Georgia residents could see their energy rates go up as a result of a bill that will likely be revived in the next legislative session: House Bill 657, the Rural Georgia Economic Recovery and Solar Resource Act.
HB 657 would create an arrangement that forces utility customers without solar panels to subsidize those with them — a system referred to as “net metering.” While proponents of the bills present them as “free market,” the effect the bills would have are anything but.
Net metering policies give solar customers a credit at the full retail electric rate for excess electricity they generate. That retail rate includes the price of generating power and the fixed costs associated with the transmission, distribution and maintenance of the electric grid that all electric consumers rely on.
Anyone who’s been in business knows you can’t buy your product at retail and sell it at retail and stay in business long. Customers that generate some of their own power avoid paying some of these costs because of the way rates were originally designed. Electric companies are then forced to buy back any excess power at prices above the wholesale prices they would pay absent this special deal.
Even though solar customers produce their own power, they must remain connected to the grid to buy power when their systems are not producing. Solar customers are often simultaneously selling electricity to electric companies on the grid. Thus, solar customers benefit from the grid at a rate almost double that of non-solar customers. The result is solar customers avoid paying their fair share of maintenance costs, even though they benefit from the grid the most.
Costs of maintaining the grid are shifted to non-solar customers. Add to this the incentive of solar-installation companies now offering solar financing models, complete with long-term contracts, to access taxpayer-funded federal subsidies, and the cost to non-solar customers becomes twofold.
The negative effects on residents and utilities in states with net-metering policies are similar across the U.S. A recent study found Californians who don’t install net-metering devices will pay an extra $1.1 billion in shifted costs each year by 2020. Non-solar customers of Pacific Gas & Electric, California’s largest utility, will pay an additional $700 million per year due to cost-shifting effects. In Arizona, the amount paid by solar customers is actually below the utilities’ costs of serving those customers.
Energy freedom means, among other things, an individual’s freedom to choose one’s energy source, including renewable sources like solar, without putting an undue burden on other customers. Net metering has proven to be failed policy already in a number of states. There is no reason the results in Georgia would be any different.
Joel Foster is grassroots coordinator and communications director of Americans for Prosperity Georgia.
