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Competing bills would amend net metering rules in South Carolina

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Competing bills would amend net metering rules in South Carolina

The amount of customer generation in South Carolina taking advantage of net metering arrangements is anticipated to meet state-imposed limits years before expected, prompting lawmakers to push competing bills in the state General Assembly to address this unanticipated growth.

"We've sort of been the victim of our own success," Eddy Moore, energy and climate program director for the South Carolina Coastal Conservation League, said in a recent phone interview.

Under a comprehensive law, Act 236, and settlement agreement signed in 2014 electric utilities must make net energy metering available to customer-generators until the total nameplate capacity of the distributed energy systems equals 2% of the utility's previous five-year average of peak retail demand. Under the agreement, set to expire Jan. 1, 2021, a kilowatt-hour produced by a customer-generator is credited at the full retail rate of a kilowatt-hour produced by the utility. The utilities are permitted to recover through their fuel clause any revenues they may lose to net metering customers.

Moore pointed out that 2016 was really the first year that the net metering policy was applied to customer-generators.

"It has created a very quick, new growing solar industry in South Carolina," Moore said. "It has been amazing to watch in two years how we went basically from zero to 60."

With utilities about to meet the net metering requirements early, lawmakers introduced H.B. 4421 to eliminate the current 2% cap by allowing new interconnections to be compensated until a new order is issued by the Public Service Commission of South Carolina. Utilities would be required to provide these customer-generators a "new standardized net metering agreement" following commission approval.

H.B. 4421 also directs the South Carolina Office of Regulatory Staff to recommend to the PSC revised ratemaking methods, cost allocations and rate designs for all retail customers by Dec. 31, 2019. The commission would be required to rule on the recommendations by Dec. 31, 2022.

"The proposed revisions should seek to ensure a fair allocation of system costs and benefits between consumers, including customers who utilize distributed energy resources and consumers who do not utilize distributed energy resources," the bill states.

Still, not everyone is on board with this plan and a different proposal, H.B. 5045, is gaining momentum.

H.B. 5045 increases the net metering cap to 4% of a utility's previous five-year-average of peak retail demand, but reduces the cost benefits and subsidies for customer-generators. It requires that each kWh of electricity generated by a customer-generator is credited at a utility's lower, avoided-cost rate and includes language that "customers of the utility who are not customer-generators are not required to subsidize the costs of customer-generators."

Duke Energy Corp., which provides electric service in South Carolina through subsidiaries Duke Energy Carolinas LLC and Duke Energy Progress LLC, calls H.B. 5045 "an improvement" over H.B. 4421.

"We are all for common-sense legislation that is fair to all who call South Carolina home — customers, utilities and solar developers," Duke Energy spokesman Ryan Mosier said in an email. "House Bill 4421 is not a fair bill. It requires utilities like Duke Energy to offer rooftop solar to customers at a subsidized rate at the same time it prevents utilities from recovering costs. This is not about utilities protecting profits. It's about everyone paying their fair share to manage the energy grid that everyone uses. Having others bankroll the lucrative earnings of the rooftop solar industry is not the answer."

Moore contends H.B. 5045 is "clearly a backlash bill" sped through the House Labor Committee as H.B. 4421 gained traction.

"As in the case of Florida, no one is fooled by the attempt to have a fake competitor solar bill to split support and thereby bring the solar industry to a halt when we hit the cap," Moore said. Florida voters in November 2016 struck down a controversial measure, supported by utilities, that would have allowed residents to own or lease solar equipment for personal use while protecting customers who do not install solar from subsidizing "the costs of backup power and electric grid access to those who do."

"The actual bill that takes away subsidies is [House Bill] 4421," Moore said. After a utility hits the 2% net metering cap, the bill "no longer allows a rider that collects lost revenues."

Under H.B. 5045, customers will get less credit for their on-site generation and managing their load while taking stress off the grid, according to Moore.

"It sharply devalues on-site generation and consumption," he said.