If cost of solar has dropped so much, why are subsidies still needed?

Kentucky Representative Jim Gooch writes in the Lexington Herald Leader about his plan to lower subsidies for solar users that are currently being paid for by all utility customers. Representative Gooch is a proponent of lowering Kentucky’s electricity rates for all customers. His plan would update the state’s Net Metering law to ensure all customers are paying for the upkeep of the grid.

If cost of solar has dropped so much, why are subsidies still needed?

As chairman of the Kentucky House of Representatives Energy and Natural Resources Committee for more than 19 years, I have seen both the highs and lows of energy policy in Kentucky.

I chaired the committee when coal production was at its all-time peak in Kentucky, and I fought the federal government as it tried to take down one of Kentucky’s signature industries. Electricity rates in Kentucky have increased by 30 to 40 percent over the past decade. Many of the factors driving those cost increases were outside the control of the General Assembly.

At every turn, I have kept as my core principle what is best for affordable energy for Kentuckians. I firmly believe that low-income Kentuckians should not pay any more on their electric bills, if it can be avoided.

This is why I’m sponsoring House Bill 227, a bill to modernize Kentucky’s outdated net metering law. The net metering “subsidy” or “mandate” is not a utility issue and it’s certainly not a partisan issue. It is a cost issue for all electric customers who choose not to install solar panels.

Kentucky is a cost-of-service, regulated utility state. The costs of Kentucky’s electric infrastructure are shared by all customers — as are the benefits. When one class of customers avoid paying the costs of the system, those costs must be paid by others to ensure around the clock reliable service.

Solar-produced energy is no more valuable than any other type of energy. For those who say otherwise, I would argue that coal-produced energy provide more benefits to Kentuckians.

For supporters of solar power and solar contractors, HB 227 would not affect larger scale private solar projects, which do not fall under Kentucky’s net metering law. It would not prevent those who choose to install private solar to do so for their own benefit and be fairly compensated. And the bill clearly grandfathers allcurrent net metered customers for 25 years, whether they sell their house or rent it.

That timeframe exceeds the life of all private net metered solar installations currently in Kentucky. Those systems already installed have been sold by contractors on the promise of paying off in 10 or 15 years. Another guaranteed 10 years of return absolutely will not hurt those customers’ investments.

HB 227 will not put solar contractors out of business. By rewarding net metered customers for their excess energy at a market price, it merely stretches out the time needed for a net metering customer to earn a return on their investment. Those who want to go solar can still choose solar and will still make a return.

Solar advocates are the first to point out that the costs of solar panels have come down 70 percent over the past decade. Who knows what the next decade will hold for them? As this market grows, other utility customers cannot afford to continue paying new net metered customers 300 percent of the market value of their electricity.

Net metering was always meant to help someone who wants solar panels to afford them. It was not meant to turn net metering customers into energy marketers, and it was not meant to enrich them with other customers’ money.

If the cost of solar is 70 percent less today than when we enacted this law, at what point do the subsidies end?

The executive director of the Harvard Electricity Policy Group, Ashley Brown, calls rooftop solar net metering and the returns they provide, ”Robin Hood in reverse” meaning it is “a wealth transfer from less affluent ratepayers to more affluent ones.”

Charles G. Snavely, secretary of the Kentucky Energy and Environment Cabinet, also supports the bill. “It is about not paying more for something than is necessary, yet also paying the solar generator customer for the equitable value of the excess solar produced,” he said.

Now is the time to address this inequity. We cannot delay this any further. We have a chance to head this off in Kentucky before it becomes an even bigger issue. Every year we don’t fix this structural problem with our electric rates, it gets harder and harder.

Every year we don’t address this issue, more and more grid reliability costs are pushed onto Kentuckians who can least afford it.

Rep. Jim Gooch, R-Providence, represents parts of Daviess and Hopkins Counties as well as all of McLean and Webster Counties.

Read original article at: http://www.kentucky.com/opinion/op-ed/article200855654.html

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FBAE Supports Kentucky Net Metering Legislation – House Bill 227

In January, Kentucky Energy and Natural Resources Committee Chairman Jim Gooch introduced a bill that would amend the compensation rate for solar users who sell the excess power they produce back to the utility companies. The 14-year-old system compensates solar users at the full retail price of the electricity, versus the wholesale price for these sales. This practice ultimately shifts costs to non-solar customers. While criticisms of net metering often center around the adverse effects on low-income individuals, evidence shows that the problem also extends to the majority of small businesses who don’t want or can’t afford solar. FBAE all business owners should fairly share in the fixed costs necessary to maintain the energy grid.

FBAE drafted a letter to the Kentucky Legislature, supporting Chairman Gooch’s legislation, H.B. 227. The bill will amend Kentucky’s net metering compensation system by paying producers at the wholesale rate instead of the full retail rate they currently enjoy. Additionally, the bill is not retroactive, and will not affect current users in the state.

Kentucky Net Metering Letter March 2018

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South Florida FBAE chapter sends letter to South Miami City Commission

City of South Miami
6130 Sunset Drive
South Miami, FL 33143


South Miami Commission:

Family Businesses for Affordable Energy (FBAE) works to secure ordinances and legislation that keep energy costs low and protect consumers and family businesses. As members and volunteers in South Miami, we are concerned by the ordinance mandating solar requirements that is threatening our community because it is being hastily passed without necessary consumer protections and protections for affordable housing.

The ordinance, in its current form, will make South Miami even more unaffordable and unattainable. During the recent commission hearing, the Vice Mayor told one of our community members that “South Miami was unaffordable.” Additionally, the Mayor continued that statement by affirming that the ordinance places only a nominal expense on a million dollar home. The comments made from the dais fail to take into account the cost of this mandate on affordable housing. We do not, however, believe that the City Commission intended to overlook those of us who earn a livable wage because the Mayor tabled the bill as a result of concerns voiced at the hearing and made a commitment to address concerns before the ordinance is voted on.

As members of the South Miami community, we urge the Commission to remove the mandate from this solar ordinance, however if the mandate cannot be removed we as the Commission to review and amend the ordinance to address our concerns before passage:


  1. Remove mandate on existing structures: The mandate on existing structures creates a burden that is too large and costly on homeowners who want to improve or expand their property. As members of the community, we support providing non-mandated incentives to encourage solar panels for remodels and expansions, but ask you to remove the mandate on existing structures.
  2. Remove mandate on all new, single family homes under 2000 square feet: The South Miami commission should work to ensure that residents have access to affordable housing. By mandating an additional expense of $25,000 (or more) on construction of smaller, more affordable homes, the Commission is reducing the number of affordable homes in South Miami and pricing lower and middle income families out of the home buying market.
  3. Provide residents with educational materials on preferred vendors and benefits of the ordinance as well as town halls to secure community buy-in. If the city mandates solar panel installation, as residents we expect more information on vendors, consumer protections, costs and best practices. Prior to passing the ordinance, local residents expect the City to prepare educational materials on consumer protections, preferred vendors and best practices for installing solar panels, as well as how homeowners can benefit the most from solar panels. We would also like the city to hold at least two town halls on the ordinance and solar installation best practices prior to passage of the ordinance to secure community understanding and buy-in.
  4. Provide residents with actual costs and benefits of solar panels in South Miami. The city has provided payback models and financial benefit for the solar ordinance, but those models are based on California energy prices and do not take into account Florida’s energy costs or the higher costs of insuring the panels using high costs of insurance in Florida. We would like a specific study done on the costs and benefits to South Miami homeowners done by the city – we do not think you should rely on a California cost and benefit model to justify the financials in South Miami.

It is our hope that you will address the concerns in the ordinance mandating solar requirements that are threatening our community. This ordinance should not be hastily passed without taking into consideration affordable housing in South Miami, as well as necessary safety and consumer protections.


South Miami Chapter
Family Businesses For Affordable Energy

Cc: City of South Miami Commission
City of South Miami City Clerk

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