A request by Missouri’s largest utility to curtail payment of millions of dollars in solar rebates is clouding the future of a popular program that’s helping make alternative energy systems more affordable for local consumers.
Ameren Missouri, in a filing with the Public Service Commission, says the value of solar rebate requests has tripled through September to $35.5 million. And the surge of rebate applications, Ameren says, threatens to increase the cost of complying with the state law that says the renewable energy requirement can’t raise rates more than 1 percent above what they would otherwise be.
The utility has asked the PSC for approval to interrupt the rebate program when the 1 percent rate limit is reached — a decision that could prematurely end the rebate program for the final weeks of this year and dictate how much money is available in future years.
The filing will have no immediate effect on the payment of rebates. The PSC has 60 days to review the filing and conduct a hearing before issuing a decision.
In the meantime, officials from Ameren and the Missouri solar industry said they’ll try to negotiate a resolution that will provide certainty for the utility, solar installers and consumers.
“We’re in a bit of an uncertain time right now,” said Dane Glueck, president of the Missouri Solar Energy Industries Association and StraightUp Solar, a St. Louis-area solar installer. “But we see (Ameren’s filing) as a first step in the process” toward a resolution.
The state’s solar industry advocated for a bill approved by the Missouri Legislature last spring. Among several provisions, the measure gradually steps down the amount of solar rebates over a period of seven years starting on Jan. 1, when the payments drop to $1.50 a watt from the current $2 a watt.
What solar installers fear, Glueck said, is a scenario in which rebates are abruptly discontinued, even temporarily. That would confuse consumers and complicate business planning.
Ameren Missouri, too, seeks clarity for the solar rebate program, said Warren Wood, vice president of legislative and regulatory affairs.
Exceeding the 1 percent rate cap could expose the utility to complaints from consumer groups, or the PSC could disallow the rebate expenses in a future rate case, Wood said.
The solar rebate program is still relatively new. It was authorized by Proposition C in 2008, a ballot initiative that requires investor-owned utilities to derive a certain percentage of their electric generation from renewable resources.
The measure requires a tiny fraction of the renewable power to come from solar energy systems. And to help encourage solar development, it required utilities to offer customers a $2-a-watt rebate with a maximum rebate of $50,000.
Over the past five years, the combination of the rebates, a federal production tax credit and a near 50 percent decline in solar costs has put the price of a rooftop system within reach of thousands of consumers who otherwise couldn’t afford it.
Wood said there are about 1,400 solar photovoltaic systems in Ameren’s service area today, most added within just the past few years.
And figures provided in Friday’s filing show the solar industry’s steep growth trajectory over the past year.
Ameren Missouri said it paid out $9 million in solar rebates last year. In just the first nine months of 2013, it has paid $13.5 million in rebates and has an additional $28 million worth of applications “in the pipeline” awaiting approval.
Wood said rebate payments in excess of $19 million this year would trigger the 1 percent rate limit, the reason it decided to file the notice with the PSC to suspend the rebate program.
The 1 percent rate limit was a key consumer protection put into Proposition C to ease concerns that renewable energy subsidies would lead to too big of an increase in Missouri electricity rates.
But for the past five years, utilities and green power advocates, regulators, legislators and the courts have failed to clearly define how the 1 percent limit is calculated.
Wood said one goal of Friday’s PSC filing is to get regulators to more clearly define the rate limit — one of a couple key points of contention between the utilities and renewable energy groups.
“There are as many ways to calculate it as there are consultants,” Wood said. “At this point, we need to get some clarity.”
Ameren isn’t the first Missouri utility to ask the PSC for approval to curtail solar rebates.
Kansas City Power & Light made a similar request in July.
Only within the last two weeks did KCP&L and solar industry reach a settlement that would establish a defined pool of money available for rebates. The PSC is set to consider the agreement at its meeting today in Jefferson City.
Glueck said the solar industry believes the agreement with KCP&L may provide a blueprint, or at least a starting point for a similar agreement with Ameren.
P.J. Wilson, executive director of Renew Missouri, the advocacy group that crafted the renewable energy standard, is hopeful, too, and said the stakes are high.
“There’s a market now, and it was created by these incentives,” Wilson said. “But we need to be careful because if we have a stop-start effect or if we screw it up we could really damage the solar industry.”