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Thursday, March 28, 2024
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Senate Looks at Net Metering Changes

Household-sized solar power producers will still be able to sell excess power to the Water and Power Authority at retail price through net metering, but larger producers will receive a smaller "Feed In Tariff" payment reflecting WAPA’s costs, if a bill approved in committee Friday becomes law.

When net metering was set up in 2007, it allowed a one-to-one exchange rate for electricity between the utility and net-metering customers. That means that when the solar panels on a customer’s roof put 1kWh of electricity onto the grid, that customer receives a credit allowing them to take 1kWh of electricity back from WAPA’s power plants at night when their panels are ineffective for no charge.

WAPA Executive Director Hugo Hodge told the Energy and Environmental Protection Committee that, because WAPA has to maintain the grid and this does not take into account WAPA’s avoided cost, this means other ratepayers subsidize net metering ratepayers to a certain extent.

To illustrate this principle by taking it to its logical extreme and considering a hypothetical case where every household had solar panels and generated enough power on average during the day to pay for their night time consumption. In this extreme hypothetical case, WAPA would receive no ratepayer revenue at all, but WAPA would still have to pay for fuel to produce power at night and would still have to employ crews to maintain the grid, despite no revenue. At low levels of net metering, the subsidy effect is small but as full-retail price net metering increases as a proportion of power generation, the cost to WAPA also increases until a tipping point is reached.

WAPA’s "avoided cost" is a calculation of the difference between full retail rate of net metering and the rate at which WAPA does not lose money, forcing it to pass that cost onto its paying customers.

The bill sponsored by Sen. Craig Barshinger leaves full retail-rate net metering for producers of up to 5 KW of solar power. But systems of 5kw to 500kw would not get retail net metering, but instead a tariff set by PSC that pays producers less, to account for WAPA’s avoided cost. Larger systems would be considered utility-level production and priced contractually as they arise.

"A feed in tariff is inherently a more fair business arrangement," Barshinger said, introducing the bill. The new system will allow WAPA to "move forward" on getting more distributed alternative energy onto the grid "without putting itself in a bad financial position," he said, adding it would still "maintain the net metering as it stands now for systems that are small."

Net metering was capped at 15 MW territorywide in 2009, with a 10 MW cap on St. Thomas and a 5 MW cap on St. Croix. A year ago, the growth of net metering was making news but reaching the caps was still distant. (See related links below)

Sen. Judi Buckley asked Friday how close the territory’s two districts are to those caps. Hodge said St. Croix has about 2.7 MW connected to the grid but that there are contracts awaiting permit approval bringing it up to "about four or 4.1 megawatts of the five." On St. Thomas, the cap is still far off, he said.

Buckley asked about raising the cap.

"I would object to that almost to the point of a temper tantrum," Hodge said. The distribution grid needs upgrades to handle much more distributed power plugged into it. But the bigger problem, Hodge said, is as solar is put on the grid, it only helps if oil-fired generation is simultaneously taken off the grid. And St. Croix is at the point now where if it cuts back any more, it will not be able to run its big generators at full capacity and not be able to run its energy-saving waste heat recovery generator. As a result, until or unless a storage system is in place, WAPA will not save more fuel and money as more solar power is put on the grid, but would still be paying for the solar power, Hodge said.

The committee approved another bill from Barshinger, eliminating excise and gross receipts taxes on material for and operation of alternative power generating systems, eliminating net metering on leased property, and amending a law requiring new construction to use solar hot water that also allows heat pump water heaters. It also allows a resident without a qualifying property at their residence to put up solar at a remote location and sell power by net metering and it forbids one resident from opening up multiple separate net metering accounts and occupying a disproportionate amount of the net metering capacity limit.

Voting yea on both bills were Barshinger, Sens. Diane Capehart, Donald Cole, Clifford Graham, Clarence Payne and Sammuel Sanes. Sen. Alicia "Chucky" Hansen was absent. Buckley attended but is not a member of this committee.

In the afternoon and evening, the committee took testimony on the situation at St. Croix Central High School, which has shut temporarily due to several instances of a foul sulfurous odor on campus. On March 18, 35 students went to Gov. Juan F. Luis Hospital for treatment after the latest episode. See related links below for more on the situation at Central High.

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