Energy bill heads for committee showdown, uncertain future
With the Energy and Technology committee’s deadline for approving bills for this session on Thursday, committee leaders, the Department of Energy and Environmental Protection, the governor’s office and environmental advocates are racing the clock on one of the most consequential energy bills in years.
Senate Bill 9 is sweeping legislation proposed by Gov. Malloy to essentially implement the state’s updated Comprehensive Energy Strategy (CES), unveiled at the start of the session and more than a year overdue.
Both the CES and the bill are packed with new energy programs, revisions to existing energy programs and updated policy to reflect increasing concerns about climate change as well as the state’s difficult finances.
By far the most controversial issues relate to how the state’s solar incentive programs are run – mainly changing the way residential solar customers are compensated for the excess power their systems make and send back into the grid during certain times of the day.
That item has been the key focus of discussion and rewrites since the bill was introduced. The original committee vote had been scheduled for Tuesday, but was moved to nearly the last possible moment on Thursday.
The bill remains a moving target as language is tweaked – but so far is still eliciting griping from environmentalists, solar industry people and committee members. And while the bill is likely to get voted out of committee, the solar portions risk derailing the entire legislation as it heads to the full legislature.
“It’s all still in process,” said Mary Sotos, who runs DEEP’s energy division. “We’re trying to stay nimble and engage in all those conversations. We think it’s a good package overall.”
But not everyone does.
“We can’t support this as currently written, so we’re spending our time trying to fix it,” said Claire Coleman, climate and energy attorney with Connecticut Fund for the Environment which, with other environmental groups, is lobbying the committee and DEEP on changes. She contends that several of the solar provisions will put a damper on deployment of solar systems, hurting jobs and efforts to combat climate change. “This is the wrong time to be pulling the rug out from under the solar industry. There’s enough uncertainty as it is with federal concerns. We need to be creating some certainty in the solar market in Connecticut.”
The key flashpoint is a concept called “net metering.” It’s a commonly used way to compensate solar customers. The way it works in Connecticut now is that solar customers are paid the retail electric rate for the power they sell back to the power grid. Many states, like Connecticut, are looking for a new paradigm as the solar industry has matured and prices have come down.
Utilities generally have opposed net metering. Eversource would only comment broadly on the legislation, saying it was reviewing the changes. In the past it has stated, as have other utilities, that because of the revenue they lose from solar customers who only use the grid part of the time — chiefly at night — they have to charge non-solar customers more to maintain the grid. They commonly call that rationale cost-shifting.
But solar advocates in Connecticut have pointed to studies from the Brookings Institution and the Lawrence Berkeley National Lab that show net metering helps all customers and that solar penetration as low as the level in Connecticut does not result in cost shifting.
The CES and original legislation did away with net metering, replacing it with a “buy-all/credit-all” concept. Essentially a solar owner would have to sell all his or her power to the grid at a rate to be set by the Public Utilities Regulatory Authority (PURA) and buy back what he or she needed at the retail rate.
Such a system would mean higher fees for solar owners and would probably make it impossible to install battery storage or home-based smart energy systems that would help reduce energy demands and integrate with more modern grid concepts.
“Forcing people to go that direction is going be counter-productive in the long run and would undermine grid modernization,” said Mark LeBel, staff attorney for the advocacy group Acadia Center.
After hours of testimony at a public hearing on the bill earlier this month and nearly 250 written comments, most of them skewering DEEP over net metering changes, DEEP and the committee leadership began negotiating changes.
But as revisions began to emerge, environmental advocates remained opposed. Two days before the vote, the language contained two methods of solar compensation for residential customers to choose from. One is still the buy-all/credit-all scenario and the other would allow net metering at a to-be-determined rate set by PURA. An earlier plan to cap amounts of each was jettisoned.
It’s a bit of a head-scratcher why solar customers would choose a buy-all/sell-all option, unless PURA sets an extremely low net-metering rate.
Sotos said DEEP thinks offering different models could work and points to a similar, though not identical, plan being tried in Rhode Island. “A lot of residential customers aren’t home during the day, so functionally a lot of customers would be selling back most of their power anyway,” she said. “They can figure out what would be the better deal, a better fit.”
Compounding the concern is an annual $35 million cap on all solar installations – residential and commercial. Sotos said that’s not far off the $40 million DEEP calculates is being spent now, and that a cap will help push solar costs down by encouraging competition among solar companies.
But Bryan Garcia, president of the Connecticut Green Bank, which runs the state’s residential solar program, calculates that the $35 million will translate into about 40 megawatts of solar a year and that the residential program alone is expected to do 45 to 50 megawatts this year.
The bank’s mission is to create 300 megawatts of residential solar. It’s done 205 megawatts already, and what worries Garcia is what happens after the program hits 300.
“I’d like to see policy that allows the market to transition effectively from a net-metering policy to an appropriately valued tariff or tariff-like structure,” he said, referring to the rates, commonly called tariffs, that PURA would set for solar system owners.
Key to that, he and others say, is something referred to as “value of solar.” It’s a way to set a monetary value on all the non-monetary benefits of solar or any renewable energy — things like cleaner air, better health outcomes, helping slow climate change.
The bill puts in motion a process to do that through PURA as part of setting rates for solar users. But environmentalists universally say the bill’s instructions are not specific enough.
Furthermore, said Sara Bronin, director of the Center for Energy and Environmental Law at UConn Law School, “If you set a tariff that really values solar – then you won’t need a cap.”
But Sotos discounted the use of “value of solar” calculations to help set tariffs on solar users, saying the monetary value could be so high that utilities would have to dramatically increase rates for everyone.
“Those are important aspects to examine and understand as part of a broader policy,” she said. “I’m not sure they need to figure directly into compensation.”
It’s unclear how much of a barrier such disagreements will have on the future of the legislation once it leaves the committee, but expectations are that there will continue to be extensive revisions, and all bets are off right now on whether the bill even makes it to the floor.
That in turn leaves two areas of concern. A big one is the commercial renewables program, now in a one-year extension. The legislation would have transitioned it to a new, yet-to-be-formulated competitive program that groups several non-residential programs into one procurement process. The existing program in Connecticut has required utilities to buy the lowest-priced power from competing clean-energy sources. All parties say it’s imperative to do another extension if SB 9 does not pass.
Another is a popular part of the bill that increases the amount of renewable energy the state is required to use. The Renewable Portfolio Standard, as it is known, has been 20 percent by 2020. The CES and the bill propose 40 percent by 2030.
Some would like to see that enacted even if the full legislation is not.
Rep. Tim Ackert, R-Coventry, the ranking member on the Energy Committee agrees that the commercial program would need to be extended. Other than that, he would like to see the legislature take its time. He’s fine with waiting until next year.
“I want a plan that is comprehensive, not piecemeal,” he said. “When I see a comprehensive process – let’s really have it be comprehensive.”
The committee is set to meet Thursday at 10 a.m.
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