Solar negotiators reach a deal

Lift cap, cut net metering rates -- but less than House wanted

STATE HOUSE NEWS SERVICE

FIVE MONTHS OF NEGOTIATIONS resulted in a deal Tuesday between House and Senate leaders to raise the cap on the amount of energy that public and private solar power generators can sell back to the grid while slashing the net metering rate that those generators get paid.

The compromise would also allow utilities companies to petition the Department of Public Utilities to charge solar-power generators a minimum bill to cover the cost of maintaining electricity transmission and distribution infrastructure, according to a summary obtained by the News Service.

Lawmakers have been debating the future of solar incentives for months as clean energy and solar industry advocates have ramped up the pressure to strike a deal, warning that delays were freezing an industry that employs thousands in Massachusetts.

House Speaker Robert DeLeo in recent days has talked about his desire to clear the solar issue off the Legislature’s plate before taking up what is being called an omnibus energy bill dealing with the purchase of  hydroelectricity and off-shore wind power.

“The legislation reflects our shared priorities and will provide a path for continued solar development in the Commonwealth while also ensuring significant ratepayer savings,” Rep. Brian Dempsey of Haverhill and Sen. Benjamin Downing of Pittsfield, the lead negotiators of the conference committee, said in a joint statement to the News Service.

The conference committee, which was named on Nov. 18, included Dempsey, Downing, Reps. Thomas Golden and Brad Jones and Sens. Marc Pacheco and Bruce Tarr. The committee, according to a source, intended to file its report Tuesday evening with the goal of allowing it to come to the floor of the House on Wednesday for a vote.

The cap lift of 3 percentage points for public and private projects goes beyond the 2 percent expansion proposed in the both the House and Senate bills that were being reconciled. Advocates had expressed concern that the longer it took to reach a compromise the less impact a 2 percent cap lift would have as projects waiting for incentives began to pile up. The current caps — 4 percent on private installations and 5 percent on public ones — are calculated as a percentage of the peak electrical usage in a utility’s service territory.

The conference committee also compromised on the net metering rate solar power generators would receive for their electricity. Currently, the state’s net-metering program allows solar-producing businesses to sell their energy back to the grid at retail rates, which typically range between 17 and 21 cents. The compromise bill reduces the value of those credits by about 40 percent, cutting the reimbursement price to roughly 11 cents to 12 cents per kilowatt hour.

Solar facilities owned by municipalities and government entities would continue to be credited at the full retail rate, and residential and small commercial projects would also be exempt from the new incentive structure.

The proposed net metering rates lean toward the Senate’s more pro-solar proposal. The House’s position had been that net metering rates should drop to about 5 cents a kilowatt hour, while the Senate favored a three-tier approach with rates ranging from 8 cents to 17 cents per kilowatt hour depending on the power generator.

While the House approach was supported almost unanimously by that body’s lawmakers, 100 of them last month sent a letter to the conference committee effectively disavowing their previous vote and encouraging the conference committee to adopt something more akin to the Senate approach,

Solar industry advocates last week said that in the year since caps were reached in the National Grid service territory 550 solar projects had stalled and $618 million in investments were put on hold, according to the Solar Energy Industries Association. Recently, caps on net metering were also met in regions of the state served by Eversource.

Despite hitting its cap in March 2015, National Grid said recently that it still interconnected 15,000 solar projects last year and continues to receive a “high volume” of applications.

Existing solar facilities would be grandfathered, under the compromise bill, and continue to receive retail rate credits for 25 years, splitting the difference between the 30 years proposed by the Senate and the 20 years recommended by the House.

The bill also includes provisions calling on the Department of Energy Resources to encourage low-income solar projects as it works to design the next phase of the state’s solar renewable energy certificate program, which is a statewide market-based program to incentivize solar outside of the net-metering system.

George Bachrach, president of the Environmental League of Massachusetts, and ELM’s program director Josh Craft called the conference report a small step forward, but suggested the 3 percent cap lift could be exhausted quickly.

“If we’re going to build a robust solar industry in the state and the jobs that go with it, we have to keep going forward, so this is one small step, but more is needed,” Bachrach said.

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Matt Murphy

State House News Service
Craft said it ELM may try to persuade lawmakers to revisit the issue of the cap when it debates an omnibus energy bill later in the session. He also said he was concerned that minimum utility bills could “further undermine the economics for solar.”

“The market likes certainty and stability and this is a pretty tentative step,” Bachrach said.