Solar panels in Damariscotta, Maine. (Photo by Evan Houk/ Maine Morning Star)
Republican lawmakers are seeking once again to repeal a utility program that they say is not only unnecessary for achieving climate goals, but is contributing to higher energy costs for Mainers.
“It seems that if we are trying to save the environment, which seems to be my colleagues’ on the other side of the aisle’s argument, there are better ways to do it,” said Senate Minority Leader Trey Stewart (R-Aroostook) at a press conference Tuesday.
Stewart was referring to net energy billing, a utility program designed to encourage customers to develop or participate in small-scale renewable energy projects like solar panels by offering credits to offset their electricity bills. The program’s supporters see it as a tool to transition the state to clean energy that has been a scapegoat for rising energy costs. But critics argue that it’s already achieved the desired environmental goals and is now just a flawed system driving up bills.
In 2023, Gov. Janet Mills set a goal for Maine to reach 100% clean electricity by 2040. While that largely hinges on the state’s ability to develop offshore wind in the Gulf of Maine, a recent report from the Governor’s Energy Office showed that most of Maine’s clean electricity needs in 2040 can be met with the state’s current and planned renewable energy resources. This includes the roughly 800 megawatts of solar, hydropower and wind generated through net energy billing projects.
Net energy billing has been modified multiple times since the program expanded in 2019, but the pros and cons are set to be weighed once again by the Legislature’s Energy, Utilities and Technology Committee. A public hearing on two proposals to repeal net energy billing was slated for Thursday but postponed due to inclement weather.
The cost of solar: rate increases, political feuds and the long-term outlook
Stewart sponsored one of the bills, LD 257, while Sen. Stacey Guerin (R-Penobscot) put forth LD 32. Both seek to repeal the laws giving the Public Utilities Commission the authority to establish a net energy billing program, as well as certain related tax exemptions. It also prohibits the commission from adopting rules that would require a utility company to allow customers to participate in net energy billing.
Proponents of net energy billing often highlight how the program has led to more rooftop solar and other small scale projects while its benefits and their associated savings aren’t spelled out on people’s power bills. However, the bills’ sponsors and many of their Republican colleagues say it has only shifted costs to low-income households and driven up energy prices, even claiming it has forced businesses to close.
Republicans have also said Democrats are to blame for utility rate increases, arguing that the law passed by their party’s majority leaves ratepayers subsidizing the clean energy transition. But there are other factors driving up electricity prices. customers have also been picking up the tab for power restoration efforts after extreme weather events and the spike in natural gas prices from global events such as Russia’s invasion of Ukraine.
Information from the Governor’s Energy Office underscored the role natural gas plays in the recent volatility of electricity prices. Since half of all electricity used in New England is generated using natural gas, it is the primary driver of the market price, according to the office.
What is net energy billing?
Net energy billing, or Maine’s version of net metering, had been the target of former Republican Gov. Paul LePage, who vetoed several legislative efforts to incentivize the proliferation of cleaner energy. It was expanded in 2019 under Mills so that customers can use renewable generators located outside of their property but within the same utility service territory, such as a community solar project. Legislation passed two years later added a goal of 750 megawatts of distributed generation through net energy billing.
GET THE MORNING HEADLINES.
There are two programs within net energy billing. First is the kilowatt hour program, which is open to all customers and provides kilowatt hour credits on a participating customers’ bill if they install renewable energy generators such as solar panels on their house or join a community solar project, where customers sign up with the owner of the solar farm to receive a portion of the credits. The credits expire after 12 months.
The tariff rate program for nonresidential customers provides dollar credits for those who use their own projects or share in someone else’s. The Public Utilities Commission sets an annual rate for the credits, which also expire after 12 months, depending on the customer’s size and utility provider.
Lindsay Bourgoine, director of policy and government affairs for Revision Energy, explained that the system provides a mechanism to compensate those who generate their own energy, which gets fed back into the grid.
The cost and benefits of net energy billing
In a presentation to the energy committee last month, the Public Utilities Commission shared that the net energy billing program has about $130 million in costs, but $160 million in direct or non-monetized benefits. Net energy billing projects sometimes pay for grid upgrades or help reduce the load on the grid during peak hours, which can help avoid costs for other customers.
During the Tuesday press conference, Guerin argued that net energy billing, sometimes referred to as NEB, shifts the cost of developing renewable energy sources onto the customers who don’t even use it.
“The cost increases with NEB disproportionately hurt low-income households who can’t afford solar panels,” Guerin said, speaking to the fact that the funds for the credits comes from payments made by other utility customers. “They are subsidizing the cost of wealthier homeowners while paying the sixth highest rates in the nation.”
A report from the citizen-led Electric Ratepayer Advisory Council at the end of last year showed that about 100,000 households in the state are struggling to pay their energy bills with electricity rates in Maine twice the national average.
Additionally, Stewart said that if the goal of the program was to incentivize solar, Maine has done that, so it doesn’t “need to pay for this failed program year after year.”
The two branches of the net energy billing program have more than 110,000 participants and have created nearly 1,200 megawatts in total operational capacity, which is enough to power more than 200,000 homes, according to a recent presentation by the Public Utilities Commission to the energy committee.
A cost and benefit analysis commissioned by the PUC released in April 2023 showed that net energy billing could cost Maine ratepayers $220 million per year starting in 2025. However, that same report also found that the economic benefits of net energy billing solar outweigh the costs of the program. Specifically, the analysis found that for every dollar spent on the program, ratepayers received $1.29 in benefits.
Net energy billing accounts for 4% or roughly $7 of a person’s energy bill, according to testimony submitted by the Natural Resources Council of Maine in opposition to the bills.
And while the program’s costs are part of a line item on a household’s power bill, the benefits aren’t, said Jack Shapiro, climate and clean energy director for the NRCM. Those benefits could include more clean energy, reduced demand for fossil fuels, less reliance on the regional grid and other downstream savings.
What to do instead?
Stewart said there is a right way and a wrong way to do renewable energy and Maine happens to have “the worst model in the country for how to do renewables.”
Instead, he would like the state to explore other options that he said wouldn’t impact ratepayers as directly. Specifically, he’d like to see the Public Utilities Commission leverage more competitive bidding to bring down costs. Also, rather than prioritize solar and wind development, Stewart said hydro and nuclear power could be better options because they have more opportunity for competitive rates.
Per the current net energy billing statute, the Public Utilities Commission annually establishes the rates that determine how much of a credit a customer receives under the tariff rate program.
However, Shapiro said the proposed legislation doesn’t take into account the ramifications of repealing net energy billing for the other 110,000-plus participants who use it, including schools that invested in installing large solar arrays. He argues that repealing the program won’t have the cost-saving benefits Republicans say it will.
If net energy billing were to be repealed, he said, the question becomes, “What comes next?”
Bourgoine with Revision Energy said if the program were eliminated those customers “would overnight be left without a way to be fairly compensated for the energy they produce.”
YOU MAKE OUR WORK POSSIBLE.