Solar powers up in rate case

Hank Hayes • Apr 4, 2016 at 8:30 AM

KINGSPORT — Solar power wants to pull the plug on a business move buried in Kingsport Power’s proposed 13 percent hike in its base rates.

In filings with the Tennessee Regulatory Authority and at TRA’s recent public comment session on Kingsport Power’s rate case petition, the solar industry and individual solar users have let it be known they aren’t happy about it.

“Customers have the right to choose to generate their own electricity and to control their demand on the grid,” Peter Stein, an associate attorney with the Southern Environmental Law Center, testified at the public comment session held at the Kingsport Center for Higher Education. “Unfortunately, Kingsport (Power’s) proposal as it stands would effectively deprive Tennessee customers in their service territory of their right to use solar.”


Kingsport Power, which does business as investor-owned AEP Appalachian Power, proposes to close its current net metering services at the end of this year and offer a different service to onsite power generators next year.

The new tariff, critics charge, would require solar customers to begin paying a demand charge not required for residential customers and reduce the rate credited for the electricity solar supplies to the grid.

“It makes investments in solar energy uneconomical,” Stein noted. “ ... Kingsport (Power) fails to consider the value of solar to the utility, to the grid and to its customers.”

In addition to the Southern Environmental Law Center, groups like the Tennessee Solar Energy Industries Association and Tennessee Chapter of the Sierra Club are lining up against Kingsport Power’s rate case.

A number of interested parties have filed petitions to intervene. “A lack of fair crediting policies and rate structures is a major barrier to entry for solar companies that wish to offer services to customers of any electric utility,” said one petitioner, The Alliance for Solar Choice.

Existing individual solar power users are also expressing opposition.

“Let’s say my solar system doesn’t work and I produce no power at all,” solar power user David Hrivnak said at the public comment session. “So I’m back to my old power usage. I’m still going to see a 75 percent increase (in rates). This is crazy once you look at the potential challenges of climate change ... I think everyone would agree that solar panels are far cleaner than natural gas or coal ... All I’m asking for is a fair shake.”

In its rate petition, Kingsport Power says it wants to realign the base rates over a six-year period and create a Variable Cost Rider that would generate about $12 million in new revenue.

The company also claims its 2015 rate of return — 1.11 percent — is not fair and reasonable. The requested rate increase would boost that rate of return to 6.69 percent.

As of last fall, Kingsport Power said its rates were 14 percent to 32 percent lower than surrounding power companies supplied by the Tennessee Valley Authority.

The rate change, the company points out, would better cover its cost of doing business for its 47,000 customers in the Kingsport area. A typical residential customer would see a $17.21 monthly increase in the first year.

As for the new demand tariff on solar customers, Kingsport Power District Manager Isaac Webb points out the company still has lines and transformers that must be serviced.

“This is a new technology that impacts our system in a unique way,” Webb said of solar power. “Our goal, and I’m not saying our solution is perfect, is to try to make the cost of each individual customer reflect the rate they pay. There are no solar customers who are off the grid. When the sun is down, we are supplying electricity to their house.

“I think the debate really needs to center around how do you design rates that allow people to have solar panels to recover a reasonable amount from the solar panels while at the same time not subsidizing their installation with rates from other customers. That’s a tricky process. It’s not an easy thing to do.”

Webb also acknowledged the rate case has turned political.

“Just like everything else nowadays, the argument tends to get polarized,” Webb admitted. “In fact there are some solar advocates ... not only do they want to get paid the same rate for generating a kilowatt hour ... they want to be paid more for generating a kilowatt hour they sell back to the grid and get a credit.”

TRA will hold hearings on the rate case in Nashville the week of August 8.

Kenneth Hill, a Blountville Republican and the father of two state lawmakers, is one of three TRA directors who will decide the rate case.

“I have not had an opinion yet and I’m not going to have one,” Hill told respondents of his position on the rate case at the public comment session. “If I had anything to say, it would be thank you very much for being here. This is exactly what we at the TRA need. We need to hear from people who are affected by changes anticipated or proposed.”

For more about TRA go to www.tn.gov/​tra.

To access all the filings in the Kingsport Power rate case go to http://​share.tn.gov/​tra/​dockets/​1600001.htm.

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