by Henry Chiang
By now, the news that Oklahoma is destroying solar with a new tax has enraged many across the states. But like the title of this article states, the anger of the many pro-renewables and those who simply think solar is a good idea is misplaced. Note that this is not an article about the morality of subsidies, nor their impact on the industry. Instead, how this bill addresses a critical issue of the coexistence of distributed energy and retail electric companies: the grid.
SB 1456, the bill, signed into law by Governor Mary Fallin after unanimous passage of the senate and only 5 nays in the house, deals with more of an operation fee for grid tied systems. In fact the final bill text never even mentions solar, having been amended early on in committee. The bill creates an upper limit “retail electric suppliers” can charge customers connected to the grid, defined by the cost of operation & maintenance of the grid infrastructure. This upper limit is to apply to all grid tied customers, regardless if they are generating their own power and or even selling their power back using net-metering.
In plain english: It costs money to maintain the grid, and utilities must charge everyone connected to it the same price. If you’re not connected to the grid, you don’t pay the fee. Energy generation and grid maintenance are two separate costs, and one of the main reasons we have utilities to begin with.
Why is this important? The reason is two fold. First, the upper limit is now to be decided by the Oklahoma Public Commission (OPC), and second, it increases fairness for all parties involved. If you read the bill here, you’ll notice it is very “simple” and does not mention a hard value. This is because now that the bill passed, the actual cost of maintenance as distributed to all customers attached to the grid must be determined in a court-like hearing by the OPC. Setting up an upper limit ensures fairness to both utilities and homeowners. It is reasonable that homeowners who are producing their own energy but are still connected to the grid contribute to maintaining the infrastructure. Utilities also cannot abuse homeowners producing their own energy by applying extra fees related to grid maintenance, such as extra meter reading charges or unreasonably high tariffs
How does this affect Mississippi? Many in the existing utilities industry still view solar and renewables as a threat to their own business. When there are examples such as Germany’s utilities making talk of leaving the country, it’s easy to see that their fear is not unfounded. What is critical then is for everyone to realize that residential and commercial solar in the form of distributed energy generation can be very helpful to utility companies as well as homeowners through reduction of peak energy demand and load side generation. By assuring the utility companies that their overhead costs of maintaining the grid and the power lines will be protected, the relationship between homeowners who are willing (and even able) to generate some or all of their power could definitely improve.
In short, the Oklahoma solar “tax” law, while it reduces the payback of solar slightly, is actually a fair regulation. It ensures that the energy infrastructure maintenance is paid for, and provides consumer and providers of electricity some needed security and balance. This is something that Mississippi, and many other states, could benefit greatly from.