Report: Sweeping policy changes considered in 2017

Fixed charges, minimum bills and distributed solar policies came under intense scrutiny in 2017, with almost all states looking at policy or rate-design changes.

January 29, 2018 Frank Andorka

Solar Frontier

It’s nearly impossible to keep up with every possible state-level policy change in real time. With 50 states all attempting to find the right balance between utilities’ revenue needs and solar’s continued growth, tracking each state’s work is a full time job – one the North Carolina Clean EnergyTechnology Center (NCCETC) takes on in its quarterly 50 States of Solar report.

Last week, the NCCETC released its final 2017 report that analyzed 249 solar policy actions over the past 12 months (an average of nearly 21 actions per month). In news that should surprise anyone in the industry, the majority of the actions concerned increases in fixed rates, establishing higher minimum bills for consumers and developing community solar programs.

In total, 45 states plus the District of Columbia took actions, but NCCTEC named the Top 10 most active states, which included:

Overall solar policy trends

Net billing is the new net metering

Many states are looking to move on from net metering and find new ways to compensate solar consumers for the excess electricity they export back to the grid. The NCCETC reports currently being examined and experimented with is net billing.

The format would still allow behind-the-metering consumption but, instead of making payments to solar consumers for exported electricity, the exports would be credited to consumers based on other rates.

Indiana, New York, Utah and the Jacksonville Electric Authority have already approved the move to net billing, and three other states are considering policy changes, including Arkansas, Louisiana and Michigan.

Diverse Credit Rate Approaches and Methodologies

What net billing necessitates is the evolution of compensation, which has little or no standardization throughout the states. Avoided cost and value-based crediting are the two most common calculations, but NCCETC says the methodologies vary widely.

Studies, studies and more studies

You knew an ever-increasing number of studies would be part of the decision making process, right? In what has been an ongoing trend, states are calling for more studies on what the best way forward to increase solar penetration is. The authors of the report wrote, “Legislatures in Michigan, Montana, and North Carolina enacted bills opening the door to net metering changes, but only after cost-benefit studies [Editor’s note: read “cost shift”] are conducted.

Other states like New Hampshire and Utah made small changes to DG compensation values and – you guessed it – initiated more studies before more changes are made.

Community solar takes center stage

One of the fastest growing segments of the solar industry is community solar, and the NCCETC says states are starting to take notice. Twenty-one states took 30 actions last year, nearly doubling the number of states dealing with community solar in 2016. Virginia and North Carolina went the furthest, adopting new policies to encourage the segment’s development.

Fixed charges get more partial approval

Fixed-charge requests by utilities continued their three-year trend of growth, reaching 61 requests in 2017. Regulators made 44 decisions, granting partial increases in 57% of the cases. On average, the approved increases were 26% of the original request, and only six utilities received their full requested increases.

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