The Legislature should not end this session without addressing the problems posed by net energy billing.
Net energy billing is a Public Utilities Commission program that generously subsidizes the development of solar electricity-generating facilities, funded through higher electricity rates for Central Maine Power and Versant Power customers.
To promote solar energy, the Legislature in 2019 required CMP and Versant to pay approximately 20 cents per kilowatt-hour for solar energy – energy that actually costs less than 10 cents per kilowatt-hour to generate.
The difference in what CMP and Versant pay for this energy and the market value of the energy (also less than $0.10 per kilowatt-hour) is added to CMP’s and Versant’s rates. Projects as big as 5-megawatt (covering approximately 20 acres of land with solar panels) qualify for the subsidy.
This 2019 legislation resulted in a “gold rush” of developers coming into Maine to take advantage of this subsidy. There are currently about 1,000 net energy billing projects either in operation or under development, representing more than 2,000 megawatts of capacity. That’s more than the combined peak usage of all CMP customers and bigger than New England’s largest nuclear plants.
The Office of the Public Advocate predicts that even if many of the net energy billing projects under development are never completed, the program will soon cost ratepayers approximately $220 million per year for the next 20 years, or about $4 billion in total.
This is the equivalent of a utility tax of approximately $275 per year on every CMP and Versant ratepayer – ratepayers who will start seeing these costs in their utility bills by the end of this summer when the PUC is expected to approve including the first $150 million of net energy billing costs in CMP and Versant rates.
The cost is immense, and it is hitting all Maine ratepayers, especially low-income ratepayers, when they are already struggling with extraordinarily high electricity bills.
To address this, our office is proposing new legislation to reform the net energy billing program in three important respects.
• First, to restore the program to what it was before the Legislature expanded it in 2019. This would allow future small solar projects, including the installation of residential rooftop solar panels, to receive the full net energy billing subsidy. The cost impact of these small projects is modest, and most of the energy from these projects is consumed on site.
• Second, to address the large $220 million annual cost of the approximately 1,000 net energy billing projects already in operation or under development, the PUC would be given authority to reduce the amount of compensation that CMP and Versant are required to pay for the energy generated by those projects. The PUC would be given clear guidance to ensure that the compensation is fair to both developers and ratepayers. The PUC can use its expertise to ensure that the amount of compensation is set at a reasonable level, sufficient to cover project costs and provide a reasonable profit for investors in those net energy billing projects, without unduly burdening ratepayers.
• Finally, the PUC would be directed to expand its competitive bidding program to develop a specific program designed for small solar projects, where reasonable bids would be rewarded with a binding contract with either CMP or Versant to purchase the energy generated by those projects. This builds on the PUC’s prior competitive solicitations, which were successful in delivering low-cost renewable energy.
Our proposal represents a fair and balanced solution to the important twin goals of meeting the state’s Climate Action Plan goals and maintaining affordable electricity prices. Our office looks forward to working closely with the Legislature over the next few weeks to review and improve this proposal so it can be enacted into law before the Legislature adjourns in June.
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