The S.C. Energy Freedom Act, which lifts a regulatory cap on rooftop solar installations, could hit a snag in the Senate this week when a subcommittee debates a provision that would mandate utilities extend long-term contracts to large-scale solar producers that can deliver electricity at or below a utility’s own cost. That would be unfortunate.
In other words, the bill would require utilities to buy and distribute solar electricity produced at or below its own costs. What’s wrong with that?
Some opponents argue that long-term contracts would insulate solar producers from market fluctuations that utilities are subject to — primarily the cost of fossil fuels. But that’s a somewhat hollow argument in a regulated monopoly environment in which utilities are already guaranteed a profit and would continue to profit from distributing clean energy.
Importantly, long-term contracts with utilities would ensure there is a market for solar energy in South Carolina. It would also make it easier for solar companies to get financing for large-scale projects and to secure leases for solar farms. Surely there is room for compromise.
As unanimously approved by the House, the Energy Freedom Act mandates contracts of at least 10 years at rates approved by the Public Service Commission, which would take into account a utility’s “avoided costs” and ensure solar producers are paid a “commercially reasonable” rate. Plus, the contract mandate would be phased out once solar production hit 20 percent of demand.
Certainly, the concept of opening up the electricity market is sound and should be retained. The details are rightly left up to the PSC, which is charged with an ongoing process of setting competitive rates that should benefit utilities, solar producers and ultimately ratepayers.
Regardless, the Senate should keep the bill moving forward. As of March 15, Duke Energy customers with rooftop installations are no longer guaranteed full credit for the solar energy they produce, and SCE&G customers are projected to hit the 2 percent limit within months.
Failing to lift the cap — for just two years while the PSC establishes future caps — would put nearly 3,000 rooftop solar installation jobs at risk and shortchange homeowners with solar panels.
The pending bill would also allow for low-income ratepayers to buy into community clean-energy programs, allow big energy users to contract directly with solar energy providers and establish a “customer bill of rights” that would include transparency in billing and a process for handling ratepayer complaints, among other things.
Expanding solar energy means reducing our reliance on fossil fuels, but it also means cutting costs and pollution because solar energy is now watt-for-watt among the most efficient and sustainable ways to produce electricity. And though it’s intermittent, it’s limitless, as opposed to finite fossil fuels whose costs will inevitably rise over time.
The House has rightly retained the broad strokes of the Energy Freedom Act and wisely left the PSC to sort out the details of what is still an emerging market. The Senate should be wary of taking any steps to weaken the legislation and keep in mind its duty to act in the best interests of ratepayers and the state’s overall economic and environmental health.