Legislator opens door for regulators to weaken rule that helps rooftop solar market

Mary Ellen Klas

A freshman Republican legislator from the Tampa area has come to the aid of Florida’s powerful utility industry in its prolonged battle against the rooftop solar industry in Florida.

Rep. Lawrence McClure of Dover asked the Public Service Commission to review its net metering rule, a billing mechanism that requires utility companies to credit solar energy system owners for the electricity they add to the electrical grid. The rule has been in place since 2008 and, according to the latest report from the PSC, only about 60,000 customers use net metering.

The PSC agreed to McClure’s request, and scheduled a three-hour workshop for Thursday, the first step to changing the rule. It heard presentations from both utilities and solar advocates. The public was not invited to participate.

But because Florida does not require utilities to increase their reliance on renewable energy, solar advocates say that net metering is the most important policy driving development of the residential solar market and changing it could undermine the industry’s expansion. Although rooftop solar makes up just 1% of the energy generated in Florida, it has been growing exponentially.

In the last three years, there has been a 55% increase in rooftop solar installations, PSC staff said Thursday, and that has meant that utilities have had to devote more time and resources to connecting solar systems to the grid.

Here’s how net metering works: For every kilowatt hour of energy that residential customer generates from a rooftop solar system but doesn’t use, they are entitled to a credit worth the full retail value of that energy. If a household generates three kilowatt hours of electricity, uses only two kilowatt hours, and delivers the excess back to the grid, the utility company must credit the customer with one kilowatt hour.

The utility company can sell that power to someone else and, if enough people generate their own power, there is less need for utility companies to build new power plants.

Utility industry’s arguments

But the issue McClure wanted the commission to focus on was not how to avoid building expensive power plants, or contributing to greenhouse gases, he wanted the commission to frame it the way the utility industry has and view rooftop solar as a subsidy.

Here’s how that argument goes: Because homeowners often don’t have the capacity to store excess energy, they still must rely on the grid for backup power when they are not generating energy from the sun. The cost of building that power system is borne by all ratepayers and, the industry argues, people who can’t afford rooftop solar are footing the cost of providing the backup generation for people who can.

“It’s very simple,’’ McClure told the Herald/Times. “I want to make sure constituents, ratepayers, aren’t subsidizing millionaires’ solar panels.”

He said he is “a huge fan of solar” and looked into installing them in his Hillsborough County home, but “the price point is too high.”

McClure attached to his letter a document written by former PSC member Lisa Edgar for the utility-backed group, Energy Fairness. It argues that because utilities have to credit customers for the energy they produce for the grid, non-solar users are subsidizing solar power.

This is is not the first time Florida’s electric utility companies have attempted to undercut rooftop solar policies. In 2016, they spent over $20 million on a failed effort to pass a deceptive ballot initiative that purported to support rooftop solar but would have limited solar expansion and imposed more consumer fees.

Florida utilities have been expanding their own production of solar power, and adding it to the base rate that allows them to make money off the production, distribution and transmission of that energy. But Florida also is one of eight states that prohibit the sale of solar electricity directly to consumers unless it is generated by a utility.

As recently as 2019, the PSC reaffirmed its support of the current net metering policy, calling it “an effective means of encouraging the development of demand-side renewable energy systems that allow participants to offset their energy usage.”

Lots of public comments

By Wednesday evening, commissioners had received 16,433 emails from people commenting on the net metering rule. Citing those emails, Commissioner Julie I. Brown said she wanted to see more net metering, not less.

“There’s such a flavor, or appetite for solar,’’ Brown said. “It’s really quite modest if you look at the data, quite frankly. So I would be interested in seeing how the utilities really promote the solar net metering policy that we have in place.”

Terry Deason, a former PSC commissioner who appeared on behalf of Florida Power & Light, Gulf Power and TECO, said he “can’t speak to” what the utilities are doing to promote net metering, but he congratulated the commission for bringing up the issue.

He agreed with Brown that “the numbers are quite small,” and that the cost of a rooftop solar installation is half the cost of what it was in 2008. But, he added, “the numbers are continuing to grow but at some point the question needs to be asked how can this be sustained in the long run?”

He urged regulators to focus on the “cost shift” that “customers who don’t have rooftop solar are paying more than their fair share of fixed costs required to provide service to customers, including generation, transmission and distribution.”

“I’m not here to say the sky is falling, by no means,’’ he added.

PSC Chairman Gary F. Clark agreed with the utilities that solar customers are being subsidized, and asked how much that amounts to each year. Deason suggested it equals about “$40 million a year” and the cumulative estimate between 2020 through 2025 is about $700 million.

Solar advocates blasted the numbers as “scare tactics” and the Office of Public Counsel presented data from the Brookings Institution that concluded that “net metering is in most cases a net benefit — for the utility and for non-solar rate-payers.”

Justin Hoysradt, representing the Florida Solar Energy Industries Association, answered Brown’s question, saying Florida investor-owned utilities do little to promote net metering, and said Deason’s estimates were wildly inflated.

“There is really no known threat to safety. There’s no known threat to reliability,’’ said Hoysradf CEO of a Palm Beach-based solar energy company. “There is no literally no known threat to cost. And I even take offense as the $700 million cumulative subsidy over what is seemingly the next six years as literally impossible,’’ he told commissioners. “That assumption is giving this industry way more credit than it deserves in the ability to find people enough to deploy that much solar capacity.”

Florida lags southern neighbors

With only 1% of all electricity in Florida generated by solar power, the state lags behind its neighbors like Georgia, North Carolina and South Carolina in market penetration, he said.

Stephen A. Smith, director of the Southern Alliance of Clean Energy, told solar supporters at a Sept. 10 webinar that the attempt to revise the net metering rule could set solar back in Florida.

“It’s at the early stages, so coming in and trying to fix something that’s not broken, with heavy-handed regulatory policies by the Florida Public Service Commission, would be extremely detrimental to the solar market,’’ he said.

Although SACE has been an adversary of the utility industry in the past, he said, it has “come to terms with them in recent years,’’ and supports their solar program offerings and they want the utility industry “to lead on this.”

But, Smith added, their support “is contingent on them not using their programs as a way to undermine the ability for local ownership, customer ownership, and allow this small but important market segment of the rooftop market to continue to flourish.”

Tyson Grinstead, a policy director at Sunrun, a South Carolina solar leasing company, told the commission Thursday about a landmark settlement reached this week between Duke Energy and solar energy advocates in North Carolina and South Carolina that he touted could be a model for the nation and end the dispute over cost-shifting in the solar industry.

If approved by Duke’s North Carolina and South Carolina regulators, the settlement would allow Duke to control a smart thermostat device in homes with rooftop solar to better manage usage during periods of peak demand, Grinstead said.

“Solar penetration matters,’’ he said, noting that many states have done creative things with solar and battery storage “but that didn’t happen until there was a robust market and its penetration was higher — more than double — what they are in Florida.”

Clark, the PSC chairperson, said it could take as much as a year for the commission to establish a new rule if it decides to go forward.

Commissioner Art Graham said if they decide to change the rule he want’s to grandfather in the people who have already installed rooftop solar under the current net metering rule.

“My concern is somebody makes the financial decision that they’re going to put a solar array on the roof, knowing that the payback is going to be in 10 years, it’s really not fair for them for the next year to change net metering, and now we change the game for them,’’ he said.

In January, the board will have a new member as Mike La Rosa, an outgoing state legislator who has been an ally of the electric utility companies, replaces Donald Pollmann, who was not reappointed by Gov. Ron DeSantis.

Mary Ellen Klas can be reached at meklas@miamiherald.com and @MaryEllenKlas