States Continue Debate Over Solar Net Metering

In recent years, PACE has been outspoken on the issue of net metering, the policy of compensating solar rooftop owners for their power generation. We have argued that regulators and lawmakers should take care to ensure that non-solar customers aren’t made to pay more under net metering practices.


In April, Executive Director Lance Brown discussed the complexities of net metering and its impact on consumers on America’s Web Radio. In February, we brought you a guest column from former NARUC President David Wright on the topic of net metering events in Nevada.

It is important for consumers to remain part of the net metering discussion because the debate is far from over.  In fact, according to a recent report from The Pew Charitable Trusts, regulators and legislatures in 28 states “are either scrapping net metering or considering doing so.” Pew reports that Hawaii, for example, is closing net metering to new solar customers. Nevada is phasing out net metering at retail rates for everyone, while California has decided to preserve net metering at least until the end of the decade.

According to Pew, one of the reasons for the renewed debate over net metering is due to the U.S. Congress extending a 30% tax credit for installing solar panels through 2021. Without such a lengthy extension, “a lot of steam would have been taken out of solar growth and out of the net metering argument,” said John Godfrey, a spokesman for the American Public Power Association. “But it’s been extended by five years, so you have fuel for conflict [over net metering].”

The renewal of the tax credit will invigorate net metering discussions and have real impacts on solar deployment, causing generation from solar power to increase as much as 50% over the next five years according to Greentech Media Research. Had Congress not extended the credit, “we’d be having a different discussion about net metering,” said Greentech analyst Austin Perea.

As David Wright explained in February, states like Nevada are beginning to come to terms with how to treat the value of solar generation from residential customers. In December, that state significantly reduced compensation to solar customers, prompting strong protests from the solar industry and complaints from some customer groups. According to Greenwich Media Research, solar customers in Nevada could see their power bills rise by half. In addition, now that the state’s aggressive net metering program has been pared down, solar companies are beginning to pull out of Nevada.

“That speaks to a larger theme, which is that rooftop residential solar is very much contingent on net metering design,” Perea said.

The net metering debate is certainly critical to both customers and to the viability of the solar industry. It is important for regulators and policy makers to engage in serious debate over which policies work best to protect the interests of all customers. As discussions move forward in the states, PACE will continue to remain engaged with decision makers and communicate with the public.


Methane Rule Comes With More Fuzzy Math

On Friday, June 3rd, the Environmental Protection Agency (EPA) issued its final methane emissions standards for new, modified, and reconstructed oil and gas sources. Much of the rule is aimed at curbing emissions related to fracking, a process that has enabled significant extraction of natural gas in the U.S. in recent years. While EPA’s latest standards won’t affect established wells, many fear the agency might have turned its attention from shutting down coal-fired power generation to restricting the process of fracking altogether.


See the New Standards Here

As with other rules in past years, EPA claims the benefits of its regulations far outweigh the costs to industry or consumers. We’ve come to expect that from the agency. But unlike with past rules, in which EPA has used an array of concocted benefits to ensure its regulatory math passes muster, the benefits from its new methane rule are all climate related.

According to a report from the Competitive Enterprise Institute, this marks the first time the agency has “finalized a rule where the monetized benefits are estimated solely from the greenhouse gas emission reductions.” According to the Institute, the rule also marks the first use of a novel metric called the social cost of methane.

If the social cost of methane sounds familiar, it should. EPA has previously used a social cost of carbon metric to justify its crackdown on fossil fuels. In November 2013, PACE wrote about the EPA’s social cost of carbon and the way it could be used to shape public policy discussions in favor of anti-energy agendas. At the time, we suggested that the assumptions made about the costs of carbon were flawed. Now, many, including the Competitive Enterprise Institute, are saying the same about the EPA’s calculation of the social cost of methane.

The Institute explains, “For example, EPA disregards Office of Management and Budget (OMB) Circular A-4, which instructs agencies to use both 3 percent and 7 percent discount rates to estimate the present value of future regulatory benefits. The lower the discount rate, the higher the present value. To estimate the benefits of methane reductions attributable to the rule, EPA uses discount rates of 2.5 percent, 3 percent, and 5 percent, but not 7 percent. Through the miracle of compounding, those rates yield much higher SCC values than would a 7 percent discount rate.”

In other words, EPA has monkeyed around with the numbers. That’s not the only sleight of hand from the agency on the methane issue though.  In an explanation of EPA’s treatment of methane in the Knoxville News-Sentinel, writer Drew Johnson says that the agency has also revised its methodology for calculating methane emissions, with predictable results.

Johnson explains, “Last year, the EPA reported that methane emissions had fallen by about 10 percent from 2005 to 2013. And emissions specifically generated from “fracking”…dropped a whopping 79 percent. Under this new formula, though, it appears that methane emissions actually increased by about 1 percent over that same period and rose again in 2014. Moreover, this formula calculates that oil and gas producers are America’s largest methane polluters.”

Surely the EPA wouldn’t purposefully make it appear that American industry is releasing more methane only to cynically justify its own new methane rule? Of course it would. The EPA has demonstrated time and time again that it will use any math, bend any interpretation, or take whatever irrational leap required to polish its regulations to a high sheen.

Why is that dangerous? Consider the state of the American economy. Despite modest gains, ninety-three million Americans are still not working. This stagnant economy created a paltry 38,000 jobs in May. Manufacturing, which has remained the lifeblood of economic vitality, continued to suffer, losing another 20,000 jobs last month. Restrictions on methane hold the potential to further throttle that stifled economy, in the process endangering jobs and snuffing out growth from a sector that is among the few bright spots in the American economy.

The fact is that the U.S. oil and gas industry accounts for just 0.000004% of the methane in earth’s atmosphere. Or, as Paul Driessen recently put it, just 4¢ out of a million dollars. That’s not exactly the looming threat that EPA would like consumers to believe. Instead of using fuzzy calculations to prop up a misguided proposal, perhaps the EPA should focus more on cooperating with industry to ensure that methane emissions in the U.S. continue to fall. That is an honest, results-driven approach that we, and likely most Americans, would support.


U.S. House Votes to Delay Ozone Rule

Last week, PACE had an opportunity to travel with one of its original partners, Manufacture Alabama, to Washington, DC, to outline the concerns of manufacturers. Among those chief concerns were energy regulations that could restrict manufacturing and hurt the economic competitiveness of American business. For the past seven years, PACE has participated in the Manufacture Alabama Fly-In.


One of the regulations of concern was a new EPA rule that lowers the threshold for ground level ozone. PACE has written extensively about the effects of the new ozone rule, reporting recently that Democratic Governor John Hickenlooper of Colorado has joined the chorus of voices calling for EPA to reconsider its rule. Fortunately, progress was made toward that effort by Congress on Friday, when the House passed a bill to curb the new EPA ozone rule. Approved 234-177, H.R. 4775, the Ozone Standards Implementation Act of 2016, extends the date for final designation of the standard until 2025.

See the Bill Here

The bill gained total support from House Republicans and attracted support from six House Democrats, including U.S. Representative Terri Sewell from Alabama.

“The legislation passed today would delay more EPA regulatory burdens placed on our job creators,” said U.S. Representative Mike Rogers of Alabama, who supported the measure. “This bill also would require EPA Administrator McCarthy to consider feasibility when revising any National Ambient Air Quality Standards, a requirement that will halt out-of-control rule making by the EPA. This bill is a common sense way to fight against the President’s costly environmental agenda and I was pleased to support it.”

“Those who voted to delay EPA’s aggressive new ozone standard are to be commended for their decision,” says PACE Executive Director Lance Brown. “This rule has great potential to hurt the American economy, particularly the manufacturing sector, at a time when it needs help, not barriers.”