MORGANTOWN – Debate on the future of home-based solar energy in West Virginia continues as Mon Power/Potomac Edison and interested parties continue their back and forth on how net metering customers will be credited for the power they generate.
And in the same rate case before the Public Service Commission, the companies noted they may have wrongly charged West Virginia customers a total of $53,000 connected to costs associated with what PSC chair Charlotte Lane has termed the “FirstEnergy lobbying scandal in Ohio.”
Net metering
As background, net-metering customers generate all or a portion of their own power, typically through solar, and receive credits on their bill for any power they generate in excess of what they use.
Currently, the companies provide a full 1-to-1 credit, meaning energy given to the utility is worth the same as energy bought from the utility. The current residential base rate is about 11.4 cents per kilowatt hour (kWh), and could go up to about 13 cents as the companies’ several rate cases reach their respective conclusions.
The companies propose to change that to base credits on the wholesale rate for electricity, which the filings calculate at 6.6 cents per kWh – roughly half of the 13 cents per kWh. This would take effect for new net-metering customers joining after March 27, 2024.
The companies say the change is appropriate “so that other customers are not subsidizing net metering customers and so that net metering customers actually pay for the distribution, transmission, and capacity facilities that they use and costs that are incurred for them.” They reference state law, which forbids “cross-subsidization.”
PSC staff have agreed that the credit needs to be reduced but proposed a middle ground: 8.8 cents per kWh.
In testimony filed last week, Dan Conant, CEO of Solar Holler, the state’s largest solar development, design, finance and construction firm, continued his opposition to the credit reduction. He disagreed with an assertion by Terry R. Eads, a consultant for PSC’s Utilities Division, who said that customer generation and utility scale generation are essentially the same.
“Customer generator installations have higher project costs,” he said. “Large-scale projects benefit from economies of scale that bring down the overall cost. Small, customer-sited projects (under 5 MW) provide greater benefits to the community and individual customers than large-scale utility projects. They also provide additional grid-wide benefits above and beyond the benefits provided by large-scale projects.”
He also said that customer generator installations directly help individual families, community organizations and businesses take control of their energy costs and benefit from solar. “Customer-generator installations specifically help low-income West Virginians take control of their energy costs and benefit from solar energy.”
Conant said Solar Holler launched the first low-income solar leasing program in Appalachia. Without the program, the upfront cost of solar would be out of reach for many low-income West Virginians. With the program, they can reduce their energy bills by 1,520% by generating electricity on their own rooftops.
But if the PSC cuts the credit to 8.8 cents per kWh, he said, it’s extremely unlikely that Solar Holler would be able to offer the program. Financing relies on immediate monthly savings for the consumer and reducing the credit would wipe out those savings.
He concluded, “Net metering should remain intact, continuing to charge and credit customer generators at the retail rate. This program works for West Virginians and appropriately values the variety of benefits that solar energy provides to the grid.”
Justin R. Barnes, speaking on behalf of the coalition of West Virginia Citizen Action Group, Solar United Neighbors, and Energy Efficient West Virginia, argued again that the companies and Eads misrepresent the meaning of cross-subsidization. “The simple fact that customer-generators reduce their energy bills does not mean that any subsidy or cost-shifting exists.”
Speaking for the companies, Stephanie Fall again supported the proposed change. “Currently, net metering customers who receive a credit at the full retail rate are not paying their fair share of the distribution and transmission infrastructure that is available to, and used by, them. They also are not paying for the capacity generation needed to be in place when net metering customers call upon it to supply their needs.”
Fall said net-metering customers clearly rely on the distribution and transmission infrastructure and generation capacity from the companies. “If they did not, they would simply disconnect from the electric grid, which, of course, they do not.”
She said later, “There is an entire network of distribution, transmission and generation facilities that must be available instantaneously, on a moment’s notice, any time NEM [net-metering] customers wish, need, or require the use of the electric grid; and this insurance policy comes as a cost that such customers should pay their allocated share.”
The companies also disagree with a proposal to delay implementing the revised credit for a year. Current net-metering customers will be grandfathered at their current rate and be protected, while all future customers will be informed in advance of the lower credit.
The PSC has received, as of Tuesday evening, 1,245 letters opposing the revised credit.
Lobbying scandal
In August, the companies and the PSC agreed to an accounting firm to perform a “Focused Management Audit” in connection with this rate case in the Ohio lobbying scandal.
This rate case seeks a $207.5 (13%) rate hike – for infrastructure their energy assistance program. The hike would cost the average residential customer $18.07 per month – raising a bill from $120.20 to $138.27. This is the companies’ first general rate-increase case since 2014.
A Focused Management Audit is an in-depth investigation of one or several specific areas of a utility’s management and operations. The results of the audit, done by Van Reen Accounting, were released last week.
The two companies are FirstEnergy sisters. FirstEnergy paid a $230 million penalty in 2021 after being charged with wire fraud concerning legislation – HB 6 – passed in Ohio in 2019.
The PSC said in August it did not believe the Ohio scandal had any bearing on Mon Power/Potomac Edison rates in West Virginia, or that the companies did any similar lobbying at the West Virginia Capitol. Any expenses on a utility’s books related to illegal activities would be excluded from rate recovery.
But in the same filing that contained Fall’s net-metering testimony, company representative Tracy Ashton corrected prior testimony about costs associated with HB 6, where she said no costs were passed to West Virginia customers.
Costs related to HB 6 were incurred after 2013, she said in her new testimony, and FirstEnergy did not calculate the impact of those costs on the companies’ vegetation management surcharge or its federal air pollution compliance costs.
“FirstEnergy has since estimated that it is possible that HB 6 costs and certain non-recoverable and non-operating costs could have been applied to these projects.” They estimate the figure at $53,000.
Email: dbeard@dominionpost.com
