Paducah Power System's new policy on customers who want to generate some of their own electricity using renewable sources is designed to establish a fair rate for all customers, according to the utility.
The PPS board recently approved a Customer Owned Renewable Energy (CORE) policy and rate schedule which goes into effect Nov. 1.
According to the utility, the CORE policy requires PPS to pay solar customers the same market rate per kilowatt hour that it pays other generating sources for energy. The CORE policy replaces the utility's old "net metering" policy that allowed solar customers to collect the full retail rate per kilowatt hour PPS charges its customers for power, an amount significantly higher than the market rate.
"What the CORE program does is whatever Paducah Power System would save by not purchasing that (customer-generated) energy on the market, we would transfer 100% of that to the customer," PPS general manager Dave Carroll said. "That's right around 3 cents per kilowatt hour. Under the old policy they received a full retail rate credit."
The cost of energy makes up only a small portion of the overall retail rate, Carroll said, and does not include the cost of the debt of the Prairie State investment, the debt on the American Municipal Power hydro facility investment, and the debt on the utility's peaking plant.
"Those costs don't go down when we purchase less energy on the market, neither does all the fixed costs of operating the plants," he said. "Also in the retail rate is the distribution system costs of Paducah Power, all those substations, all the facilities, the wires in town. So all they really replace is the energy purchases. All those other costs still exist."
Carroll said the utility "completely supports a customer's choice to generate renewable energy, but we believe it should not affect the cost to other customers who choose not to generate."
"If we do not set a rate for solar customers that is more reflective of our actual cost of serving them, all our other customers will subsidize them. And, if we don't set that rate early on, as solar becomes more common here, our lowest income customers who cannot afford to install solar will bear the biggest burden of supporting those who can."
While PPS does not fall under the jurisdiction of the Kentucky Public Service Commission, Senate Bill 100, which the General Assembly approved to go into effect Jan. 1, essentially does away with net metering for the state's utilities that are covered by the PSC, Carroll said.
Under the new CORE policy, there will be a customer charge equal to 25% of the (current) $14.75 customer charge, and an energy credit that reflects the cost the utility is avoiding paying for purchased power -- the estimated 3 cents per kilowatt hour.
PPS currently has two solar-generating customers. They will be grandfathered in under the provisions of the old net metering policy. One of those customers is Paducah Cooperative Ministries, which has solar panels installed on three of the seven units that make up its Fresh Start Village for homeless women and children.
Bryant Hileman is a local solar advocate who was instrumental in raising money for and coordinating the solar system construction at Fresh Start Village.
While he is pleased the solar panels on the Fresh Start Units -- as well as the four remaining ones -- will be grandfathered in, along with a planned system for Family Services Society provided an application is turned into PPS by Nov. 1, Hileman thinks the new policy will dramatically impact future development of solar energy in Paducah.
"The problem moving forward, while it's great that we can do that at Family Services Society and those other four units (at Fresh Start Village), it still completely eliminates all renewable energy in Paducah," he said.
"To me, the only reason to do this is simply because you don't want solar in the city."
Hileman said "there are markets similar to theirs (PPS') and people that are in the same position. You can look at utilities all over the country that have gone in a completely opposite direction. There are cities, towns, states, there's other countries that are doing much more ambitious things.
"This is not an impossible thing to do. I think these things present challenges, there are growing pains to them, but it doesn't make sense especially since (solar) is the fastest-growing job market in energy."
Hileman contends the CORE policy discourages investment in solar, particularly among the poor, and would greatly increase how long it would take for people to get their money back.
He said there is a petition online gathering signatures to ask the utility to reverse the policy that he hopes to present in coming weeks.
"I don't believe this is the answer to all energy problems. I wish it was. A lot of people want to present this as this 'magic bullet,' that there's not challenges that come with it. I completely understand the situation and the reality of it. I just think it has a place."