Solar Energy Fee Fuels Debate in Louisiana

19 january 2013

Louisiana, USA — The road to “America’s Energy Independence” – which both Democratic and GOP candidates have spoken about in this election year’s presidential campaigns – is, much like Louisiana roads, destined to have a few bumps in it.

Dianne Michon, of Sunset, LA, checks her net meter on her solar powered home. She said the her last electric bill was $50 dollars, half of which was fees for electricity.

Many in the Louisiana solar energy industry may see Clyde Holloway, Public Service Commissioner for District Three, as one of those bumps.

He has proposed that property owners who install and use solar energy panels to generate electricity for their home should pay a monthly fee back to utility companies like Entergy and Cleco.

Amid rumors of a proposed $50 monthly “utility charge” to solar users, Holloway recently said that amount is too high.

“Twenty-five dollars is my limit, I won’t vote for a $50-dollar charge on solar customers,” said Holloway. “What I am trying to do is put a monthly fee on just solar homes that have the system, they would be the only ones that get these charges added. But what amount should that solar customer pay to offset the amount to Cleco, Entergy or whomever for those solar customers being on the grid.”

Holloway said that if solar isn’t working, due to cloudy or rainy weather, solar customers need to use electricity generated from the utility company grid.

Special meters installed on solar homes help to utilize “net metering” – which has been in place in Louisiana since 2003 and allows sunlight-generated electricity from the homes to be generated back onto the grid.

Some are calling Holloway’s proposal an “increased net metering fee”. Most utility companies already have a monthly fee for the special meters, often calling them a monthly interconnection fee.

Holloway contends that people who don’t use solar will be paying for people who do use solar.

Louisiana solar users qualify for a 50 percent, one-time, refundable, state income tax credit for the purchase and installation of the system under provisions of the Wind and Solar Energy Systems Tax Credit created by state legislation in 2007.

Combined with a 30 percent Federal tax credit, some Louisiana solar customers can receive an 80 percent credit. In Louisiana only homeowners can receive the 50 percent credit while state businesses can qualify for the federal incentive.

Back in February, it was reported by the Associated Press that Holloway wanted to ask Louisiana lawmakers to do away with the state’s solar incentive program altogether.

“I don’t want to kill solar,” Holloway said in a recent interview. “I hope it survives…but on its own. We’re the highest solar- subsidizing state, it’s the highest amount of the (solar) subsidy in the nation.”

Some think Holloway’s proposed utility charge could have crippling effects on Louisiana’s burgeoning solar industry.

C. Tucker Crawford, chairman for the Gulf States Renewable Energy Industries Association – a non-profit organization that represents solar and renewable energy firms in Louisiana, Mississippi, and Alabama– said that the entire Louisiana industry could be affected.

“I think Holloway has misinterpreted some of the data that he has been given,” he said. “He’s a little overly concerned right now.”

Crawford said that there is no such thing as “alternative” energy, only energy.

“Maybe 15 years ago, solar could have been called ‘alternative’ energy,” he said. “Now, it’s considered renewable energy. With respect to oil and gas and other forms of energy, solar is a complimentary solution to our much-greater energy demand. We’re going to need all forms of energy. The beauty of solar is that it’s clean and the fuel source is infinite.”

So clean in fact that Crawford said a number of oil and gas companies, like Shell and Chevron, are investing in solar companies.

“Because oil companies aren’t oil companies anymore, they consider themselves ‘energy companies’ now,” Crawford said. “So they’re diversifying wherever they see fit. They’re hedging their bets as well. They’re considering it an ‘energy play’, not an ‘oil and gas play’.”

Robert Suggs, Chief Executive Officer of South Coast Solar – a Louisiana-based company – said that they are doing their part to bring revenue into the state of Louisiana.

To Suggs, this is the real “going green.” He said the solar industry has a great environmental and economic impact to Louisiana.

“Nearly 40 percent of all of our revenues generated come from non-state, taxpayer dollars,” he said. “We do work for the Federal government and the US State Department, including work that we have done and continue to do at Fort Polk in Louisiana and the Andrew H. Wilson Elementary School in New Orleans.”

As solar usage has expanded into the federal and state level of government – which has decreased energy costs and saved taxpayer dollars – the oil and gas industry has expanded their use of solar as well.

Suggs said that not only are those companies investing in solar, they’re using solar as well.

“Solar is absolutely being used on telemetry devices for well pumps in the oil field,” he said. “There are a lot of telemetry devices that are put in place on remote pumps where you have wellheads in the middle of a marsh somewhere.”

Suggs said that solar brings with it a new, burgeoning industry for the state. He said that the number of licensed, solar panel installation companies has spiked in recent years, from about 7 companies in 2008 to 196 companies to date. He said these companies seem to be hiring and growing, with some companies even working in other states and bringing the money back to Louisiana.

The Public Service Commissioner of District 5 and commission chairman, Foster Campbell, said a proposed fee on solar panel homeowners is an example of Holloway “putting the cart before the horse.”

“We need to not worry about the 1/10th of 1 percent of people in Louisiana who are using solar power to save money, they’re not the problem,” Campbell said. “We need to be more concerned with the rest of the state who is paying too much in electric utility rates. Holloway needs to be concerned with companies like Cleco, which he represents in his district and which nets 11.75 percent in allowed earnings annually.”

If there is a battle for “America’s Energy Independence,” then Louisiana homeowners are on the frontline.

According to most solar customers, solar is big and easy. Those who have solar energy systems are saving big on utility bills and the usage and installation of the solar panels is easy.

With that, it is not surprising that this “battle for the sun” takes place in New Orleans, a city now abuzz with those who have “seen the light” when it comes to solar energy.

Rashad Ketchens, manager of the LSU Health Sciences Bookstore in New Orleans, said that he had solar panels installed in his East New Orleans home. He said that now he shows off his electric bill any chance he gets.

“Solar panels actually cut my electric bill almost by half,” said Ketchens. “I have three small children at home. And now that I am able to start saving more, that extra cash goes a long way. I’ve been taking some of that money and putting it in to a savings account for the kids to go to college.”

He said that he believed that energy costs will steadily increase over the years and only recently, with advent of the solar panels, has he ever seen a utility bill go down.

“Because I’m generating my own electricity, I’m not feeling the heat, as much, to pay that bill every month,” he said. “Is Clyde Holloway really doing the public a service? Am I supposed to pay because I save money? I’m saving money, you don’t charge people for that.”

Chris Schultz, a founder of a New Orleans business incubator called Launch Pad, said that he installed solar panels two-years ago on his uptown New Orleans home. He said that he believed that the addition of solar energy systems to a home can increase the property value of a home.

“The tax credits were totally what drove that and what did incentivize us and our electric bill is now two-thirds of what it used to be,” said Schultz. “And that’s significant for Louisiana. The tax incentives were what made it economically viable to get the solar panels.”

“The company that did the installation work for us actually did the paper work and prepared what we needed to give to our accountants to submit for our taxes,” Schultz said. “We didn’t have to do anything.”

Holloway said that the fee decision will be made in a vote of the five-member PSC sometime in 2013.

“It’s small now, but Entergy said that there is going to be 1,000 systems installed in New Orleans by the end of the year,” said Holloway.

According to Tucker, there are currently about 1,500 systems for solar power installed in New Orleans.

Thomas Neyhart, president of Green Grants – which is an organization that developed a leasing program to help homeowners cover the up-front cost of a solar energy system – said that Louisiana is “trailblazer” compared to other states.

“Louisiana is definitely one of the most aggressive programs for renewable, solar and wind energy,” Neyhart said. “It’s focused just on allowing the residents, and homeowners of Louisiana to become energy independent.”

“The energy companies of the world need to see that they are going to need ‘renewables’ and that it needs to become part of their portfolio,” he said. “Renewables is energy independence. At a macro level, it’s the country not buying oil from the Middle East, not being reliant on countries. On the micro level, it’s that single homeowner, that consumer, being allowed their independence. You don’t want to take that choice away. If somebody wants to invest their money and become energy independent, it’s a right just like anybody else’s right.”

As the road towards “energy independence” winds from Washington to Baton Rouge and to New Orleans, it then leads to Acadiana in South Louisiana, to find new solar customers who would be affected by Holloway’s proposal.

The home of Dianne Michon – which is located, ironically, in Sunset – is the only one in her neighborhood whose roof is laden with solar panels.

Michon, an Entergy customer, said she is a new solar power user who installed a system on her home this year.

“I’ve always wanted solar,” she said. “My husband used to live in California and they had major incentives for using solar power in that state.”

Houses with solar panels that generate electricity also come outfitted with a net meter, something that Michon said is her “declaration of energy independence”.

“They’re actually purchasing electricity from me right now,” she said. “When the arrow is going backwards, Entergy is purchasing electricity from me.”

Hearing about Holloway’s proposed, additional “utility charge,” Michon said made her angry.

“Why should I have to pay more for net metering? I don’t understand the purpose of raising the net metering fee,” she said. “Holloway said that the Public Service Commission’s job is to make sure that the electric companies keep their costs low so that we can afford to buy electricity. Well, it doesn’t look like (Holloway) is looking out for my best interest if he is going to allow the electric companies to go up on a net metering fee.”

Michon said that since using a solar power system on her home, her Entergy utility bill has shifted from what she expected for her last billing cycle. September’s average bill for her home – which last year was at around $185 – dropped to $50 this September, according to Michon.

“My total energy use for the month is probably around $25,” she said. “All these other fees that are tacked-on, made my bill $50. There’s a hurricane fee, I pay a customer fee. They add on all these things that make up half of my bill. But in reality, my bill is $25.”

Michon said that she sees Holloway’s proposal as a new tax that penalizes people who want to be responsible with their energy consumption and to the environment.