On Florida ballot, a utility-backed measure might harm solar power

Florida voters filling in their ballots this week might be forgiven for feeling confused about Amendment 1.

After all, the ads in favor of the ballot measure urge citizens to “vote yes on 1 for the sun,” and promise it will “promote the increased use of solar power in Florida.”

But the amendment is opposed by the entire solar industry, and virtually every newspaper in Florida has editorialized against it.

Moreover, reading through the proposed constitutional amendment multiple times could leave even an astute reader scratching their head as to what it actually does – despite the fact that it may become the most well-funded ballot initiative in the state’s history, with over $26 million raised so far, almost all coming from utilities and related groups.

If the measure is approved, it would put a right to own solar panels into the state constitution (even though no one is questioning that right) but would also reaffirm that government has the right to protect consumers, and – in the language that has gotten the most attention – to ensure that non-solar utility customers “are not required to subsidize” grid access for those who do have solar panels.

Many advocates of solar power say the real point of the measure is not to bring more renewable energy to the state, but rather to pave the way for utilities to pay less when buying electricity from solar-equipped residences. That would actually be a deterrent to rooftop panels.

Although the details in Florida are unique, it’s a window on a battle over power pricing that’s nationwide in scope.

“We’re seeing the deception increasingly around the country, but what the Florida utilities have done is the most egregious example,” says David Pomerantz, the director of the Energy and Policy Institute, a pro-renewable energy watchdog group. He says part of Amendment 1’s significance is now about whether those tactics can work. “Whether it’s a percentage point either way with the utilities winning or losing, the marketplace of people involved in the utility space are going to judge how successful utilities can be in deceiving people on this solar question.”

At issue is whether (or how much) rooftop solar should be encouraged and whether solar customers are subsidized by non-solar users, or vice versa.

The questions are complex. For one thing, putting panels on residential rooftops is not the be-all, end-all of tapping power from the sun.

Varieties of solar

Centralized solar installations – those that produce electricity at the Megawatt scale or higher – are far more cost-effective than distributed, rooftop solar, says Varun Sivaram, the acting director of the Program on Energy Security and Climate Change at the Council on Foreign Relations.

Nevada is one state where the market for rooftop solar collapsed due to changes in “net metering,” the practice by which solar panel owners sell back the electricity they generate to the utilities, generally at retail rates. But Nevada has also been a very strong deployer of centralized solar installations, Mr. Sivaram points out.

“A vote against distributed solar is not a vote against solar,” Sivaram says.

But he also acknowledges that there are many reasons beside cost effectiveness why states want to encourage rooftop solar, or why people want to install panels.

Often, Sivaram says, advocates paint the issue in extremes. Utilities want to disparage net metering as an unfair subsidy, shifting the costs of the power grid disproportionately onto lower-income customers who can’t afford solar. Solar advocates, he says, focus on the benefits of net metering but want to ignore some of the side effects – such as how those fairness questions could grow if the rooftop solar market expands significantly.

“What’s missing is a transparent discussion of this,” Sivaram says. He points to New York as a state where the utilities and solar companies and government are trying to work together and develop new models, as well as a new formula for how to compensate solar users in a fair way for the power they generate, one that takes into account the benefit solar provides, the maintenance of the grid, and the environmental value. (Sivaram suspects rooftop solar will end up earning somewhere between the wholesale and retail rate).

“The best thing we can do is make rates reflective of the cost of service, so others don’t cross-subsidize,” he says.

But the details are fodder for sharp debate from one state to the next.

Many solar advocates argue that rooftop panels are actually subsidizing the electric grid. When their power is used on site, it reduces overall load on the grid during peak demand times. And when the power is sold onto the grid, it provides electricity to the utilities.

In Florida, Stephen Smith sees the utilities’ worry about subsidized solar as a red herring.

Utilities last year paid only about $150,000 to customers due to net metering, says Mr. Smith, the executive director of the Southern Alliance for Clean Energy and a board member of Floridians for Solar Choice, which is opposing the amendment.

“If you put in an LED light or a more energy-efficient refrigerator, should utilities be able to charge you more because you’re more efficient?” asks Smith. “If I’ve got solar on my house, and have cut consumption down, that’s me being more energy efficient.”

If people wipe out their energy bill completely – but still stay connected to the grid to provide power when they need it – then utilities have an argument, he acknowledges, but he doesn’t see that as being an issue until there’s dramatically more market penetration for solar than Florida has now.

Monopoly mindset?

The utilities are still in a monopoly mindset, he says, and that has to change. “They’re not picking up on the market signal that both energy efficiency and solar and potentially storage are on the horizon,” says Smith. “they’ve got to adjust their business model.”

By storage, he means battery advances or other ways of making solar-generated power available even when the sun isn’t shining.

Utilities say they want to make sure all customers pay their fair share to maintain the electricity grid that everyone relies on.

“There’s a whole parade of horribles our opponents have come up with that [the amendment] doesn’t do but that they’re speculating that it will,” says Screven Watson, a board member of Consumers for Smart Solar (CSS), the political action committee behind the ballot measure. Some of the policy changes solar advocates would like to introduce in Florida would circumvent government oversight, he says. Amendment 1 “just codifies our current situation, with government involvement in energy, and places it in the constitution.”

As for the subsidy question, Mr. Watson acknowledges that in the current situation – Florida has just under 12,000 solar customers and more than 9 million electricity customers – it isn’t really an issue. And he emphasizes that nothing about the amendment means that net metering will change in the immediate future.

“But you can envision a situation where in a decade there is an unfair cost shift,” Watson adds.

Critics say that the amendment is clear indication of how scared the utilities are of an increased solar market in Florida – a state which has abundant sunshine but, in large part due to market barriers, has had very little solar energy growth.

Floridians for Solar Choice tried to get a measure on the ballot this year to encourage rooftop solar by allowing what’s known as “third-party sale” of solar energy, a popular way of offsetting the upfront cost of installation by having a solar company sell the energy back to the customer or offer the panels on lease. Currently Florida is one of just four states that bans such financing.

The drive for signatures failed when opponents poured big money into pushing the alternative ballot initiative, Amendment 1, Smith says.

Those who have criticized Amendment 1 as deceptive felt vindicated last month when audio surfaced of Sal Nuzzo, a vice president at the conservative James Madison Institute, addressing attendees at an energy/environment leadership summit.

He reminded his audience that “solar polls very well,” and pointed to Amendment 1 as a way in which utilities could harness that public goodwill toward solar.

“To the degree that we can use a little bit of political jiu-jitsu and take what they’re kind of pinning us on and use it to our benefit either in policy, in legislation, or in constitutional referendums — if that’s the direction you want to take — use the language of promoting solar,” Mr. Nuzzo told his audience.

Both Consumers for Smart Solar and the James Madison Institute later said that CSS had never hired the institute to do research, and the director of the institute said that Nuzzo “misspoke.”

And Mr. Pomerantz, also opposing the amendment, notes that despite their claims to be pro-solar, the two main utilities in Florida – Florida Power & Light and Duke Energy – have almost no centralized solar installations in the state and no big plans for the future.

“Do we need real thoughtfulness about how solar policy evolves so we’re getting the maximum social benefit from rooftop solar for the whole grid? We totally do. We can’t say all we need is net metering,” says Pomerantz. “But I think you look at a state like Florida, where there’s virtually no net metering now, the number of rooftop solar installations is minuscule relative to Duke’s [and others’] energy’s grid, and these guys are talking about the cost shift like it’s apocalyptic.”