Sustainability Law 101: Net Metering in Arkansas

Net metering is the scheme under which power generated privately and using renewable energy sources is transfered back to the grid. The Arkansas legislature required utilities to offer net metering in 2001. The program is overseen by the Arkansas Public Service Commission.

The defining characteristic of net metering in Arkansas, as with many net metering schemes, is that private energy generators do not receive any actual cash for pushing power back into the grid. Instead, private generators receive “credits” toward future electricity bills. These credits last for 12 months; at the end of the 12 month period, excess generation is given to the customer’s utility.

Here are the basic elements of net metering in Arkansas:

• Solar power and systems generating power from wind, hydroelectric, geothermal, biomass and microturbines are eligible for net metering;
• Residential renewable electric generation systems up to 25 kW are eligible to enroll in net metering.
• Non-residential renewable energy systems up to 300 kW are eligible to enroll in net metering.
• Any utility under the jurisdiction of the PSC must allow eligible customers to net meter. However, municipal utilities are not covered by the net metering law.
• To participate, private energy generators must sign an interconnection agreement with their utility.
• Customers are responsible for the costs associated with interconnecting their system to the grid, including the cost of additional metering equipment needed to net meter. Utilities may also charge the private energy generators a tariff.
• There is no limit for the aggregate capacity of all net-metered systems.

As noted above, Arkansas’s net metering scheme does not allow private energy generators to actually “sell” power back to the grid. Instead, “net excess generation,” known counter intuitively as “NEG,” created by the private energy generator’s system is fed back into the electric grid, earning the private energy generator credits toward future energy use. These credits are known as renewable energy credits, or, for those of you who like acronyms, “RECs.” NEG is carried over to the customer’s following monthly bill at the utility’s retail rate. Any NEG remaining at the end of an annual billing cycle is granted to the utility. Customers, however, do own their RECs, and RECs can be bought and sold.

There are at least 37 net metering systems in Arkansas: 30 solar systems with a total of 97 kW installed capacity, and 7 wind systems with a total of 128 kW installed capacity.

Governor Beebe Promotes Renewable Energy

Over my last several postings, I have been slowly making a case that, as a matter of public policy, Arkansas supports renewable energy.  Last Thursday, in the course of introducing former Michigan Governor Jennifer Granholm at the Clinton Library, Governor Beebe made a few brief comments that suggest I’m not suffering from visions of a non-existent public policy. 

As reported by arkansasbusiness.com, Governor Beebe “called on audience members to ‘evangelize in the old Southern way’ about solar power, biofuels, and other forms of alternative energy,” and commented that renewable energy is “good for the environment, it’s good for our economy, and it’s good for our national security.”

Admittedly, these comments lack depth and could easily be no more than lip service in support of visiting speaker and colleague.  But consider: Arkansas has already implemented statutory programs promoting sustainable building design and energy efficiency in state facilities, and the legislature did appropriate significant funding to those programs. Arkansas is quietly but steadily supporting biofuel development and has successfully recruited several significant wind energy manufacturers to the state (i.e., Nordex).  And, as the Second Annual Renewable Energy Conference earlier in the week at ASU Jonesboro demonstrated, real and significant efforts to develop renewable solar, wind, biomass, and hydrogen energy sources and bring them to market are ongoing throughout the state. 

In the view of this sustainablawger, given the significant failure of our legislature to pass any significant clean energy legislation, citizens of the Arkansas sustainasphere need to stay focused on the areas where Arkansas is leading by example.  Renewable energy is shaping up as one of those areas.

Arkansas Appropriates $20 Million for the Sustainable Building Design Program

One of the hidden victories for the sustainable building community that emerges from the last session of the Arkansas legislature is a significant appropriation of up to $20,000,000 to the Arkansas Sustainable Building Program.

The Sustainable Building Program is administered by the Arkansas Building Authority and was established in 2009. It is a loan program, funded through a revolving fund, designed to assist Arkansas agencies, boards, and commissions to make energy efficiency upgrades and renovations to state owned facilities.
Here are the basic contours of the Program:

• The agency, board, or commission seeking funding must be authorized by law to make renovations to state owned facilities.
• The renovations or improvements must exceed $250,000.00.
• To qualify for funding as a sustainable building design project, the state-owned facility must be a facility of the requesting agency and must be designed, renovated, and certified pursuant to the Arkansas Energy Office’s requirements of the “The Sustainable Energy-Efficient Building Program,” which, in broad strokes, establishes a performance criteria of a 10% reduction in baseline energy consumption.
• The loans carry an origination fee of .5%, up to $2,500.00, per loan.
• The maximum term of a loan is 10 years.
• The Program only applies to capital improvements for existing buildings and not for new construction.

Eligible renovations and upgrades include weatherization, improvement or increase in insulation, replacement of doors, windows, and skylights, upgrades in lighting technology, replacement of heating, ventilation, heat recovery, steam system, or air conditioning systems, improvements to energy control systems and sensors, and other energy efficiency projects that will result in a significant reduction in the consumption of energy within a building. Significantly, costs for equipment or systems that reduce energy costs without reducing energy consumption are not eligible.

As noted above, the Program is designed to work in connection with the Sustainable Energy-Efficient Buildings Program, which is a program that promotes energy conservation in buildings owned by public agencies and institutions of higher education.

In the view of this sustainablawger, the Sustainable Building and the Sustainable Energy-Efficient Buildings Programs show Arkansas “leading by example” and represent a public policy that promotes sustainable building practices. The programs will also provide much needed economic and political support for Arkansas’ emerging sustainable building industry.

Only time will tell if these programs are actually sufficient to achieve these goals. But it is abundantly clear that one of the main impediments in promoting sustainable energy development and consumption has been gap in financing. For state agencies, the Sustainable Building Program holds real promise both for filling that gap.

(Department of Citation: the Sustainable Building Program can be found in the Arkansas Code Annotated at section 22-3-1901 et seq., and the Sustainable Energy-Efficient Buildings Program can be found at section 22-3-2001 et seq.)
(Department of Rules and Regulations: the Arkansas Building Authority’s July 2010 Sustainable Building Design Program Procedures can be found at www.aba.arkansas.gov/aboutUs/Documents/sustainanble_rules_04_15_10.pdf.)

Sustainability Law 101: Executive Order 13514

Executive Order 13514, signed by President Obama in October 2009, is the public policy cornerstone of Federal sustainability law. By design, EO 13514 fits into the category of policy that leads by example. In broad strokes, it requires federal agencies to designate a “Sustainability Officer” and establish an integrated strategy for sustainability.

Significantly, Executive Order 13514 did not spring fully formed from the Obama administration. Instead, it expanded on Executive Order 13423, which was signed in 2007 by President Bush and which directed the implementation of sustainable building practices (largely analogous to the Guiding Principles that underlie the U.S. Green Building Council’s LEED-rating system) into Federal agency building projects.

Executive Order 13514 sets benchmark goals for agency improvements in:

• Greenhouse gas emissions
• Energy efficiency
• Water use efficiency and management
• Pollution prevention and waste elimination
• Sustainable Federal buildings
• Sustainable acquisition
• Electronics stewardship
• Environmental management

At its core, the Order requires Federal agencies to inventory and report green house gas emissions and energy usage. Another significant requirement is that all new Federal buildings that begin the planning process in 2020 or after must be designed to achieve zero-net energy consumption by 2030.

The most immediate and far-reaching requirement of Executive Order 13514 was its requirement that Federal agencies ensure that 95% of all new contracts for products and services – including contract modifications but, of course, excluding contracts for weapons systems – are energy and water efficient, biobased, environmentally preferable, non-ozone depleting, and call for recycled content.

Undoubtedly, Arkansas-based companies who contract with Federal agencies have already felt the force of the Order’s sustainable acquisition policy. But at the end of the day, the question is whether Executive Order 13514 provides a blueprint for emerging forces in sustainability and renewable energy like Arkansas. The Governor of Arkansas can issue both executive orders (designed to insure the implementation of Arkansas law) and policy directives (designed to guide Arkansas agencies in the implementation of policy). Arkansas is also developing – albeit, in a scattershot manner – a portfolio of sustainalaws that, considered as a whole, can be read as establishing a public policy of sustainability: the Arkansas Clean Energy Development Act; the Arkansas Alternative Fuels Development Program; the Arkansas Renewable Energy Development Act; the Sustainable Energy-Efficient Buildings Program; and the Sustainable Building Design Program. (There have also been some notable failures – such as the failure to pass the Property Assessed Clean Energy Act and the Arkansas Clean Energy Act in the most recent session of the Arkansas Legislature.) The groundwork is there; now it’s time to follow the example.

(Department of Definitions: An Executive Order is a presidential directive to Federal agencies to implement administration policy.)

 

 

 

The 2011 Arkansas Renewable Energy Conference

Arkansas State University, Jonesboro, will host the 2011 Arkansas Renewable Energy Conference next Monday, April 18, 2011. This annual event is an important clearinghouse for all things renewable energy in Arkansas, and thus far there are over 125 registered attendees. While the focus of the conference is on research and development advances and opportunities, the undercurrent of much of the conference program is the continuing growth of the renewable energy and sustainable business economy in Arkansas. Here is the conference agenda:
8:00 am REGISTRATION AND BREAKFAST Alumni Lounge

Session I: Moderator: Paresh Patel
8:30 am Lynita Cooksey, Associate Vice Chancellor for Academic Services, ASU
Welcome
8:35 am Gregory Phillips, Dean, College of Agriculture and Technology, ASU
Overview of Renewable Energy activities at ASU

8:45 am Peter Nelson, Director, AgBio Works and Co-Founder of Biodimensions Inc, Memphis, TN
Photosynthesis: Economic Driver for Energy, Fuels, and Chemicals in the Mid-South

9:10 am Frank Kelly, President, Solar Source Consulting and Chairman, Arkansas Renewable Energy Association, Little Rock, AR
From Passive to Active. Why Design With the Sun in Mind?

9:35 am Gibson (Sunny) Morris, Arkansas Delta Training and Education Consortium (ADTEC), West Memphis, AR
ADTEC- The Power of Partnerships = The Power of Success!

10:00 am Benjamin Brenner, Sustainability Attorney, William & Anderson PLC, Little Rock, AR
Recent Developments in Renewable and Clean Energy Law in Arkansas: A Short Course on What Did and Did Not Happen in the Last Session of Arkansas' General Assembly

BREAK 10.25 – 10.45 pm Alumni Lounge

Session II: Moderator: Rajesh Sharma

10:45 am Mark Cochran, Vice President for Agriculture, University of Arkansas Division of Agriculture, Little Rock, AR
An Overview of UA Division of Agriculture Research and Extension Programs in Bioenergy

11:10 am Dan McDevitt, Vice President, Operations, Nordex USA Inc., Chicago IL
US Wind Industry: Challenges and Opportunities

11:35 am R. Paneer Selvam, Director of Computational Mechanics Laboratory, University of Arkansas, Fayetteville, AR
Solar thermal energy conversion and energy storage work at the University of Arkansas

12:00 am Mr. Omar Mendoza, US Air force
USA/DOD Renewable energy initiatives

LUNCH 12.25 – 2.00 pm Centennial Hall

Session IV: Moderator: Robert Straitt

2:00 pm Rajesh Sharma, Renewable Energy Technology Program, Arkansas State University, Jonesboro.
Photo-electrochemical Hydrogen Production

2:20 pm Robert Engelken, M. Jason Newell, Maqsood Ali Mughal, ShyamThapa, Joshua Vangilder, John Hall, Frederick Felizco, Zachery Hill, and David McNew, Arkansas State University Optoelectronic Materials Research Laboratory, Electrical Engineering and Environmental Science Program, Arkansas State University, Jonesboro.
NASA, NSF and NIH-funded photovoltaic/optoelectronic materials research at Arkansas State University

2:40 pm Kwangkook Jeong and Brad Edgar Center for Efficient and Sustainable Use of Resources, Department of Mechanical Engineering, Arkansas State University, Jonesboro.
Advanced concentrating solar power plant technologies and experimental and computational approach for novel molten salts development

3:00 pm Robert Straitt1, Nadine Straitt2 and Walter Ellis3, 1Resource Efficiency Manager, Little Rock Air Force Base (LRAFB), Little Rock, 2Arkansas State University, Jonesboro, 3Consultant, Washington DC.
Renewable Energy Systems for Families and Communities in Developing Regions

BREAK 3:20 – 3:40 pm

Session V: Moderator: Gauri Guha

3:40 PM Paul Armah, Professor of Agricultural Economics, College of Agriculture and Technology, Arkansas State University, Jonesboro.
The Economic Impact of Crude Oil and Ethanol Prices on Arkansas Livestock Feed Prices

4:00 pm Brett J. Savary1,2*, Prasanna Vasu1, Jose C. Tovar1 1Arkansas Biosciences Institute and 2College of Agriculture, Arkansas State University, Jonesboro, AR
Biochemical technologies for generating value co-products from plant biomass processing residues

4:20 pm Steve Green, Associate Professor, College of Agriculture and Technology. Arkansas State University-Jonesboro
Towards Sustainability in Biomass Energy Crop Production

4:40 pm Chris Barnoud, Renewable Energy Instructor, Mid-South Community College, West Memphis, AR
Biomass to Bio-based Products in the Champagne-Ardenne Region of France

5:00 pm Gregory Phillips, Dean, College of Agriculture and Technology, ASU
Concluding remarks

5:10 pm Conference adjourns

There will also be a “poster session” during the lunch hour.

For more information on the conference, contact Dr. Paresh Patel or Dr. Rajesh Sharma at ASU – Jonesboro.

(Department of Shameless Self-Promotion: This sustainablawger will be presenting at the conference on recent developments on renewable and clean energy law in Arkansas.)

You Win Some, You Lose Some: HB 1118 Passes; SB 516 Fails

The 88th Session of the Arkansas General Legislature is through the short rows, and at this point the fate of the slate of proposed sustainalaws seems clear.

 

HB 1118 – The Arkansas Central Business Improvement District Rehabilitation and Development Investment Tax Credit Act. PASSED, and sent to Governor Beebe for signature. This Act is designed to encourage economic development within the central business districts of Arkansas cities by providing tax incentives for the rehabilitation and development of structures in those districts.

 

Unfortunately, the HB 1118 that passed is not the same HB 1118 that this sustainablawger wrote about back in February. As originally conceived, HB 1118 provided for a tax credit equivalent to 20% of the first $1 million in qualified expenditures on a project. The tax credit program would have existed for 5 years, and there was no cap on the total amount of credits that could be issued. The tax credits could also be bought and sold one time – a problematic limitation.

 

The pertinent differences between HB 1118 as proposed and HB 1118 as passed are:

• The value of the available tax credits is limited to $1 million per fiscal year, and the credits are issued on a “first come, first serve” basis.
• The value of the individual credits has been reduced to 25% of either the first $500,000 of qualified expenditures for income-producing property or the first $200,000 of qualified expenditures for non-income producing property.
• Once effective, the program will last for two years, not five.
• The tax credits can still be bought and sold, but still only one time.

Assuming Governor Beebe signs HB 1118 into law, and the expectation is that he will, an additional – and significant – hurdle remains. One of the last minute amendments to the bill requires the Chief Fiscal Officer of Arkansas to certify that there sufficient funding for the tax credits are available in the General Improvement Fund. When that will happen is anyone’s guess.

 

I had previously questioned whether a credit of 20% of $1 million would be sufficient incentive to foster the type of development and investment required to make real changes to the downtowns of Arkansas, and to do so using sustainable business practices. Evidently, it was too much to pass legislative muster. Regardless, some incentive is better than no incentive, and certainly some central business districts – Little Rock immediately comes to mind – are poised to benefit from HB 1118 once it becomes effective.

 

SB 516 – The Property Assessed Clean Energy Act. DID NOT PASS. SB 516 would have enabled counties to create “Property Assessed Clean Energy” (or PACE) districts. PACE districts would have been able provide bond-financed loans to property owners to make energy efficiency improvements, and for other clean renewable energy projects. This bill was two years in the making and did not pass by a close vote of 48-44. The jury is still out on why SB 516 failed, but the initial indications are that a misperception that SB 516 required the creation of PACE districts and the issuance of bonds led to its downfall.

 

Here are the thoughts of one of the primary proponents of SB 516, Mark Robertson:

 

I am encouraged through all your efforts we were able to make a dramatic change in the position of SB516 in less than 24 hours. Yesterday this bill had a rough day and we were solidly in a minority position after the vote due to a lack of understanding the bill. Through great leadership from many legislators and through your efforts the bill was brought back to the floor today in the waning hours of the session and won a close and bi-partisan majority vote of 48-44. However, we were 3 votes shy of the 51 needed to help make a real difference in the many communities of Arkansas. We came very close and further than I think many thought possible in such a short time. Good policy should not fail for lack of effort and I know we gave it every effort and used every option available to try and have a successful income.

 

You all should be commended and pat yourself and your network of friends on the back for such a valiant effort. This shows me when we unite we can make a significant difference in our State and our communities. It does not matter if it is energy, environment, social justice, economic development, poverty, education, health or just the well being of our communities, we can collectively continue to move Arkansas forward to becoming the community we all envision when we act together.

Worthy sentiments. Assuming that sustainability is a result, it is a result that can only be accomplished by giving the stakeholders in the Arkansas sustainasphere the wherewithal to adopt sustainable building practices and to take a chance with renewable, clean energy projects. SB 516 would have enabled counties to move toward providing private, small-scale financing for these projects, and would have filled an important gap between legislation such as HB 1118, which is clearly focused on large scale urban investment and development, and the private stakeholder. Let’s hope the substance of SB 516 finds new life in the 89th General Assembly.

 

Legislative Update: Is the Property Assessed Clean Energy Act Doomed?

The Arkansas Legislature has a self-imposed deadline of today to finish business. One of the most promising pieces of proposed sustainalegislation, SB 516, is in serious jeopardy. SB 516 would enable – not require – counties to establish Property Assessed Clean Energy Districts. These districts would be a significant tool for local economies to use to encourage investment in sustainable homes and practices.


Yesterday, SB 516 received a “do not pass” vote from the Legislature. It appears that the vote was driven by the misperception that the SB 516 would require the establishment of PACE Districts, and would have a negative impact on the state’s finances. Neither view is accurate. SB 516 is merely enabling legislation, and it is revenue neutral.

Below are some talking points on SB 516.

1. SB516 is only enabling legislation. It simply gives permission but does NOT create districts.

2. PACE = Property Assessed Clean Energy Bonds.

3. PACE = Economic Development and job creation in the hard hit construction industry. It creates new job opportunity STATEWIDE.

4. PACE enabling legislation has been adopted in 25+ States and has existed since 2007. It has a successful track record across the country and within the region.

5. SB516 is the result of a year long study of the Legislative Task Force on Sustainable Buildings and included countless hours of testimony from experts within and outside of Arkansas and include numerous reports and evaluations from other programs. This bill is the only recommendation from the 2009-10 Task Force and is based on extensive study and discussion. Members of this Task Force include Legislators, Industry Professionals, and State Agency representation.

6. PACE is VOLUNTARY for the State, County, municipality and the homeowner. Any City, County, or homeowner that chooses not to participate in PACE will NOT be affected by PACE legislation. It is an Opt-In and not an opt-out program.

7. PACE is NOT a tax.

8. Property owners voluntarily borrow money for investments in energy conservation improvements or to install clean renewable energy options to power property.

9. PACE is a LOAN and is repaid over time as an additional amount collected with the property tax of the applicant who chooses to participate. PACE is voluntary

10. REVENUE NEUTRAL – this will not impact the general revenue fund.

11. County Assessors simply enter a code to the county records identifying those properties that have VOLUNTARILY enrolled in the PACE loan program. It is treated similarly to several existing programs that require simple coding in the office.

12. NO additional property assessment is required by the County Assessor. Value is determined by the amount of the LOAN the applicant qualifies for and receives NOT by additional time spent by Assessor analyzing the property.

13. PACE is funded by private capital.

14. PACE provides consumer choice in the marketplace and is an alternative to traditional lending mechanisms and should be at a lower cost (interest rate). Especially beneficial to low to moderate-income property owners. Those who choose other options may do so and neither effect the PACE program or be limited to utilizing different options of their choosing.

15. The benefits to homeowners. 3 things – access to 100% financing, repayment terms, and transferability.

16. February 2011 report by independent Pike Research indicates over 42% of the respondents want this type of option to be available and would choose to participate if available. (http://www.pikeresearch.com/newsroom/42-of-homeowners-would-be-interested-in-a-residential-clean-energy-financing-program) the 58% of homeowners that may choose not to utilize PACE financing would NOT be affected by its availability to others.

17. PACE districts administered by local boards.

18. PACE is Supported by National Association of Regulatory Utility Commissioners (including AR PSC Chair); National League of Cities and National Association of Counties (http://pacenow.org).

19. SB516 is supported by AR Municipal League and has not opposed by the Association of AR Counties, AR Assessors Association, AR Bankers Association or Mortgage Bankers of AR Association.

Proponents of SB 516 are organizing a last ditch attempt to save bill, and hopefully it’s not too late to save this significant piece of proposed law. Give your representative a call, text, email, or smoke signal.

In the meanwhile, I’ll continue tracking progress. Stay tuned.