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.)