The Oklahoma Corporation Commission recently implemented rules that set out new excess-energy payment requirements publicly regulated utilities must follow to compensate owners of solar and small-wind systems, commonly referred to as distributed generation, that put power back onto the grid.
Two of the state’s largest utilities have cases before the agency to develop plans that comply.
The revised rule is a step forward for distributed generation backers who have been frustrated by what they say are “solar tax” policies that limit compensation for system owners.
While it will require utilities to pay system owners money for some of the excess power generated by their systems, that compensation will remain limited in several ways.
First, through an already existing process called net metering, a utility still will be allowed to offset energy produced from a distributed generation system against the energy consumed at the same location during any given billing period.
Under net metering, the customer gets compensated for the energy produced at full retail energy rates — but only up to their consumption level or the energy used at that location during the period.
Second, for energy generated by those systems flowing back onto the grid that exceeds a customer’s consumption, a utility only will be required to pay an “avoided energy cost,” or wholesale rate, for each excess kilowatt hour.
Third, the amount of excess energy the utility might be required to purchase at wholesale rate will be capped at an amount that equals 125% of whatever the historical peak load of the home or business where the system operates might be.
It also limits the sizes of systems that qualify under the rules to those with the capacity to generate 300 kilowatts of energy. Customers with larger systems or systems that regularly generate more than 125% of their historical peak loads likely would be recategorized as small independent power producers and covered by separate rules.
In all cases, customers with homes and businesses connected to the grid are still required to pay their utility standard monthly service charges paid by all customers who receive electrical service.
In some states, solar system owners get compensated for excess power sent to a grid by their systems at higher retail rates, without limitations on amounts. In fact, some utilities even pay distributed generation system owners incentives to produce energy that flows back to the grid.
Regional Differences
In Oklahoma, rooftop solar systems only slowly have gained popularity, compared to many other regions of the country.Oklahoma would have to further adapt its state laws and rules to encourage growth similar to that seen elsewhere.
Before this change, excess power system owners put back on to the grid beyond what they had used essentially was “donated” to the customer’s power provider, said J.W. Peters, president of Solar Power of Oklahoma.
“I think this is better than what we had before,” Peters said.
But he added distributed generation system owners in Oklahoma ought to get the same breaks as others do in Kansas, Missouri and Arkansas.
“In some states where we operate, some utilities are even paying their customers to go solar,” Peters said. “That’s not something we are seeing here.
“For the most part, when we talk to potential customers, they don’t even know solar is a viable resource.”
Still, Peters said the rule change enacted by the corporation commission for public utilities it regulates is a “game changer,” as it helps make rooftop solar systems used by Oklahoma Gas and Electric Co. and Public Service Co. of Oklahoma customers more financially viable.
Additionally, some communities served by the Oklahoma Municipal Power Authority also are allowing solar systems on a limited basis, including Edmond Electric.
Peters said Solar Power of Oklahoma bases its system designs on historical power usage of the client that is involved, and aims to design a system that can offset 70% to 80% of that.
He said the average size of a rooftop solar system Solar Power of Oklahoma installs is about 7 kilowatts at an average cost of about $25,000. The company pitches potential customers on the systems in part by predicting that future energy costs will climb.
The company has installed about 500 systems totaling about 2 megawatts of capacity in the past two years, he said.
“We would really like to have a (compensation) program that is followed by all of Oklahoma’s electrical service providers,” Peters said.
‘First Step’
Another solar technology backer in Oklahoma said the rule changes made by the corporation commission are “an important first step that’s fair.”Lindsey Pever, representing the Oklahoma Solar Association, added, “we are really happy they opened the rulemaking and considered those changes.”
Pever said the solar association worked with former Oklahoma Secretary of Energy and Environment Michael Teague’s office in 2018 to discuss the issue with power providers and regulators.
Pever said those discussions involved the commission’s public utility division staff and representatives from Oklahoma Gas and Electric Co., Public Service Co. of Oklahoma, individual cooperatives, the Oklahoma Association of Electric Cooperatives and rooftop solar installers.
The discussions also involved an analysis of the value of excess generated energy that was made possible by a tool developed by the National Renewable Energy Laboratory.
The main issue, they all agreed, was how much the owner of a distributed generation system should be paid for the excess power the system generates that flows back to the grid.
“That is the battle all across the country: What should customers be paid for their excess energy?" Pever said. "Should it be at retail, or should it be at an avoided energy rate? They did a really good job of getting us all close to being on the same page.
“Oklahoma is an energy state. We are in the Top 3 of oil and gas and wind, and we could be No. 6 in solar energy, but we have some work to do.”
Brandy Wreath, director of the Corporation Commission’s Public Utility Division, echoed Pever’s sentiment somewhat as he discussed the rule change.
Wreath said the change provides owners of small wind and rooftop solar systems with a fairer way to get compensated for power they contribute to the grid.
However, he said Oklahoma’s fourth-lowest cost for retail electricity, not previous or current payment barriers, is the most likely reason that rooftop solar and small wind systems haven’t gained the same level of popularity in the Sooner State as they have in other parts of the nation.
Wreath said there are some Oklahomans who desire those types of systems because they are environmentally friendly or because they want to boost their independence from power providers on the grid.
“These changes are not designed to create a money-making opportunity for rooftop solar and wind. That’s not the point,” Wreath said. “The point is to make it more possible for people to have a choice … and to be able to do it in the most economical manner that’s available.”
©2019 The Oklahoman. Distributed by Tribune Content Agency, LLC.
