JUNEAU — Lawmakers are considering a bill from Gov. Mike Dunleavy’s administration that would require utilities in Alaska’s Railbelt to implement new net metering rules for their customers.
SB 150 would significantly change how Railbelt customers who generate renewable energy, including solar and wind, are credited for the power they send back to the grid.
But some Alaska utility companies are against the proposal, citing concerns that it will unfairly shift costs on to customers who don’t contribute to the grid.
The proposal would allow homeowners and businesses with rooftop solar to be credited at the full retail rate for every kilowatt-hour they generate and feed into the grid. Those credits could then roll over from high-producing summer months to darker winter months.
“What the bill does is allow folks to harvest the sun when it is shining and save it for when it’s not,” said Cady Lister, executive director of Renewable Energy Alaska Project, an Anchorage-based nonprofit that supports the bill.
Under the existing system, most Railbelt utilities compensate consumer-generators at an “avoided cost” rate, the cost the utility avoids by not having to generate that power itself. That rate varies by utility, but is typically about one-third of the retail rate customers pay for electricity.
The new bill would move to a one-to-one crediting system: For every kilowatt-hour a customer generates, they would receive a credit for one kilowatt-hour.
It would allow utilities to issue retail-rate credits without violating state statutes prohibiting undue discrimination or preference among utility customers.
The bill would also create a reimbursement fund to compensate utilities for potential lost revenue associated with net metering. The Legislature would determine how much money, if any, to appropriate to that fund.
Curtis Thayer, executive director of the Alaska Energy Authority, said the bill must work its way through the Legislature and then the Regulatory Commission of Alaska.
“Our priority for this session is to have the bill introduced and have it pass,” said Thayer.
Thayer said it’s possible that the Legislature could choose not to create a reimbursement fund, which would necessitate more work with the RCA and utilities to figure out a way forward.
Jeff Turner, a spokesperson for the governor, said in an email that the governor introduced the legislation as his “priority is to ensure affordable, reliable, and sustainable energy for all Alaskans.”
Dunleavy has said he installed 50 solar panels on his own property.
The Senate bill and its House counterpart are currently being considered and amended in committees.
Railbelt utilities rely heavily on fossil fuels, primarily natural gas in Southcentral Alaska.
Southcentral utilities are preparing for the possibility of importing liquefied natural gas as Cook Inlet supplies decline. That would mean bringing higher-priced, globally traded fuel into a market that has relied on relatively stable, locally sourced gas for decades.
“Offering opportunities for households to self-generate and maybe bring some sort of stability in that way and reduce imports is important,” Lister said. “I think that’s a reason why it is particularly important now.”
Lister also said the bill could help offset the loss of federal tax incentives for rooftop solar that were canceled under the Trump administration, restoring a similar return on investment for homeowners.
The primary opposition to the bill centers on concerns about cost-shifting.
Utilities have both fixed and variable costs. Fixed costs include maintaining infrastructure and ensuring reliable service. Variable costs reflect fuel expenses, such as gas, coal or diesel. Fixed costs are spread across all customers through rates.
Critics argue that if more customers generate their own power and buy fewer kilowatt-hours from utilities, there are fewer sales over which to spread those fixed costs. That could raise rates for customers who do not or can’t install solar.
Chugach Electric, the largest electric utility in Alaska, does not support the legislation.
“The current proposed legislation would cause members who do not net meter (who do not have solar panels, for example) to pay more for the utility’s fixed costs than net metering customers, even though all customers receive the benefit of fixed assets on the system,” said Julie Hasquet, senior manager and corporate communications for Chugach. “We believe costs should be allocated fairly across the entire membership and that customers should pay for the level of electric service that they receive.”
Fairbanks-area electric utility Golden Valley Electric Association similarly opposes the bill due to potential for cost-shifting, said Ashley Bradish, GVEA external affairs and public relations director. The inclusion of a reimbursement fund in the bill is not a comfort, since it is not a guarantee, she said.
“An undedicated, unappropriated account every year — we feel that makes the process more uncertain than certain,” Bradish said.
Some legislators raised similar concerns at committee meetings on the bill.
“The homes that can afford to buy this would win big, and those that can’t afford to buy it, it seems to me, they would be paying for those who have it.” said Sen. Robert Yundt, a Wasilla Republican, during a Senate Labor and Resources Committee hearing Wednesday.
Gwen Holdmann, chief scientist at the Alaska Center for Energy and Power at the University of Alaska Fairbanks, told lawmakers the reimbursement fund written into the bill is meant to address cost-shifting concerns.
Lister, with Renewable Energy Alaska Project, also argued that the current scale of rooftop solar on the Railbelt is so small that any impact on other customers would be minimal. Only 0.35% of power on the Railbelt utilities comes from rooftop solar, according to Lister.
“The amount of impact on the overall system and to individual utility customers is just exceptionally nominal,” Lister said.
The Legislature has not yet set a cost estimate for the bill, but according to the Alaska Energy Authority, costs would include administering the program — which the agency believes it can do with minimal additional expense — and whatever funding lawmakers ultimately choose to allocate to the reimbursement fund.
Thayer said the priority this session is to pass the bill, then work with regulators and utilities to determine how it will function in practice.
Mari Kanagy is a Juneau-based reporter for the Anchorage Daily News.
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