill goes forward with some needed amendments.