The future of residential solar in Kentucky is in question as a bill races through the legislature to restructure how utilities credit solar customers for the excess electricity they generate.
Senate Bill 100 was introduced Monday, voted out of the Senate Committee on Natural Resources on Wednesday and only hours later passed out of the Senate on a 23-12 vote.
Republicans praised the bill as a compromise even as the state’s solar industry continues to oppose it. Meanwhile, Democrats on the Senate floor criticized the process.
“And the reason we are hearing [the bill] today, right after it was heard in committee is so that the amendments that were filed by the minority party can’t be heard,” said Democratic Sen. Morgan McGarvey.
The measure would grant state utility regulators the authority to set exchange rates for the solar power that customers feed back into the electricity grid.
Utilities behind the bill say ratepayers are currently subsidizing residential solar because the utility has to pay a premium for the excess power residential solar customers put back on the grid.
Residential solar advocates counter the cost for ratepayers is equivalent to about a penny or less, and that this bill would ensure utilities a monopoly over the future of solar generation in the state.
Republican bill sponsor Sen. Brandon Smith said the bill is a fair compromise that puts “experts” — in this case state utility regulators — in charge of determining the exchange rates for solar customers.
“We have a unique opportunity to modernize solar in Kentucky, to give it something that’s dependable and moves it forward in a way that takes care of the utilities, the customer and solar, and that’s not easy to achieve,” Smith said.
What Does The Bill Do?
To better understand this bill, it’s worth slowing down and diving into the weeds.
The bill requires state utility regulators to decide how to credit residential solar customers based on a “dollar-denominated credit” rather than a “kilowatt-based credit”, said Tom FitzGerald, an environmental attorney opposed to the bill.
FitzGerald said that language lays the groundwork for utilities to argue that solar customers are being paid, and are therefore subject to taxation and federal regulation as a wholesale electric supplier.
In essence, the bill could end up with utility regulators treating each residential solar property as its own tiny utility — and setting similarly low wholesale exchange rates. In other states, utilities have already made similar arguments, Fitzgerald said.
“The bill ends the netting of electricity generated and used by solar customers instead directing the [Public Service Commission] to set the value to be credited to the solar customer for the fed-in electricity,” FitzGerald said. “No standards, no parameters, no guidance is provided.”
David Samford, an attorney speaking on behalf of utilities, has a different point of view. He told the Senate committee that the measure would give ratepayers an equal opportunity to present their case before the Public Service Commission.
“There’s not a need for one class of ratepayers to continue to subsidize a different class of ratepayers,” Samford said.
The bill is similar to last year’s Senate substitute of House Bill 227 with some minor changes. It would raise the cap on residential solar customers affected by the legislation from 30 to 45 kilowatts and would grandfather in customers who purchase residential solar before the bill takes effect.
Existing properties with residential solar would continue to receive credit under the current law for 25 years, regardless of if the property is sold.
The House committee on natural resources is scheduled to take up Senate Bill 100 on 9 a.m. Thursday.
This pose has been updated.