Federal policy proposals in support of clean energy are
often blunt and controversial, relying mostly on mandates or targets that
trouble free-market conservatives.
Numerous bills creating a national renewable energy target
have been shut down over the years. Recent carbon regulations from the White
House that effectively create
new clean energy targets for states have also sparked fierce legal opposition from the energy industry and
Congressional leaders.
But could a new bill based on consumer choice and market
fairness change the framework for supporting distributed generation at the
federal level?
Angus King, an Independent Senator from Maine with a background in
the energy business, introduced legislation this week that avoids mandates, and
instead creates “a broad set of parameters” for valuing and integrating
distributed generation on the grid.
The bill, called the Free Market Energy Act of 2015, would direct states to
establish unbundled rate structures for distributed resources --
opening up the door for time-variant pricing or local tariffs that more
accurately reflect the costs and benefits of solar, storage, demand response
and microgrids. It would also set standard interconnection policies for these
technologies.
“Government policies do not support the free market
conditions that allow distributed energy to flourish,” said Senator King in a
statement upon releasing the bill.
“For example, expensive grid-connection fees discourage
consumers from pursuing newer technologies, while simplistic net metering
formulas do not properly compensate grid owners. The result is a slowing in DER
innovation at a time when our energy policies should promote appropriately
valued consumer-based energy technologies,” he said.
If states do not set up dynamic rate structures and stronger
interconnection policies, power companies will be required to purchase
electricity from distributed systems under the law PURPA. That law, created in
the late 1970s, instructed utilities to enter contracts with independent power
plants at the avoided cost of building their own plants -- opening up a new
market for power procurement at the wholesale level.
Applying the law to the distribution system would mean
utilities have to buy power from distributed generation at the full retail
rate. That requirement, known as net metering, is already in place in 43 states.
Assuming states don’t unbundle rates, the federal expansion
of net metering will likely perturb utilities. The bill would also place a cap
on net metering fees of $10 per month -- another likely area of concern for
utilities worried that solar system owners are not paying their
fair share of fixed grid costs.
Finally, the bill would establish state-level "smart
grid coordinators" -- similar to regional transmission operators -- to
manage distributed resources on the grid. This could be run by the utilities
themselves, or by an
independent entity.
While energy experts and advocates digest the language of
the bill, reactions are cautious -- but generally positive.
"I'd say in general, I could support an arrangement
like this," said Travis Fisher, an economist with the American Energy
Alliance (AEA), a nonprofit that has opposed traditional mandates
supported by the renewable energy industry.
Although AEA hasn't adopted an official stance on the bill
as an organization, Fisher did say the proposal is sparking conversation among
staff. “I like the avoided-cost framework when it comes to solar,” he said.
Debbie Dooley, founder of the Green Tea Coalition, is
enthusiastically embracing the legislation. Dooley has been an
outspoken advocate for policies that allow consumers to connect their
solar systems to the grid and get compensated fairly.
“I think it’s a good bill. Senator King said he’s working
with different groups to fine-tune it, and I think it’s something that true
free-market conservatives should support,” said Dooley. “I feel very
encouraged.”
The big question for conservatives will be how much
authority is handed to the Federal Energy Regulatory Commission when it comes
to setting rates. There are also questions about the default to net metering
under PURPA: should it be valued at the retail rate, or the wholesale rate?
The solar industry’s national trade group is not yet taking
a firm stance on the bill. Ken Johnson, the vice president of communications
for the Solar Energy Industries Association, said there’s lot the organization
can support -- along with some unanswered questions about the future of net
metering.
“From our perspective, reducing barriers to solar remains a
top priority. That said, it’s also important to point out our strong,
unwavering support for net metering laws nationwide,” said Johnson.
“While Senator King has laid out a thoughtful,
outside-the-box approach, this should not be seen as a potential replacement
for net metering. In states that don’t have net metering -- or where it isn’t a
possibility -- Senator King’s approach could open up new solar
opportunities. We look forward to working with him on this legislation,”
he said.
The bill was introduced this week at the request of Alaska
Senator Lisa Murkowski, chair of the Senate Energy and Natural Resources
Committee, who's hoping to pull together different ideas as part of national
energy legislation.
With Congress barely able to pass a stripped-down version of an energy efficiency bill,
prospects for a comprehensive energy bill are not strong. However, King's bill
is couched in free-market language targeting "personal
freedom" and "the right to sovereignty over personal choices"
that may appeal to more conservatives in both the House and Senate.
That's the hope, anyway.
“This is what really makes me feel good: Senator King
introduced this bill with a free-market message, not a climate-change message.
That shows the message I’ve been delivering since 2013 is resonating on all
sides of the political spectrum. I’d like the dialogue to shift more to the
free-market choice message," said Dooley.
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