Anthony Deljou considered adding solar panels to his home and 70,000-square foot art gallery in Atlanta’s West End neighborhood to cater to some of the business’ environmentally conscious clients.
He considered it, that is, until he saw the price tag. The panels for his house alone would cost $30,000, but over 10 years he could recoup that money through lower electricity bills.
“It’s cost-prohibitive even if you really want to do it,” Deljou said.
Deljou would have financing options — if he lived in another state. But in Georgia, an arcane law prevents consumers who want solar panels from getting the type of financing available to residents and businessowners elsewhere.
In other states, Deljou could get the panels from a private solar company, who would get a bank to finance the upfront costs. The private solar company would own the panels and sell the electricity to Deljou at a price that’s locked in for 15 to 30 years.
But in Georgia, the state’s dominant electricity provider, Georgia Power, and the state’s electrical membership cooperatives argue such an arrangement means the solar panel companies would be illegally operating as a utility. The electricity providers are using their influence with state regulators and lawmakers to make sure they share the same view in interpreting the 1973 law regulating the sale of electricity.
Solar companies argue they’re locked out of Georgia if they can’t arrange financing for the panels. And because the panels are otherwise too expensive for most homeowners and businesses, solar companies view Georgia as hostile to their business at a time when federal tax breaks and other incentives encourage alternative energy production.
“It’s a bit of a conflict of interest with the citizens and the corporations,” Deljou said. “You have an opportunity here if a third party came in and financed the acquisitions — all of us to have a better [carbon] footprint — and in the long run we’re less dependent on the power that’s being sold to us by these corporations.”
It’s that last part that worries Georgia Power and the electrical cooperatives.
A territorial act
Georgia’s 1973 Territorial ACT prevents anyone other than a utility from selling electricity. That essentially protects the customer base of electricity providers.
If solar took a foothold in Georgia, it would mean existing providers would put less power on the grid and, subsequently, pull less money to their bottom lines.
Solar advocates challenge the utilities’ claim that their profits would be hurt if other companies come in and sell sun power. In most cases, they say, the amount of solar electricity would help utilities by lessening their need to produce power during the time in which electricity is being used the most — during Georgia’s hot summers. And what solar generates would not be enough to replace the thousands of megawatts of electricity being generated by large nuclear or coal-fired power stations, they say.
Utilities say it’s not that simple. They argue that competition from solar could raise energy rates for the Georgians who depend on them.
“So our revenues go down, and our fixed costs remain the same,” said Kyle Leach, Georgia Power’s resource policy and planning director, referencing the billions of dollars the company has invested in infrastructure. Leach said that would lead to the company not being able to cover its costs. Per PSC approval, Georgia Power would have to raise rates to cover those costs and also meet its profits, set at 11.25 percent.
“You look at the states that are the most aggressive with renewables, and they have some of the highest rates,” Leach said. “It could be that their rates are just high because they have high costs or they could be high because they are producing renewables.”
Rick Gilliam, research and analysis director at the Vote Solar Initiative, said such claims are rooted in utilities’ fear of competition.
“The utilities are just concerned because they are in a situation where they have a franchise service territory, and they see a third party coming in and providing service to one of their customers as a potential threat to their business model,” said Rick Gilliam, research and analysis director at the Vote Solar Initiative. “The solar industry is not trying to create power plants where they are truly going to be competitors of the utilities.”
Change coming?
A group of senators has sponsored a bill to ease restrictions on how homeowners and businesses install and use solar panels. The measure, SB 401, has slowly faded after being sent to the Senate Natural Resources and the Environment Committee. An attempt to attach the bill to another one so it could be heard in the committee that oversees utility regulation failed also.
Part of the reason lawmakers and regulators might be struggling with the issue is the influence of Georgia Power and the electric cooperatives, say government watchdogs.
Lobbyist reports from January and February show Georgia Power spending $8,623 on senators and representatives, including the House leadership and the chamber’s energy and natural resources committees. Georgia Power also was one of the 14 groups and corporations that shared the $1,900 cost for the House Natural Resources Committee dinner on Jan. 25, as previously reported by The Atlanta Journal-Constitution.
For its part, lobbyists for the Georgia Electrical Membership Corporation spent $4,880 during those two months, also on dinners and gifts for lawmakers including the House Majority Caucus and the natural resources committee for both chambers.
“Couple that with Georgia’s law that has unlimited lobbyist spending, and you’re talking about great deals of money that can be spent to influence legislation,” said William Perry, executive director of Common Cause.
Less reliability
For its part, Georgia Power argues that no matter what, it is required to provide safe and reliable electricity at all times, including to homeowners or businesses that get a portion of their power from solar. The private solar companies aren’t regulated by the state’s public service commission, which also troubles the state’s largest utility. Not only might solar raise rates for other electricity customers, the utilities argue, but reliability could be affected.
“Nobody governs it, nobody oversees the technology being installed,” Georgia Power President and Chief Executive Paul Bowers said at a recent meeting with the AJC editorial board. “If I get a lineman on the line, and that solar panel backfeeds and I kill somebody, is it worth that?”
What’s more, Georgia Power says states that have embraced solar have seen rates climb, too. California, New Jersey, Nevada, Arizona and Colorado are states where rates have gone up after private solar companies were allowed to compete in the marketplace, according to Georgia Power. While those states average higher utility rates compared with Georgia’s, the cost of providing power there either already was higher or increased because of other reasons, according to information providing by regulatory commissions and the state’s utilities.
Georgia’s electricity rates are low: 10.07 cents per kilowatt hour on average for residents in 2010 versus California’s, which was 14.75 cents per kWH, according to the federal EIA. Georgia Power’s rates were even lower, averaging 8.61 kwh, according to the utility. Affordable electricity rates have been one of the state’s most stable economic development incentives, said Chris Clark, executive director of the Georgia Chamber of Commerce.
“Our goal is that we don’t do anything to undermine the reliability and affordability” of the electric grid, Clark said.
Some companies say the rates are low enough that they don’t consider the state a lucrative market for their business.
“If the cost of energy is really low, it’s hard for us to offer a value proposition,” said Susan Wells, spokeswoman for California-based SunRun, which installs solar panels for residents. “SunRun will really enter a state if we can make solar energy make financial sense for an owner.”
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