National Grid Proposes Fee on Wind and Solar Energy

By TIM FAULKNER/ecoRI News staff

PROVIDENCE — National Grid wants to impose new fees on wind and solar systems, and renewable-energy developers and advocates are, of course, not happy.

Rhode Island’s primary electric utility says the fees are necessary to offset the costs of running and improving the electric grid, especially as power generation shifts away from big power plants to solar arrays and wind turbines. As this transition to distributed electricity generation occurs, National Grid is losing revenue as some fees they collect are shrinking.

The cause, according to the power utility, is renewable-energy systems, which earn credits for generating electricity. These credits eliminate most charges on monthly bills.

National Grid maintains that wind and solar energy still need the grid to take the electricity they generate by wind and therefore should pay for its upkeep.

“It’s just a fairness issue,” said Tim Roughan, director of energy and environmental policy for National Grid.

The fees, Roughan said, don’t raise new revenue but only make sure that everyone is contributing “to fairly allocate the cost.”

National Gird is offering two main fees. The first is an increase in the customer charge on all electric bills. For residential customers, the fee would increase from $5 a month to a tiered charged based on electricity use that ranges from $5.25 to $18 a month. For commercial use, the new fee range would run from $10.50 to $26 a month.

Customers with renewable-energy systems — photovoltaic solar panels are the majority — would also be required to pay the transmission charge on their electric bills, which on average would cost between $10 and $20 monthly.

The other fee would apply to larger, stand-alone wind turbines and solar arrays. A new fee would be accessed according to the amount of electricity the project has the capacity to generate. The fee would $5 or $7.25 based on the voltage. For example, the fee on a 1-megawatt solar array would cost about $2,500 a month. The fee would apply to all existing and future renewable projects regardless of what power-purchase program it uses.

Roughan estimated that the fee is a fair trade-off for the above-market price being paid to renewable-energy projects for their electricity. He noted that the same 1-megawatt project would still net about $23,000 in revenue monthly.

Opponents of the idea say National Grid is looking for revenue to fund the operation of its current static distribution system that should actually shrink and become less expensive to manage with the anticipated growth of energy efficiency and renewable power.

The proposed rate revisions would hamper the state’s fast-growing efficiency, wind and solar sectors, said Seth Handy, an attorney for the state’s biggest developer of land-based wind power, Wind Energy Development LLC (WED).

“The proposed fee for public entity net-metering facilities and facilities enrolled in Rhode Island’s distributed generation and renewable-energy growth programs is devastating to developers, and especially those that have built, planned and financed projects without expecting any such fee,” Handy said. “Such a fee is pretty clearly contrary to the purpose of the ‘Renewable Energy Growth’ statute under which it has been proposed.”

In a motion recently filed with state Public Utilities Commission (PUC) — the agency that will determine the fate of National Grid’s proposed fees — WED requested that the access fee be dismissed, calling it “an unjust, unreasonable and illegal charge.”

The access fee is also being contested jointly by the Conservation Law Foundation, Acadia Center, the New England Clean Energy Council and the Alliance for Solar Choice. They argue in a letter for dismissal that the fee goes against the principle of the state’s distributed generation laws, in that they reduce the distribution costs along with other cost-saving benefits to the environment.

The letter concludes, “The proposed access fee would severely jeopardize the economics of all of those projects and thus the purpose of the statute.”

Opponents also say the benefits of renewable-energy systems outweigh the costs of using the distribution system. Wind and solar power reduce air pollution, offer a hedge against fossil-fuel price increases and add power during high demand.

During a Sept. 17 presentation to the PUC, National Grid referred to the fees as minor and baby steps.

“In fact this is not a baby step, this is a really big deal,” said Marion Gold, head of the state Office of Energy Resources, at a recent meeting of one of the state’s renewable-energy boards. “This is a big deal for what is being developed for, currently, what is a very small amount of renewable energy that is going into the system relative to the overall energy.”

Gold said her office plans to offer a counter proposal. However, she recognized that utilities everywhere have to reconcile costs as they create a modern electric grid. Other states, she said, have considered such fees but have backed away from them “because of the complexity in getting end users to understand what’s going on.”

Arizona, in fact, withdraw a request for a similar access fee late last month. Hawaii, however, is one of the first states to levy fees on solar-panel users. In June, the state’s utility requested raising the fees from about $18 to $25 per month, while cutting the rate the utility pays for the solar. New York and Massachusetts are considering similar fees.

Ken Payne, chairman of the Distributed Generation Board, said some compromise is likely. “One way or another, the underlying issues have got to be addressed so that there is a constructive outcome,” he said. “Because you could easily envision conditions getting worse and worse.”

The PUC is expected to rule on National Grid’s fee request by March 1.