Testimony on HB 2713 by Bill Griffith February 11, 2002

Testimony on HB 2713
by Bill Griffith
February 11, 2002

Thank you Mr. Chairman and members of the committee for the opportunity to speak on behalf of HB 2713. I am here today representing the Kansas Chapter of the Sierra Club and the Heartland Renewable Energy Society.

We are in favor of the legislation being discussed today for several reasons. Net metering is truly the lynchpin of small-scale renewable energy programs in the United States. Without net metering farmers, ranchers, schools, churches, and homeowners are in effect economically barred from investing in renewable energy for themselves.

Renewable energy has many advantages we should encourage: It is decentralized, which makes it much less of a security risk, it is non-polluting, and it adds needed variety to our resource mix which depends on coal to a higher degree than most other states do.

If you will take a moment and look at the map in my handout you will see thirty-four states have enacted net metering legislation as of now. Four states- Kansas, Missouri, Michigan, and Utah are considering it this year. The Utah bill has no opposition so in effect we will have at least thirty-five states with net metering provisions very soon.

I would argue that we realistically are looking at thirty-five out of forty states-not fifty at this point in time. The states in the southeastern portion of the country have the lowest wind speeds so the demand for this type of legislation is less. When solar power comes down a couple more dollars a watt in the next two to five years you will probably see movement from these states except of course Georgia, where the main utility was one of the driving forces in enacting legislation for net metering a year or two ago. Alaska has very little transmission lines outside of towns, so the point is moot because of their uniqueness in that regard.

Going back to Utah for a moment I would like to make two points: The key utility in the state is in support of the legislation. They do not feel it is a subsidy worthy of any consideration. There is a concern about how much future power will be required of them that comes from renewable energy if a renewable portfolio standard is put in place. They realize this would be the most inexpensive way to acquire new generation (let someone else pay for it). Secondly, it is very interesting to note that at the bottom of the sheet entitled “Solar, Wind-Energy Users May Get Benefit” from the Salt Lake Tribune it states that the Utah Committee of Consumer Services briefly flirted opposing the measure over concerns of a subsidy. On the second page, third paragraph the committee decided “that from a financial standpoint the cross-subsidy potential would be miniscule” (my quotations).

Continuing down to the fourth paragraph, Jeff Burks, the energy policy coordinator for the Utah Energy office is quoted as saying, “Barring the cross-subsidy issue, which could affect the typical Utah residential electricity user by a ‘nano-cent’ a year, there is little downside to allowing net metering” (my quotations).

The growing trend of adapting net metering standards has been also helped along with endorsements from the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of State Utility Consumer Advocates (NASUCA). Both groups passed policy resolutions supporting state net metering policies. “These resolutions urge states to consider measures to make net metering available to small-scale renewable generating facilities, and authorize the Executive Committees of NARUC and NASUCA to ‘request Congress and the FERC to identify and remove any barriers to state implementation of net energy metering’ ” (Starrs brief to the Iowa Supreme Court).

The Iowa Office of Consumer Advocates was active in the Iowa Supreme Court where it argued in favor of Iowa’s net metering law. Also active among others were the Public Advocate Office of the State of Maine, the New York State Consumer Protection Board, the State of New Hampshire Governor’s Office of Energy and Community Services, and the Maryland Office of People’s Counsel. The point being here is if net metering raises rates for consumers and is a preferential treatment for one class of individuals, why are all these consumer groups lining up in support of net metering? The answer of course is there is no real subsidy or realistic chance of higher bills for customers. There is apparently, a large upside to net metering that is in the public’s interest. I would also add it is just common sense that thirty-five states would not pass net metering if it led to higher bills for their constituents. No state has ever overturned a net metering statute. The reason is again, it does not lead to higher bills.

I would like to turn your attention to the document entitled “United States of America Federal Energy Regulatory Commission”. This decision was issued in response to the Iowa Supreme Court case where FERC clarified what net metering is and is not.

Opponents of net metering have argued that the customer-generator is “banking” their power with the utility and withdrawing it later when they need it. This was the postion that MidAmerican Energy Company of Iowa took in the case. FERC ruled on page five in the first two full paragraphs that net metering does not constitute the banking of electricity.

FERC also backed the assertion of the Iowa Board on page two that net billing (metering) does not pay the generator the retail rate of electricity, but only the avoided cost of excess electricity generated at the end of the billing cycle. Both these rulings were important victories for net metering statutes across the United States.

Net metering imposes no direct costs to utilities, in fact administrative costs will go down because of no need to read a second meter and cut a check each month. The small loss of revenue in fact is comparable to energy efficiency improvements such as compact fluorescent lighting, a new refrigerator, or a more efficient air conditioner. The customers are offsetting retail purchases of power and their effective return on these efficiency investments is the avoided retail price of electricity.

This has been recognized by other states. For example on page sixteen of the Starrs brief to the Iowa Supreme Court, the New York Public Service Commission concluded in considering whether the state’s investor-owned utilities were entitled to recovery of this resume stated, ” Net metering results in a reduction of usage at a residence that is conceptually similar to other declines in consumption due to changes in lifestyle, purchases of energy efficient appliances, pursuing energy conservation, and the like. Just as the utilities are not permitted to automatically recover lost revenues attributable to reduced consumption, they are not entitled to recover lost net metering revenues. If a utility can instead demonstrate it has incurred a net metering cost attributable to factors other than lost consumption, it may attempt to justify recovery under the applicable rate and restructuring agreement.”

The document you are looking at comes from an Iowa Supreme Court case that was decided in favor of the Iowa Utilities Board and the Department of Justice vindicating Iowa’s net metering statute.

The expert who wrote this brief, Tom Starrs, has written the net metering laws for Oregon, Washington, and also Utah’s proposed legislation. HB 2713 has many similarities to Mr. Starrs’ model legislation.

Another key point Mr. Starrs makes is in the first two paragraphs on page seventeen where he states for the court that net metering has no technical consequences that impose a burden on a utility. Secondly, the utility never pays a retail rate for electricity. They only pay the avoided cost of a net excess of electricity. This is how the Kansas bill is written as well.

Mr. Starrs next addresses the subsidy issue by running an economic model of the utility in question and its net metering requirements and he then makes a projection ten times as large and then one hundred times as large. If you would turn to page nineteen of his brief you will observe the results of the analysis:

At 300kW there is no effect on residential rates at all. Growing the analysis to three megawatts (an incredibly large amount for net metering) it would come to the grand total of a penny. Three megawatts is the equivalent of 300 ten kW wind turbines-an unbelievable amount for one territory. With the cap on total net metered generation at one percent, everyone is assured that net metering will not become a real subsidy (a nickel? a dime?). If the opponents of net metering still insist on bringing up the idea of a “subsidy” I hope they bring some numbers to show proof of this to the committee that have been scrutinized like Mr. Starrs’ analysis was.

I would like to comment on the one percent cap on generation in any REC or utility’s territory. This will ensure a market for small-scale renewable generation which is very popular with the public and bring the benefits such as cleaner air, insurance for the generator against fuel spikes, reduced energy losses in transmission and distribution lines, voltage support, increasing the reliability of the electric supply, deferring the need for new transmission and distribution capacity, and the reduced demand for spinning reserve capacity. It will give assurance to the RECs and the utilities that the scope of net metering will be modest in their area and limited to only one percent of their territories production.

Poll after poll shows renewable energy has widespread support with the public and folks both rural and urban will continue to be in favor of renewable energy legislation. The two wind energy conferences drew packed houses and I have people contacting me all the time about how to tap into wind energy. It is time Kansas opened the wind market to small-scale renewable technology and our citizens who wish to use it.

Based on the facts presented here we urge the committee to vote yes on HB 2713 and allow Kansas to join the burgeoning number of states that have designed and implemented their own net metering legislation. Thank you.

Courtesy of you

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