Ill. taps brakes on utility bid to end net metering

Source: By Jeffrey Tomich, E&E News reporter • Posted: Monday, October 5, 2020

Net metering remains in effect for an Illinois utility — for now — after regulators ordered an audit to decide whether it can change how it compensates customers for excess solar generation under a 2016 energy law.

In an emergency meeting late Thursday, the Illinois Commerce Commission (ICC) ordered its staff to evaluate Ameren Illinois’ methodology to determine whether the utility could terminate a net-metering rate before a replacement compensation system is approved.

Commissioners rejected a motion to keep net metering in place indefinitely. But they joined solar advocates in expressing concern about the impact of a phaseout on an industry that’s already struggling from a funding crunch and the COVID-19 pandemic (Energywire, June 11).

ICC Chair Carrie Zalewski said in a statement that ending net metering without a successor tariff “could have a chilling effect on solar sales at a time when the state is working to further decarbonize the grid and increase renewables. This could also lead to layoffs in the solar industry at a time when the state is still recovering from an economic downturn.”

The tension between Ameren Illinois and solar advocates echoes long-running disputes going on across the country over the value of distributed solar capacity like rooftop panels. While many utilities have warmed to large-scale solar projects, specifically those on which they can earn a return, they continue to push back against customer-owned solar projects that eat into electricity sales.

The 2016 Future Energy Jobs Act (FEJA) in Illinois was supposed to enable a transition from net metering to a new system of compensating solar owners for excess generation. But state regulators have been slow to settle a technical dispute that’s simmered since the law took effect.

Brad Klein, an attorney for the Chicago-based Environmental Law & Policy Center who is representing solar advocates in the case, said he is encouraged by the direction of Thursday’s order to preserve net metering. But, he said, it’s an issue that should have been resolved sooner to avoid the uncertainty facing the solar industry.

“This has been a slow-moving train wreck,” he said. “We’ve been consistently bringing this problem to the commission and commission staff for two years.”

The solar industry warned last week that the sudden end of net metering without a replacement tariff could devastate the rooftop market in southern Illinois.

“Solar companies expect it would be difficult if not impossible to sell solar systems to new customers in Ameren’s service territory if full net metering were not available,” Angela Luginbuhl, owner of Bloomington, Ill.-based Legacy Solar LLC, told regulators in an affidavit.

The small solar installer said as much as 90% of its business is in Ameren Illinois’ service territory. The company fears the uncertainty created by the threat of an end to net metering could jeopardize future sales at a time when it’s already struggling because of the pandemic.

St. Louis-based Ameren Corp., meanwhile, contends net metering is a subsidy that benefits only a small fraction of its 1.2 million customers.

“This is another example of Chicago-based special interest groups and out-of-state developers trying to take advantage of downstate customers,” Ameren Illinois President Richard Mark said in a statement before Thursday’s order.

A utility spokeswoman didn’t respond Friday to a request for comment on the ICC’s order.

At the core of the ongoing dispute is a difference in how the two sides interpret state law.

FEJA requires utilities to offer net metering until distributed generation capacity reaches 5% of peak demand, after which net metering is to be replaced with a solar rebate that compensates solar energy systems based in part on where they’re located. The law requires the commission to begin determining the value of the rebate when net-metering capacity hits 3%.

Ameren notified regulators in April that had it reached the 3% benchmark. But an administrative judge rejected the utility’s methodology for calculating the rate. The judge determined net-metering penetration in the utility’s service area was 1.62% and wouldn’t reach 5% until 2023.

As the dispute continued to play out, Ameren notified commission staff late last month that net-metering capacity could reach the 5% threshold in October. The utility said it has about 3,000 net-metered customers and expects to add about 200 a month.

The news prompted Thursday’s emergency meeting, at which the ICC rejected solar advocates’ motion to retain net metering indefinitely on procedural grounds.

The commission also directed its staff to audit Ameren’s methodology for determining the 5% threshold.

The audit buys some time for the solar industry, though it’s unclear how much. The clock is ticking, and installers and customers who want to install rooftop solar in southern Illinois still face an uncertain future, said Klein.

“Customers are being put at risk of losing net metering and being forced to donate the value of rooftop solar systems to Ameren,” he said.