How solar development incentives will cost Maine's poorest the most

Residents in the northern parts of the state stand to incur the highest costs.............. But if all 750 community solar farms under development in Maine come online by 2024, they are estimated to cost ratepayers more than $270 million per year, according to the Maine Office of the Public Advocate, which represents consumers. That’s more than $330 per year, on average, for customers of Versant Power and Central Maine Power...................................It appears the Maine Legislature did not fully discuss the cost-shifting, either. Though some people urged greater understanding of the financial picture, none of the 59 people who submitted written testimony about LD 1711 in 2019 talked in detail about how incentives for community solar development would be paid for. They instead spoke about how the programs would benefit people with lower incomes..........................................the costs, which get passed on to non-participants, have been higher than Maine lawmakers initially anticipated.

How solar development incentives will cost Maine's poorest the most

By Meher Sher

March 7, 2023

Every morning Kent Libby, 61, plays chess at a local fast food restaurant to keep his mind sharp. He lifts weights and completes sets of pushups and situps to keep his body strong. After a car crash in DICTIONARY.COM 1984 left him comatose for 20 days and ended his ability to work as a mechanic, he deeply understands the importance of maintaining his health. But it’s a task made more difficult living on the edge of financial security.

Libby resides in a mobile home in Holden. He has a fixed monthly income of $934, of which $152, or 16 percent, went to electricity in January. Yet it is people like him who will bear the burden of electricity costs that are expected to increase in the coming years in part due to the state’s efforts to boost solar development.
“My bill has never been this high before,” he said.

The Maine Legislature and the governor have turned to solar to transition the state away from fossil fuels and meet its ambitious climate goals. One type of solar development, called community solar, allows people who subscribe to a small-scale solar farm to reduce their electricity costs. But the cost savings for subscribers are offset by all other utility customers who don’t participate, meaning those who already can’t afford their electricity bills will be hit hardest.

Few appear to truly understand the cost implications for Mainers with lower incomes. But some are beginning to question whether it is fair to fund the state’s clean energy transition this way, especially given lucrative incentives for solar developers.

“It is significant,” said Phil Bartlett, the chair of the Maine Public Utilities Commission, which sets electricity rates. “Lower-income Mainers will be hurt by this, and this is a regressive way of funding public policy.”

Residential and commercial owners buy into community solar farms, which are no more than 20 acres in size, to receive credits on their electricity bills once the projects start operating. The idea is that people can participate in solar even if they don’t install solar panels on their roofs or property. While it’s free to subscribe to a community solar farm, the costs, which get passed on to non-participants, have been higher than Maine lawmakers initially anticipated.

Libby is not planning to subscribe to any community solar farms, which are proliferating throughout Maine. But starting July 1 he will likely end up paying for them. Residents in the northern parts of the state stand to incur the highest costs, which are expected to increase each year as more community solar farms connect to the grid.

Over the past month, the Bangor Daily News spoke to or heard from more than 35 people across Maine about their views of community solar programs. Many expressed skepticism about them, questioning whether the pamphlets they’d received in the mail urging them to sign up were a scam or believing that joining would cost them more long term — neither of which are true. They found it difficult to understand how community solar programs work and wondered how they affect electricity rates overall.

Costs will depend on how many community solar farms are built. But if all 750 community solar farms under development in Maine come online by 2024, they are estimated to cost ratepayers more than $270 million per year, according to the Maine Office of the Public Advocate, which represents consumers. That’s more than $330 per year, on average, for customers of Versant Power and Central Maine Power.

“We stand by those numbers. We were very careful before we put them out,” said Bill Harwood, the Maine public advocate. “It is inequitable.”

The burden of subsidizing community solar will fall to those who are financially vulnerable for the benefit of those who are more likely to subscribe to a solar farm: people who are financially secure. Residential solar adopters nationally tend to be wealthier, middle-aged and have higher education levels, according to the Lawrence Berkeley National Laboratory in California.

The poorest 30 percent in Maine spend an average of 12 percent of their income on electricity costs. The wealthiest spend 1 percent of their income on electricity, according to the National Renewable Energy Laboratory.

Maine considers electricity prices above 4 percent of low-income ratepayers’ earnings to be unaffordable.

Starting this summer, Central Maine Power customers are projected to see costs associated with solar add $4 to $5 per month to their electric bill. Versant Power customers are projected to pay an additional $5 per month, with the exception of Aroostook County where costs are estimated to increase about $12 per month.

These initial yearly rates, which require approval by July from the Maine Public Utilities Commission, are expected to grow each year as more community solar farms start operating.

‘We had no idea’

John and Kathryn Farquhar of Bangor subscribed to a community solar program in Hermon more than a year ago. Neither of them are officially retired. John, 69, provides care online to people with drug addiction, and Kathryn, 77, works as a kindergarten substitute teacher. They signed up because they wanted to support clean energy development and save money on their electric bills.

Looking back they wished they knew how costs were being shifted to customers who were not participating. 

“It would have been great to know more about how these programs are subsidized,” John Farquhar said.

It appears the Maine Legislature did not fully discuss the cost-shifting, either. Though some people urged greater understanding of the financial picture, none of the 59 people who submitted written testimony about LD 1711 in 2019 talked in detail about how incentives for community solar development would be paid for. They instead spoke about how the programs would benefit people with lower incomes.

That bill, sponsored by former Sen. Dana Dow, R-Waldoboro, and signed by Gov. Janet Mills in June 2019, established a program to boost solar development overall, including to increase the number of smaller-scale community solar farms. People who subscribe to them get a discount on their electric bills through what is called net energy billing.

Since 2021, the Legislature has changed the net energy billing programs for community solar twice: first, to limit the number of participating solar projects, and, second, to reduce the compensation paid to developers. But the community solar projects that applied under the original program are grandfathered in under the initial, incentivized rate structure.

The governor is sensitive to the hardships faced by low- and moderate-income Maine families, which is why she and the Legislature delivered $450 energy relief checks this winter, said the Governor’s Energy Office in a written statement. Utility bills are high because of the grid’s overreliance on natural gas to create electricity and Russia’s invasion of Ukraine, which caused energy prices to skyrocket, it said. It added that Maine must diversify its electricity supply to make sure it is more affordable long term.

The office did not answer questions about whether Mills was considering modifying the incentives still in place under the original program or whether she believed its design was fair.

Under revised rules, solar developers will get a fixed rate for the electricity they produce. But solar developers in the original program continue to qualify for payments that are tied to natural gas-derived rates. 

“One of the mistakes the Legislature made was tying the incentive to the standard offer rate. We had no idea natural gas was going to go up three times as much, as would the rate,” said Sen. Mark Lawrence, D-Eliot.  

This means people are paying more for solar power than it costs to produce. Utilities, through their customers, pay approximately 25 cents per kilowatt hour for electricity that costs less than 10 cents per kilowatt hour to generate, according to the Maine Office of the Public Advocate. 

Maine has people with wealth who want to invest in more renewable energy and expect utilities to provide the tools to make that clean energy transition, said Judy Long, the communications manager for Versant.

“But we also have customers who can hardly afford to heat their homes and just need us to be reliable and cheap,” she said. “Balancing the interests of those different groups of customers is tough.”

There are an estimated 70,000 Maine households that need financial assistance to pay their electric bills, according to the Electric Ratepayer Advisory Council, which advises the public advocate. But fewer than half receive help through the electricity Low-Income Assistance Program, the council says, and the subsidies they do get are still not enough to make electricity affordable. 

Jennifer Clement, 35, lives in a mobile home park in Ellsworth with her boyfriend and their two children. Clement works as a direct support professional, and her boyfriend works in the seafood department at Hannaford. Between them, they earn $5,400 a month. While they can meet their family’s needs, they live paycheck to paycheck, she said. 

She doesn’t question increasing electricity costs too often because either way she will have to pay the bills, she said. But higher costs of power affect her ability to pay for other things. 

“That’s going to add up to be a lot of money, and I don’t have that. Where can I pull that from? My back pocket?” Clement said. “It is unfair that all of us have to pay more.”

‘It feels exploitative in some ways’

The rate structure for community solar projects was designed to incentivize developers to spur an industry. Solar developers keep an estimated 85 to 90 percent of profits and share the remainder with subscribers, according to a report by the Maine Public Utilities Commission. 

“In retrospect, could we have looked at something different than the standard offer rate? Sure,” said Jeremy Payne, the former executive director of the Maine Renewable Energy Association and a lobbyist. “I just don’t know what the alternative would have been, and I think the idea was to try and unshackle the industry, because it had been locked down for a better part of a decade.”

While Bartlett, with the Public Utilities Commission, recognizes a problem with the way the initial solar program was designed, he also argued that the addition of community solar to the electric grid will lead to reduced overall costs of power over time, benefiting everyone. Those benefits are hard to quantify or notice immediately, however, Bartlett said.

“It puts downward pressure on wholesale market prices in the region,” he said. “Community solar is treated as a reduction in our load, which means that we pay a lower share of the regional transmission costs.”

Net energy billing benefits ratepayers in the sense that solar developers invest in grid upgrades when they connect their projects, “increasing grid reliability and resiliency,” said Carolyn Dykema, the Northeast policy director of Nexamp, a Massachusetts-based national solar company that owns and operates community solar farms in Maine.

However, she noted that incentives are structured differently in other states — and can still be lucrative and not cost as much for ratepayers. 

Because there is no upfront cost barrier for subscribers, solar companies say community solar is accessible to people with lower incomes. 

“It truly is equitable access to green energy,” said Eric LaMora, the executive director of community solar at Nautilus, a New Jersey-based solar company.

The company declined to provide exact figures, but its revenue does not all go to profit. Rather it is also put toward “significant costs for construction, operation, and ongoing maintenance of the community solar projects as well as the management of subscribers,” Nautilus said.

While it’s possible for people with lower incomes to save money on their electricity bills by signing up for community solar, a lack of trust and understanding about how the programs work may prevent them from participating, Nautilus said. 

Meanwhile, aid organizations are seeing an increase in need. 

“Energy bills stress lower income households disproportionately, and so folks that were previously getting by and not needing the help that MaineHousing provides are now in a position where they have to look to us for help,” said Daniel Brennan, the director of MaineHousing, which subsidizes people’s housing costs.

Downeast Community Partners in Washington and Hancock counties has seen a 400 percent increase in the assistance it has provided over the past two years. It is on track to see an additional 200 percent increase this year, according to Sharon Catus, the director of development. 

Of those who apply for help with heating and energy costs from Washington and Hancock counties, 94 percent are seniors and 50 percent have disabilities, Catus said.

Bonnie and Randy Johnson live in an 800-square-foot log home in Cherryfield in Washington County. In the past, Bonnie, 62, has worked in the fields of caregiving and teaching. Randy, 70, a mechanical engineer, is retired from the Maine Seacoast Mission. Altogether, their monthly Social Security income is $2,937. In February their electricity cost $215. 

They have not received power assistance. Bonnie Johnson said she is already so grateful for the help they receive paying for food that she doesn’t want to ask for it.

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https://www.bangordailynews.com/2023/03/07/mainefocus/incentives-ma...

Mehr Sher is a Report for America corps member. Additional support for this reporting is provided by the Unity Foundation and donations by BDN readers.

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