After four years, the Arkansas Public Service Commission (APSC) announced the State’s new net-metering rules regarding solar development on June 1, 2020. The new rules established net-metering rates, terms and conditions in Arkansas and implemented the provisions of Act 464 (effective July 2019).
In short, the commission ruled that utilities should retain the existing rate of what they pay for electricity from solar systems that is brought back onto the electric grid and produced by residential and commercial consumers.
Prior to this ruling, a retail rate of 1:1 was the current net-metering rate that utilities credited to their customers for net-excess solar generation. This means a solar producing homeowner would get the same amount of money they would spend buying a kilowatt-hour (kWh) from their electric utility, credited back for excess generation not consumed monthly.
Between 2018 and 2019, the number of net-metering systems rose 53.8 percent, or by 812, to 2,320, with more net-metering systems added in the state in 2019 than in any other year, according to the Arkansas Advanced Energy Association. So, what does this mean for residential and commercial solar systems now if the existing net-metering rate is maintained? What changes are expected and what differences in this ruling? Renewable Rayna is here with the answers.
In Arkansas, net-metering is available to residential customers whose solar system has generating capacity up to 25 kilowatts (kW). For reference, a 25-kW solar system will produce approximately 35,000 kWh per year, with the average household only using approximately 14,500 kWh, annually.
So, what happens to that excess generation? When a customer’s solar system over-generates during a billing cycle, that excess energy (kWh) is fed back to the utility. Current net-metering rules require the utility to credit the customer the full retail 1:1 rate for those kWh, and the Arkansas Public Service Commission’s recent Order No. 28 confirms. For example, if a customer pays their utility $0.09/kWh, that customer will receive $0.09/kWh that is over-generated by that customer’s system and fed back to the utility.
Although it may be that a commercial solar customer does not have a demand component, it is common for solar generators of this sort to be charged with demand.
In summary of the recent ASPC order, if there is no demand component on your utility bill, a commercial solar array will qualify for the 1:1 credit to be retained. If the consumer has the demand component on their bill, the 1:1 credit can still be obtained from a commercial solar array if the solar ratio does not exceed 1,000 kW (1 megawatt).
You may wonder why “demand” and “no demand” components dictate net-metering rates and rules, but the reason is that demand for power is not a “one size fits all” approach.The price of energy for a company every month depends not just on how much energy was generated during the month, but also on what rate electricity was consumed.
If demand component consumers want to install a system that is greater than 1 megawatt (MW) and less than 20 MW, they still earn the 1:1 credit but are also subject to a specific utility grid charge. This charge is set to zero at first.
The retail rate of 1:1 can be locked in commercial solar customers with or without the demand components on their bill for the next 20 years with solar systems within the commercial 1 MW capacity limits. If larger, rates and rules are grandfathered on a case-by-case basis.
For the next two years, the residential and commercial net-metering retail rate of a 1:1 credit is locked in, but after 2022, a utility may implement alternative net-metering structures. But depending on when you go to solar and when the required solar interconnection agreements are sent to your energy supplier, you can now lock in net-metering for up to the next 20 years at the current 1:1 retail rate.
All existing net-metering customers and customers who have, prior to the issuance of the PSC’s order (June 1, 2020), are locked into the 1:1 rate.