The West Virginia House of Delegates has approved a bill designed to encourage retail customer investment in solar energy by exempting solar power purchase agreements from the state Public Service Commission’s jurisdiction.
The House voted 83-16 Wednesday to pass House Bill 3310, which specifies that solar energy facilities located on and designed to meet only the electrical needs of the premises of a retail electric customer do not constitute a public service, nor is the output subject to a power purchase agreement with the retail electric customer.
Under a power purchase agreement, a developer arranges designing, permitting, financing and installing a solar energy system on a customer’s property at little or no cost.
The customer buys the system’s electric output from the solar services provider for a predetermined period at a fixed rate, usually lower than the local utility’s retail rate, while the solar services provider gains tax credits and income from electricity sales.
The bill has no tax credit provisions and does not provide any state subsidies — something that Delegate Moore Capito, R-Kanawha, chairperson of the House Judiciary Committee in which the bill originated last week, stressed on the House floor Wednesday as he urged passage of the bill.
“The bill before you is truly the epitome of [a] free market,” Capito said. “This bill does not allow for more solar in the state of West Virginia. This bill does not provide any state subsidies for solar or renewable energy, and it does not give any preference or priority to solar or renewable energy.”
House Bill 3310’s legislative findings note that free-market financing may give more customers opportunities to install solar energy facilities on their properties and that that would stabilize long-term energy costs to “make the state more attractive for industry and commercial investment.”
The bill’s exemption of power purchase agreements from state Public Service Commission jurisdiction would be conditional, the first condition being that the aggregate of all power purchase agreements and net metering arrangements for any utility not exceed a cap of 3% of the utility’s aggregate customer peak demand in the state during the previous year.
That cap already exists for net metering, which allows customers who generate their own electricity from solar power to sell the electricity they don’t use back into the grid.
The bill’s second condition sets individual customer onsite generator limits so that solar energy facilities meet only the electrical needs of the retail electric customer’s premises, not to exceed 25 kilowatts for residential customers, 500 kilowatts for commercial customers and 2,000 kilowatts for industrial customers.
The bill also requires customers who enter into power purchase agreements or solar facility leases to notify their utility first, and extends authority to the Public Service Commission to make and govern interconnections for the power purchase agreements. The commission would not have authority over the power rates for such arrangements between the onsite generator and the customer.
Public Service Commissioner Charlotte Lane approved of the bill at last week’s House Judiciary Committee meeting that resulted in the bill’s advancement to the full House. West Virginia Coal Association President Chris Hamilton condemned it, predicting it would result in a loss of coal jobs as consumers get to “cherry-pick” their electrical load.
John Scalzo, vice president of regulatory and finance for Appalachian Power and Wheeling Power, testified that customers providing some of their own power from a third party could result in “a little less” cost recovery for the utilities that the rest of their customer base would have to support.
The bill now goes before the Senate.