House Republicans vote to reduce one tiny solar power subsidy. Weeping ensues.
The vote took place today in the Minnesota House Energy committee and the tally was 8-7 in favor, with all Democrats voting “no.”
The bill was HF 845, captioned with the unhelpful description, “Various provisions governing net metering modified.” Reading the actual bill text won’t provide much more of a clue as to what the bill does, or how it does it.
Regardless, some 23 testifiers showed up this afternoon to a packed Capitol hearing room to oppose the bill. One woman was openly weeping during her presentation.
The bill is being carried by sixth-term state Rep. Dave Baker (R-16B, Willmar), mostly on behalf of the state’s rural electric cooperatives. The co-ops are all nonprofit companies and most of them serve just a few thousand customers each, in sparsely populated areas of the state. Co-ops are wholly-owned by their own customers, who are charged rates just high enough to break even.
“Net metering” describes a business arrangement where an electric customer can sell relatively small amounts of excess electricity he produces back to the local utility.
We aren’t talking about those 1,000-acre mega-solar farms, these are mostly rooftop installations or a few solar panels in a yard.
A customer setting up a solar-power array can often benefit from state and Federal tax credits and subsidies.
Net metering mostly involves a customer installing solar panels capable of producing more electricity than required on site. Excess power is then bought back by the utility at the full retail price rather than the wholesale price determined by the market.
To put numbers to it, customers are selling their excess production (the “net”) for roughly 13 cents/kWh, when the commodity is worth only 2 cents/kWh. With that sort of profit margin, you can see why so many people are so upset.
Without shareholders, co-op customers have to eat the 11 cent/kWh subsidy. And for some coops and other small utilities, these subsidies are adding up to big dollars. It’s a zero-sum game.
Rep. Baker added an amendment to his bill to make it prospective only: any new net metering customers will have to face the lower selling price, but existing customers are locked into the old, higher selling price.
So. not a single one of the 23 opposition testifiers will be out a penny. But it goes to show the huge difficulties at chipping away at even the smallest subsidy programs. Someone somewhere does (or could) benefit from these subsidies, achieved at the direct expense of their literal neighbors.
It’s the classic case of “concentrated benefits and dispersed costs.” In the case of an individual rural co-op, dozens of individual customers are benefitting at the expense of thousands of other customers. Those benefitting have the incentive to complain and hire lobbyists and lawyers to plead their case. Those stuck with the literal bill for these subsidies have only the co-op management to represent them.
Net metering got to be so bad in California (!) that the state has all but ended the practice.
But in the People’s Republic of Minnesota, no subsidy is left behind.