Maine’s public advocate warned the Maine Legislature on Thursday the costs of community solar programs for electricity customers are likely to explode in the coming years.
Community solar projects, which are funded by passing costs on to nonsubscribers through their electricity bills, are expected to cost electricity customers $220 million a year by 2025, with the increase continuing for the next 20 years, Maine Public Advocate Bill Harwood said in his testimony on LD 1347. Those rising costs could potentially harm Maine’s goal to reduce fossil fuel dependence.
The bill, sponsored by Rep. Steven Foster, R-Dexter, would eliminate net energy billing, which provides discounts on electricity bills for those who subscribe to community solar farms. The savings for subscribers, however, are not absorbed by utilities or solar developers. Rather they are passed on to electricity customers who don’t participate in community solar.
By 2025, Harwood estimated that an average Maine electricity customer could expect to pay up to $275 a year due to the state’s current community solar policies. The money could subsidize the creation of 1,200 megawatts of power in Maine, representing more capacity than any generator in New England, even the Seabrook and Millstone nuclear plants, Harwood said.
While Harwood said net energy billing for community solar is flawed and should be changed, he has reservations about ending it altogether. Instead of asking people to subscribe to solar farms, he recommended that the Maine Public Utilities Commission set up a competitive bidding program for smaller solar projects, resulting in long-term power purchase agreements between utilities and winning solar developers.
Harwood testified “neither for nor against ” the bill.
In the past, net energy billing was mostly used for rooftop solar panels to offset costs for homeowners through the production of excess power. But under 2019 legislation, this rate structure also was applied to community solar farms to further incentivize them and prompt similar benefits for participants.
Community solar projects are smaller scale and typically sell power to nearby residential and commercial properties. They are supposed to allow people to participate in solar even if they don’t install panels on their property.
But the arrangement has been criticized because the costs that customers pick up to fund community solar programs, called stranded costs, are not necessarily based on customers’ power consumption or line maintenance costs for utilities. These costs also are not always clearly defined on electricity bills.
Versant Power specifically lists stranded costs on customers’ electricity bills. Central Maine Power doesn’t specify stranded costs as a line item, but they are included in the overall delivery charges on its electricity bills.
These costs did not exist until utilities were restructured more than 20 years ago. Since 2000, utilities can no longer generate electricity and are responsible only for transmitting and distributing electricity. This is when the Legislature created stranded costs, which were used to pay the utilities that lost assets as a result of the restructuring.
Today, utilities are concerned about the rising costs of electricity bills due to stranded costs funding community solar incentives.
The solar industry in Maine doesn’t agree that the program will make electricity unaffordable. They say that it would be damaging to pass LD 1347.
Others said it would be more equitable to fund energy policies, such as the one for community solar, through taxes instead of charging all utility customers regardless of their income. Many lower-income Mainers are skeptical about community solar programs and are unlikely to sign up for them, but they will end up paying for the programs as the stranded costs get added to their electricity bills.
Customers don’t necessarily understand the different components of their electricity bills, but they are frustrated with increasing bills.