May 4, 2014

New Oklahoma Law Charges Residents Who Install Solar Panels, Wind Turbines

Oklahoma residents who choose alternative energy by installing solar panels or wind turbines for their homes will be charged an additional fee, which has not yet been determined.

The bill, SB 1456, sailed through the House after no debate, despite being widely opposed by renewable energy advocates, environmental groups and the conservative Oklahoma utilities group TUSK. Gov. Mary Fallin (R) signed the bill into law last week after the state House passed the measure 83-5.

The law doesn’t affect those who already have alternative energy sources installed, but any new alternative energy customers will have to pay a fee that has yet to be determined.

The measure took Ctaci Gary, owner of Sun City Oklahoma, by surprise.

“We knew nothing about it and all of a sudden it’s attached to some other bill,” Ctaci Gary told ThinkProgress. “It just appeared out of nowhere.”

Homeowners who produce their own energy actually sell excess energy back to the grid, but Gary worries the new fee could be a deterrent. Sun City is trying to help customers install solar panels before the new fee goes into effect.

“We’re going to use it as a marketing tool,” Gary said. “People deserve to have an opportunity [to install their own solar panels] and not be charged.”

Doug Mataconis at Outside the Beltway blog wrote “the idea of charging people extra for doing something that reduces their dependence on the grid while at the same time increasing the amount of energy available seems rather nonsensical.”

“It is unfortunate that some utilities that enthusiastically support wind power for their own use are promoting a regressive policy that will make it harder for their customers to use wind power on their own,” Mike Bergey, president & CEO of Bergey Windpower in Norman, said in a statement. “Oklahoma offers tax credits for large wind turbines which are built elsewhere, but wants to penalize small wind which we manufacture here in the state? That makes no sense to me.”

Representatives of Oklahoma Gas and Electric Co. and Public Service Co. of Oklahoma told The Oklahoman that the surcharge recovers "some of the infrastructure costs to send excess electricity safely from distributed generation back to the grid." 

“We’re not anti-solar or anti-wind or trying to slow this down, we’re just trying to keep it fair,” Oklahoma Gas and Electric Co. spokeswoman Kathleen O’Shea told the Oklahoman. “We’ve been studying this trend. We know it’s coming, and we want to get ahead of it.”

For the rest of their requirement, the companies must make compliance payments to the Illinois Power Agency, which can use the funds to buy RECs or renewable energy.

"But the IPA doesn't know how much funding will be there each year and can't make long-term commitments," said Mark Pruitt, an Illinois energy consultant and former executive director of the state agency.

In the end, he said, "there is really no mechanism to guarantee a long-term stream of payments, renewable or otherwise, in Illinois."

Also complicating the situation is the fact that renewable energy funds collected from consumers served by utilities and alternative energy suppliers are maintained in separate "buckets." And the power agency can't spend funds from alternative suppliers unless it is simultaneously acquiring renewable energy for customers who still buy energy at the default rate from utilities.

Because the utilities have seen most of their customers turn to competing suppliers, they have no need to procure additional renewable energy because they have more than enough from a 2010 wind energy procurement.

That binds the hands of the power agency, which didn't conduct a renewable energy procurement last year. In fact, the agency had to curtail some of the wind energy procured on behalf of utilities in 2010.

"Seventy percent of the residential customer base has left the utilities," said Anthony Star, the agency's executive director. "That kind of blows a hole in the budget."

Unspent funds and flat growth
The result of everything is a growing pool of money for renewable energy procurement that can't be spent and a renewable energy mandate that isn't being met.

As of the end of last year, customers served by alternative energy suppliers had paid $53 million into a fund for renewable energy procurement -- money that remains untapped.

The cash-strapped Illinois government borrowed almost $7 million from the fund a few years ago. It quickly repaid the loan, but there is growing concern among clean energy advocates that the Legislature could look to "sweep" the account once again.

Meanwhile, Illinois is falling behind on meeting its renewable energy targets. The statute requires utilities and alternative suppliers to obtain 8 percent of their generation from renewable resources for the year ending June 30. While there are no official data available, all parties agree that the state is falling short of the mandate.

An analysis by the Environmental Policy and Law Center published by the Chicago Tribune last year suggested 5 percent of eligible Illinois electricity demand was being met with renewable resources -- well short of the 8 percent mandate for the 12-month compliance period that ends on June 30.

"Clearly, by some level of magnitude, the RPS is not being met," Star said.

While renewable energy funds go unspent, clean energy development in Illinois has ground to a halt.

While 820 MW of new wind generation was added in 2012, the numbers last year were zero wind and only a couple of megawatts of solar, said Barry Matchett, co-legislative director and policy advocate for the Environmental Law and Policy Center, a Chicago-based clean energy advocacy group that's helping negotiate a fix for the renewable standard.

A big reason for that, Matchett and other renewable advocates said, is the inability of the state to enter into long-term power purchase contracts that provide financial certainty to developers.

"Right now, banks are not lending to energy projects that are operating on a merchant basis," said Kevin Borgia, manager of membership and public policy for Wind on the Wires, a wind energy advocacy group.
Borgia said developers representing eight prospective wind farms cumulatively worth 1,300 MW are currently holding county-level permits -- a sign that they are serious about moving forward with the projects. And more than 1,000 MW of wind development saw local permits expire last year, with no guarantee that they'll go through the process again.

Searching for a solution
There's little disagreement about the nature of the problems with implementing the renewable energy law in Illinois, even given all of the disparate interests of utilities, alternative energy suppliers, renewable energy developers, consumer interests and legislators.

But general agreement about the nature of the problem doesn't make it any easier to implement a solution.
The proposed fix wouldn't change what consumers pay. Instead, it would solve the problem by allowing funds set aside for renewable energy to flow between accounts depending on whether customers take energy supply from a utility or an alternative supplier. That would guarantee the Illinois Power Agency a certain minimum level of funds to enter into long-term agreements with renewable developers.

A proposal to free up existing funds for clean energy procurement has been agreed to in principle by major players. And bills filed in 2013 that stalled in the Legislature could ultimately be revived.

While several interested parties reportedly reached an agreement last fall on a solution, the General Assembly has yet to formally take up the issue this spring. Among those that signed off on the bill were Chicago-based Exelon Corp., according to a story in Crain's Chicago Business.

In a statement, however, the company said that while it supported the 2007 renewable standard and remains a proponent of clean energy, it is premature for the company to comment on any proposed changes in the law.
One important player that did not sign off on the fix negotiated by clean energy advocates is the Illinois Competitive Energy Association, an association of alternative energy suppliers.

Kevin Wright, the group's executive director and a former ICC chairman, said the proposal would increase costs for his members by restricting their ability to self-procure renewable energy resources and forcing them to write bigger checks to the Illinois Power Agency.

Specifically, the proposed solution would allow alternative suppliers to self-supply one-fourth of their renewable requirement and buy the rest through the power agency. Currently, they can meet half of the requirement on their own and find it more cost-competitive to do so.

"It increases compliance costs," Wright said. "That reduction from 50 percent to 25 percent really hurts."
More recently, rumors of some type of comprehensive energy legislation next year to address the competitiveness of Exelon's Illinois nuclear fleet could further complicate discussions about a fix for the renewable standard.

Matchett, however, remains optimistic that a measure will be adopted before the current session ends at the end of May.

"The existing statute isn't getting it done," he said. "But what's great is that it's easily remedied."

No comments:

Post a Comment