Rising costs of solar subsidies in Maine prompts debate over program’s future

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Maine's public advocate is warning that electric ratepayers are about to be hit with another price increase unless lawmakers change a law that encourages solar energy development.

"This program just keeps giving and giving,” said William Harwood of Maine’s Office of the Public Advocate. “There are more flaws to this program."

But it won't be an easy fix, and the solar industry is hitting back hard.

"So I think it's very important to understand that the OPA is echoing the utility's numbers there and they have not done their own analysis,” said Kate Daniel, northeast regional director for the Coalition for Community Solar Access.

In 2019, a new program took effect in Maine that uses electricity bill credits to encourage people to install solar energy system. The "net energy billing" program has led to a surge in homeowners installing solar panels and an absolute explosion in so-called "community solar" projects that often cover acres of land.

Harwood, whose office is charged with representing the interests of utility ratepayers in regulatory proceedings and before the Legislature, said during a State House press conference on Thursday that the program’s success is about to hit home for electric ratepayers – to the tune of up to $220 a million a year for the next 20 years. By Harwood’s estimate, that could add $275 annually to bills on top of the recent rate spikes largely driven by the rising costs of natural gas.

According to figures from the Maine Public Utilities Commission, about 100 megawatts of solar were participating in the net energy billing program as of the end of January. About 1,100 megawatts have billing agreements in place but are not yet operational while projects accounting for another 1,200 megawatts have applied for participation.

The vast majority of those likely won't be built or they will be completed after the window for the current net energy billing program closes, according to observers. But Harwood said Thursday that the $220 estimate is based on an assumption that only 23 percent of projects are built.

"We are not suggesting that the solar industry is responsible for the high rates we are experiencing today,” Harwood said. “But what we are saying is if net energy billing is not checked, if this program goes forward, it will be net energy billing that will be the cause of substantial increases and future prices, starting on July 1 of this year."

Harwood wants the Legislature to revert to more modest subsidies that existed before the 2019 law change without changing the incentives that currently flow to homeowners or businesses with individual rooftop systems. He is also proposing that lawmakers allow the PUC to reduce the compensation rates for projects already in operation or under development. And he said the PUC should expand the competitive bidding program to cater to smaller solar projects.

But Daniel and representatives from the solar industry are pushing back strongly against the public advocate’s office.

The Coalition for Community Solar Access contends that Harwood is relying entirely on inflated cost projections put together by Central Maine Power and Versant, Maine's two largest electric utilities. CMP and Versant have to offer those net energy billing credits to the owners of solar energy systems and then recoup those costs from ratepayers. But Daniel said those projections have not yet been approved by the PUC.

For instance, Daniel says CMP's math is "just plain wrong" because it assumes too many of the proposed solar projects will be built and participate in net energy billing. The coalition estimates that 80 to 90 percent of the projects in the pipeline either won't be built or won't receive the credits.

“These utility numbers are projections that go three years out and the utilities themselves have said that their projections are unreliable,” Daniel said. “The one thing they know about them is they are not right. So we think that is the wrong conversation to be having.”

There are multiple bills dealing with net energy billing pending in the Legislature but the Energy, Utilities and Technology Committee has yet to act on them.