TOPEKA — Four utility companies serving Kansas want to set aside legislation that allows businesses, schools, churches, hospitals and others to contract with investors to install solar panels on their property and buy the solar panels directly electricity at a price lower than what is available on the grid.
Evergy, Kansas Electric Cooperatives, Wheatland Electric and Heartland Rural Electric Cooperative joined Kansas Corporation Commission staff with objections to a House bill ending the monopoly held by Kansas utility companies on those types of purchasing agreements of energy.
“This bill, by another name, is a mini-deregulation bill for large clients,” said Jeff Martin, vice president of client operations at Evergy. “Evergy strongly opposes this bill because it will hurt residential and smaller commercial customers. Proponents of this legislation are not suggesting they no longer want access to the power grid or the generation that Evergy supplies them today. They just want to pay less.”
Twenty-seven states, including Oklahoma, allow third-party power generation contracts for electricity from solar or wind systems. Kansas remains among seven states to specifically ban the practice. Kansas is one of the top 10 sunniest states, but in 2020 it ranked 43rd in terms of solar generation.
Jessica Lucas, a representative of the Clean Energy Business Council, said the opposition to House Bill 2227 was misguided. There is no justification for a state law that makes energy purchase contracts the exclusive domain of utility companies, she said. Electricity consumers should be free to make choices about financing, building and operating solar or wind farms on their property without involving a utility company, she said.
“That’s why this legislation is being sought,” Lucas said on the Kansas Reflector podcast. “It once again offers customers more choice when making decisions about their energy use. We want Kansans to have as many tools in their toolbox that they can use to decide their power generation.”
He said the legislation should not be viewed through a partisan lens because access to advanced technology for rooftop solar, for example, did not address the political goals of Democrats and Republicans. The question was whether Kansans’ best interest advocated moving to a law that allows third-party contracting for independent electricity generation, she said.
Backers of the bill included the Kansas House, the U.S. Army’s Environmental and Energy Regional Office at Fort Leavenworth, and an assortment of companies involved in solar development, including Cromwell Environmental of Lawrence, King Solar by Yoder and Pratt-based Stanion Wholesale Electric.
About the competition
Eric Stafford, a Kansas House lobbyist, said the corporate organization’s legislative agenda included a goal to create equal competition between energy sources and technology. He recently told the House Energy, Utilities and Telecommunications Committee that Kansas’ competitive position nationwide for the lowest average energy cost has slipped from 14th to 34th.
“Our contributing members continue to express concern about rising energy costs,” he said. “State law should encourage competition and not prevent it from going out of business.”
Solar energy contractor Mark Horst, who owns King Solar, said the House bill would give businesses, organizations and individuals more opportunities to enter into self-generation deals that avoid liability for large initial capital investments. Under current law, he said, a church interested in a solar panel for its roof had to come up with hundreds of thousands of dollars.
“A power purchase agreement allows a lender to buy the system, own it and install it. So the church just buys the energy it produces each month, perhaps at a lower cost,” Horst said.
Purchasing agreements allowed for residential customers would be limited to 25 kilowatts, agreements for commercial customers could not exceed 200 kilowatts, and schools, hospitals and religious facilities would be limited to 1.5 megawatts, according to the bill. . There would be no limits for military installations.
Patrick Orr, regulatory analyst for the Citizens’ utility Ratepayer Board, said CURB’s advocacy for small residential and commercial ratepayers has led it to conclude that the housing bill could be a useful funding mechanism for retail electricity customers attracted to solar or wind energy for their own use. The bill would be in the public interest because it would help expand the state’s energy portfolio, he said.
Not so fast
Jeff McClanahan, director of utilities at the Kansas Corporation Commission, said commission staff recommended lawmakers refuse to pass the House bill because increased use of power purchase agreements, or PPAs, by the of commercial and industrial customers would reduce electricity sales and leave customers unserved by a PPA to pay what is needed to keep utility revenues constant.
He said the bill would not relieve public utilities of their obligation to serve all customers. Utilities should maintain enough generation capacity to meet demand despite the rise of customer-generator contracts, she said.
A utility company’s fixed cost coverage could be solved by imposing an additional charge on the application or by adopting a minimum utility bill for all customers, McClanahan said.
“Staff would notice that high overheads and minimal bills are not popular with customers because they greatly reduce the customer’s control over their total bill,” he said.
Bruce Mueller, general manager of the Wheatland Electric Cooperative that serves 23,000 customers in 15 Kansas counties and two Colorado counties, said the House bill would shift electricity costs away from members able to afford behind-the-meter generation to members who cannot.
School districts and other large electricity consumers would like to remain Wheatland members even if connected to solar or wind generation, he said.
“They know the sun doesn’t always shine and the wind doesn’t always blow,” Mueller said. “Wheatland will have ongoing debt for assets and maintenance costs. All those investment, administration, operations and maintenance costs that are now locked up would be socialized into Wheatland’s fare design process and passed on to other Wheatland members.
What about on-the-spot trading?
Michelle Milburn, clean energy product manager for Stanion Wholesale Electric, said lawmakers should also consider setting net metering standards across all utilities, cooperatives and municipal electricity providers. Net trading is the process that allows people with renewable energy generation to funnel excess electricity back to a power grid to offset a portion of their electricity costs.
“We’d like to see it more consistent,” he said on the Kansas Reflector podcast. “Someone like me, who helps people evaluate whether or not they have a viable option with solar, we factor in their production, we factor in their resources, but we also need to factor in these policies that vary and can really degrade the feasibility of a project.
Under House Bill 2228, state law would add Kansas electric utilities outside KCC jurisdiction to the list required to participate in net metering. KCC-regulated utilities have been involved in spot metering for years.
The bill would raise the total generating capacity limit for net metered systems from 1% to 10% of a utility’s peak demand from the prior year. Some Kansas utilities are close to the current 1% peak demand limit. Once achieved, a utility may no longer be required to make metering available to customers who generate electricity on their own in Kansas.
This bill would change the way excess energy would be billed for the purpose of offsetting a customer’s bill. The existing law says that the excess energy must be credited to the customer at the same rate as the average monthly kilowatt-hour cost of the utility. The bill states that a customer’s excess energy would be reported in kilowatt-hours over future energy use. Supporters of the bill also want to eliminate the expiration date on net metering mandates in state law beyond 2030.
Justin Cobb, of the nonprofit Nature Conservancy in Kansas, said net metering in Kansas was hampered by lack of uniformity and corporate uncertainty.
“With recent studies and hearings identifying that Kansas has higher ridership rates than the surrounding region,” Cobb said, “one simple solution is to loosen seat metering capacity regulations to match surrounding states.”