Kentucky bill would throttle back net metering

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The Kentucky state legislature is trying to slash net metering rates in the Bluegrass State for the second straight year, in another attempt to prevent a largely mythical cost shift to non-solar customers.

House Bill (HB) 227, introduced into the legislature earlier this week, would cut compensation for surplus generation under the state’s net metering policy by nearly two-thirds.

Residential solar users are currently compensated at full retail rates, and are also able to defer monthly surpluses to later in the year.

HB 227 would eliminate that practice and would allow utilities to decide whether to pay customers by cash, check or other equivalent at the end of each month or roll the credit over to the next month.

The bill, which would apply immediately to all solar users that install systems after July 15, would grandfather current solar users into the one-to-one payments through July 15, 2043. It would eliminate the ability of homeowners to transfer that grandfathering mechanism to new owners if they should sell their homes, however.

Critics of the bill say the lack of transferability lessens the economic case for installing solar for residents.

Sponsors of the bill say it is necessary to relieve non-solar customers from paying for grid upkeep that they say solar users don’t pay because of their system of self-generation, an argument commonly used by utilities around the country when they try to change net metering rules.

National studies, like one by the Lawrence Berkeley National Lab, suggest that this “cost shift”, as it is commonly known in the industry, is non-existent when solar penetration is 10% or less. According to the most recent data from the Solar Energy Industries Association, Kentucky currently generates 0.05% of its electricity from solar.

Last February, the Kentucky legislature defeated a similar bill that would have enshrined into law the utilities’ right to charge solar customers demand and fixed charges and allow those charges to bear no relation to the rates charged non-solar customers.

Industry advocates said the resulting payback-calculation chaos would likely cause customers to decide against investing in a rooftop solar system, bringing the state’s market to a screeching halt.

While the current changes being proposed under HB 227 would not be as damning given that they only apply to monthly surplus generation, this would further weaken the business case for residential solar in the state.