Proposed changes to KingsportPower Co.'s net metering tariff for its solar customers inTennessee could deter the use of solar power, according to several renewableenergy and solar energy groups in the state.
The changes would "unfairly shifts costs and makesinvestments in solar uneconomical," and "effectively deprive"Kingsport's customers of their right to choose solar, Peter Stein, attorneywith the Southern Environmental Law Center, or SELC, at a recent public hearing hostedby the Tennessee Regulatory Authority.
The matter is part of the American Electric Power Co. Inc. subsidiary's rate casecurrently being considered by the TRA. The regulator began to Kingsport's rate requeston Jan. 20.
Kingsport, which does business in the state as AEP Appalachian Power,is seeking to pay far less to solar customers for the power they generate andto impose higher demand charges on residential and small commercial customers,according to the SELC.
"A demand charge like the one proposed by Kingsport isnot good rate design," the SELC said. "Because Kingsport would imposethe charge regardless of whether a customer's peak use coincides with Kingsport'speak demand, it would allow the utility to overrecover from solar customersregardless of the marginal cost of providing electricity to them."
Matt Beasley, president of solar advocacy and lobbying groupTenneSEIA, said the group is strongly opposed to the changes because initialresearch showed customers net electricity bills could go up after installingsolar at their homes.
"Two of our members who are Kingsport residents haveinstalled solar on their homes and performed a detailed analysis of theirelectricity bills, concluding that under the proposal they would pay more thanif they had not installed solar," Beasley said. He added that the proposeddemand charge reflects other efforts across the country to unfairly penalizesolar customers.
Net metering successfully functions to provide energy choiceand competition in 42 states across the country, Tyson Grinstead, spokesman forthe Alliance for Solar Choice, said in an interview. If the demand charge isapproved, Grinstead predicted it would prevent future solar growth in Tennesseeand "other utility monopolies across the country may follow suit."
AEPAppalachian Power spokesman John Shepelwich said in an email that because theKingsport rate case is still open and active, the company did not have aresponse to the comments made at the hearings. However, he notedKingsport will "continue to listen to comments from our customers andattempt to work out the best tariff for everyone involved."
Shepelwichsaid Kingsport's goal is to make sure the final outcome for both its solar andnon-solar customers is "equitable."
Kingsportis also requesting a rate increase, which is "never easy," accordingto Shepelwich. But he insisted that the company's existing base rates "arenot adequate to recover reasonable operating costs and earn a fair andreasonable rate of return" on its investment. Kingsport's last base rateincrease was granted in 1992.
Shepelwichnoted that the current company rate of return is roughly 1.1% and if therequest is approved, the company's projected rate of return would be 6.69%,equal to about a 13% increase for a residential customer.
"Withthat change, we project that Kingsport Power costs will continue to be about 22points below the national average," he said.