PSC Disapproves Entergy’s Revised Solar Power Offering

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Entergy Arkansas suffered another regulatory setback Friday in its bid to offer discount solar power to local governments, schools and non-taxed entities like water systems.

The Arkansas Public Service Commission disapproved Entergy’s solar proposal, which the electric utility had revised after a regulatory rejection in June, with the panel’s three commissioners finding that the revision did not comply with certain provisions of the PSC’s earlier ruling.

However, Entergy’s director of regulatory affairs, David Palmer, said that the utility was pleased with the order, saying that the regulators’ focus in their decision “inherently supports that the order recognizes the value Entergy Arkansas is proposing for its customers.”

Nevertheless, Entergy officials were left to further revise the plan, last filed July 8 and known as Solar Energy Purchase Option B. “The remaining items to be modified are largely administrative,” Palmer said, like ensuring “that low-income customers aren’t inadvertently excluded from eligibility as capacity is made available.”

He said the company will present modifications to the commission by the end of the month.

The ruling Friday, as well as the June ruling before it, was seen as a victory for third-party solar installation companies in Arkansas, which have increasingly been building solar arrays for non-taxed enterprises ever since the General Assembly enacted the Arkansas Solar Access Act last year, allowing third-party financing of solar arrays.

Friday’s order on the rate, known as a tariff in the utility industry, was signed by commission Chairman Ted J. Thomas and Commissioners Kimberly A. O’Guinn and Justin Tate, who agreed with several points made in testimony by Public Service Commission staffer Robert H. Swaim that Entergy’s revised proposal still ran afoul of several requirements in the June decision, known as Order 9. Swaim testified that Entergy’s July 9 revised proposal fell short in 6 of 15 areas, though the full commission ended up agreeing with Entergy on several of those details.

However, the commission agreed with its staff in finding that the Entergy power purchase proposal must expressly state that the power will come from Entergy’s Stuttgart Solar facility, rather than using the more generic term designated solar resource, which the ruling said erroneously “suggests that approval of the Commission is not required.” The panel also agreed with Swaim in ruling that any revised rider — a procedure allowing a utility to recover specific costs outside a general rate proposal — must include a provision that non-participants in the solar purchase plan should retain the renewable energy certificates associated with the solar resource. It also found that Entergy Arkansas had failed to provide options for low-income participation in the offering.

Several parties who opposed Entergy’s solar purchase plan, including the leaders of private solar installation companies, said they would hold off commenting until they could ponder the eight-page PSC order.

Entergy Arkansas’ vice president of customer service, Michael Considine, told Arkansas Business last month that he expected the revised tariff to be approved, saying that 167 non-taxed customers had signed letters of intent to subscribe to the solar package conceived after Arkansas removed its ban on solar leasing and power purchase arrangements known as third-party financing. Entergy asked such customers to sign up for SEPO Option B via a website that went online July 8, the same day the investor-owned utility filed its revised tariff proposal with the PSC.

While each solar customer is different, Considine said at the time that calculations for most potential customers indicated that they could save 15% to 25% of their electric costs under the SEPO-B plan. One party against the SEPO-B plan, the Arkansas Advanced Energy Association, had argued that Entergy was using its size and clout as the state’s largest electric company — serving about 700,000 meters in the state — to offer a special and noncompetitive solar rate to select customers. The trade group had assessed the original SEPO-B proposal as an attack on “both the regulatory agenda of the Commission and the clear intent of the General Assembly.” 

Katie Laning Niebaum, who left her job as the advanced energy trade group’s director weeks ago to give birth to twin girls, said Entergy’s plan “rested on the assumption that a monopoly utility should be able to use regulatorily approved tariffs to undercut the emergence of competitive markets.”

Considine countered last month by saying that Entergy is constantly diligent in keeping Arkansas’ electricity rates among the lowest in the nation. 

“I’m completely unapologetic about that, because it’s a great thing,” he said. “Low rates drive business and economic development, and that benefits all.

Former Arkansas Lt. Gov. Bill Halter, CEO of Scenic Hill Solar of North Little Rock, had outraged Entergy executives with a vivid argument that Entergy’s plan would kill third-party solar projects and depress hiring during an unemployment crisis brought on by the coronavirus pandemic.

Considine noted that Entergy has the largest solar facilities in the state, including the 81-megawatt Stuttgart facility, and that utility projects at that scale are far more economical than third-party arrays.

The PSC ruling Friday was the third high-profile solar setback for Entergy in two months. On June 8, commissioners decided not to lower compensation immediately on the excess power put back onto the grid by homes and businesses with solar arrays. Net metering, the accounting system governing those credits, has been an issue before the commission for well over four years.

That ruling, too, pleased the third-party installation industry by keeping the compensation for solar power equal to the cost of power delivered to homes and businesses. Utilities had hoped the net-metering rate would be reduced, perhaps by half, but the commission rejected that thinking. It did hold open the possibility for a grid charge, which would allow utilities to recoup some of their infrastructure and upkeep costs. The utilities’ most repeated argument was that paying solar customers more for the power they provide would shift infrastructure and grid costs to customers without solar panels.

Palmer said Entergy looks forward to quick approval to its new revisions “so the growing number of customers seeking to enroll in this offering are able to begin reaping its benefits as quickly as possible.”