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Clock is ticking for rooftop solar owners: Financial incentives may end after 2028

Miami Herald logo Miami Herald 3/8/2022 Mary Ellen Klas, Miami Herald

Florida homeowners will have until Dec. 31, 2028 to install rooftop solar systems before all incentives disappear under a bill the state Senate sent to the governor on Monday after ignoring warnings that it will decimate the state’s growing solar industry.

The bill, HB 741, achieves the top priority of the state’s largest utility, Florida Power & Light, by phasing out current billing credits for homeowners and businesses that sell excess energy from their solar arrays back to the utility companies.

What you need to know about changes to rooftop solar if DeSantis signs them into law

But instead of immediately eliminating the so-called net metering credits as FPL’s original language sought, legislators worked out a compromise with the solar industry that phases out the credits.

In return, the industry secured a trade off: If the five-year phase-out that starts in 2024 results in a surge in new rooftop solar installations across the state, the state’s monopoly utilities may ask state regulators to raise fuel surcharges on all other customers to make up any lost revenue.

The bill is a major victory for FPL, which wrote the initial legislation, funded a lobbying effort that included direct mail and television ads, and directed $3.2 million in campaign cash to legislators of both parties before rooftop solar expansion in Florida cuts too deeply into its revenues.

The investment paid off with a bipartisan vote. The House voted on the bill 83-31, with six Democrats in support. The Senate voted 25-15, with Democratic Sens. Randolph Bracy of Orlando, Bobby Powell of West Palm Beach and Victor Torres of Kissimmee in support. Republican Sens. Jeff Brandes of St. Petersburg, Doug Broxson of Pensacola and George Gainer of Panama City voted in opposition.

It’s also major defeat for Florida’s growing solar industry, which says it produces $18 billion in economic value, $3.2 billion in household income and $3.3 billion in total tax revenues, and that the bill threatens 40,000 jobs in the state. Industry advocates now hope to persuade the governor to veto it.

“Understanding how popular rooftop solar is for homes, churches, small businesses, schools, there’s so much public benefit across the entire state, we’re really hoping that Gov. DeSantis sees this and chooses to veto this,’’ said Josh Kerns, board member with the Florida Solar Energy Industries Association last week.

Poll shows broad support for rooftop solar

Solar advocates point to a recent Mason-Dixon poll which found that 84% of Florida voters support net metering and 68% of Floridians think public utilities should make it easier for Floridians to install residential solar.

Since 2008, the state requires electric utilities to use net metering as the mechanism to allow customers who generate excess energy from their rooftop solar panels to deliver it back to their utility company and receive a credit on their bill.

The bill is based on what solar industry advocates consider a myth and the utility industry says is fact: that homeowners without rooftop solar are subsidizing those with it.

The House staff analysis acknowledged the subsidy is not a settled fact: “There is debate as to the components of the utility’s cost of service that are offset by energy generated by net metering customers and, accordingly, the appropriate credit to provide for such energy,’’ the analysis states.

In fact, FPL and Duke were recently authorized to charge customers a monthly minimum bill of $25 and $30, respectively.

But the bill sponsors, and the Republican leadership that made its passage a priority disagreed.

“This is a system that was quite intentionally set up for the sole purpose of subsidizing a nascent solar industry in 2008,’’ said Sen. Jennifer Bradley, R-Fleming Island, the Senate sponsor. “So not only are the utilities mandated to purchase all excess energy back, they are mandated to purchase back at a subsidized rate...This drives up costs. It shifts into all ratepayers and it is a regressive policy.”

It’s a growth industry

Solar has been growing quickly in Florida. In 2020, Florida electric utilities reported 90,552 customer-owned rooftop solar connections, nearly one-third more than in 2019.

Under the bill, rooftop solar owners will be given a credit at current retail rates for the energy they generate and sell back to the grid for the utility to use only through 2024.

After that, the rate will gradually decline, until it reaches a new rate based on the utility’s “fully avoided cost,’’ which is the cost it would take for the utility to generate or purchase that same amount of energy from another source. It is a fraction of the retail rate.

Sen. Lori Berman, a West Palm Beach Democrat, noted the public opposition to a 2016 amendment that also attempted to do what the bill has done, limit the expansion of rooftop solar.

“It said that we’re not going to favor subsidies for any solar in our state,’’ she recalled. “And you know what? That amendment failed. The people of the state of Florida didn’t want to do that. They want to help the solar industry.”

Brandes asked if Florida had conducted any studies to determine if a subsidy existed or if the bill is “just arbitrarily throwing numbers out.” He asked if the state consulted national experts to determine if this would impact any cost shift.

Bradley said there hadn’t been any such research. Brandes tried and failed to amend the bill to require a data-driven analysis. It was defeated.

Sen. Gary Farmer, D-Fort Lauderdale, attempted to amend the bill to include a study into whether the cost shift exists.

“Before we’re going to negatively impact a generation of solar-powered activity, let’s find out exactly what the costs are associated with that so the ratepayers don’t unnecessarily pay something they shouldn’t have to pay,’’ he said. It was defeated.

Brandes warned that the policy change was ill-conceived and that will force legislators to come back to fix their mistakes.

“This bill is a sledgehammer of a bill on the solar industry,’’ he said. “It needs a scalpel.”

How the bill changes financial benefits

If the bill becomes law, homeowners with rooftop solar installations who now see credits on their bills will be paying more when the five-year clock runs out. Here’s how it works:

▪ The net metering program that credits excess energy generated by a rooftop solar system phases out but anyone who has a system before Jan. 1, 2029, will be allowed to keep the credit structure in place at the time for 20 years.

▪ After Jan. 1, 2024, utilities may petition the Public Service Commission (PSC) for approval to impose new charges “including base facilities charges, electric grid access fees, or monthly minimum bills to ensure that the IOU [investor-owned utility] recovers the fixed costs of serving [solar] customers.”

▪ If the PSC finds that the solar penetration rate of customer-owned or leased renewable generation across all IOU service territories in the state exceeds 6.5%, the PSC must initiate rulemaking to adopt a new rule that could include new charges and fees.

▪ Under Florida’s current net metering framework, the credit per kilowatt hour the customer receives on their monthly bill equals the value of the excess energy. (The retail rates for each of the IOUs range from about $0.12 to $0.15 per kilowatt hour.)

▪ Between Jan. 1, 2024 and Dec. 31, 2025, energy credits produced from rooftop solar generation will be reduced to 75% of the current value.

▪ Between Jan. 1, 2026, and Dec. 31, 2026, the credit will be reduced to 60% of the current value.

▪ Between Jan. 1, 2027, and Dec. 31, 2028, the credit will be reduced by 50% of the current value.

▪ Beginning Jan. 1, 2029, the billing credit is eliminated. The PSC must adopt new rules that ensure that rooftop solar customers “pay their full cost of electric service and are not cross-subsidized by the general body of ratepayers.”

Mary Ellen Klas can be reached at meklas@miamiherald.comm @MaryEllenKlas
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