Appalachian Power has proposed a minimum amount to charge customers in its future shared solar program, in which participants will be able to buy solar power generated by another company and receive credit for it on their electric bills.
In the weeks to come, state regulators will consider Appalachian’s proposal along with input from solar developers and other stakeholders in a regulatory case that likely will play a critical role in determining the solar program’s viability.
Appalachian has not yet launched its shared solar program, but the minimum bill in Dominion Energy’s program has been a point of contention since it began in 2020.
An average Appalachian residential customer fully subscribed to shared solar should pay the utility at least $48.66 per month, the company said in a filing last week with state regulators. That calculation assumes that the administrative cost of the program is just $1, which Appalachian said could change.
The minimum bill amount will cover program participants’ “fair share” of costs to operate the grid and minimize shifting costs to non-participating customers, all while compensating participants for the benefits that solar brings to the electric grid, the utility said.
An Appalachian Power spokesperson said the company had no comment beyond its filing.
Under the shared solar program, participants will be able to buy solar energy generated by a third-party company, receive credit on their power bills for that energy, and pay the monthly minimum to Appalachian.
Shared solar programs allow people to participate in using solar energy without having to own their own panels, and they can potentially save money.
But solar developers and others say that if Appalachian’s minimum bill is too high, customers won’t see a net savings compared to a regular electric bill — which for an average Appalachian customer is $174 a month — and therefore won’t want to participate in the program.
Figuring out the appropriate minimum is an opportunity for Appalachian, which has drawn criticism from residents and elected officials for its rising electric rates, said Brandon Smithwood, vice president of policy for Dimension Energy.
“These are resources they can bring to customers and give customers immediate relief,” Smithwood said of shared solar projects.
In Virginia, Dimension has 42 megawatts of operational shared solar projects in Dominion Energy territory.
[Disclosure: Dominion is one of our donors, but donors have no say in news decisions; see our policy.]
All of Dimension’s projects serve low-income customers because under Dominion’s shared solar program, they are exempt from paying the monthly minimum, Smithwood said.
Appalachian Power’s shared solar program will have no legislatively mandated exemption from the minimum bill for low-income customers, but its program is required to provide low-income program participants with at least a 10% savings compared to the cost of the subscription.
The State Corporation Commission, which regulates utilities in Virginia, anticipates holding a hearing on determining the minimum bill at the end of May with an eye toward having the program implemented by July 1.
Calculating costs vs. benefits
Legislation passed last year established Appalachian’s 50-megawatt shared solar program and expanded the size of Dominion’s program from 200 megawatts to 350. Those numbers mean both programs will be a relatively thin slice of Virginia’s energy pie.
The legislation also instructed the utilities to come up with minimum bill amounts based not just on covering participants’ fair share of grid costs but also factoring in the benefits that solar brings to the grid.
Dominion is expected to file its own new minimum bill calculation with the SCC by May 1. Its minimum bill as of late last year was $83.59, but that was before it was instructed to recalculate it to include solar’s benefits.
Appalachian’s $48.66 proposal is for a customer using a typical 1,000 kilowatt-hours of electricity per month and subscribing to that much solar energy.
Without $40.59 worth of benefits, such as savings on transmission costs and helping the utility meet legislatively mandated renewable energy goals, the minimum bill would be $89.25, the utility said.
In his written testimony filed with the SCC, William Castle, Appalachian’s director of regulatory services, said that the company’s calculation did not include certain benefits because doing so would double-count them.
These included benefits that a subscriber already receives through the solar bill credits or federal investment tax credits that a solar project developer receives.
Other benefits, such as the value of construction jobs or increases to the local tax base, cannot be quantified, especially ahead of any shared solar projects actually being built in Appalachian’s service territory, Castle said.
Price tag to run shared solar program is in the works
Besides the minimum bill, shared solar programs also come with an administrative cost, which is how much the utility charges for the overhead necessary to run the program.
Dominion’s administrative cost is $1 a month, according to spokesperson Tim Eberly.
In its filing, Appalachian’s minimum bill calculation also assumes a $1 administrative cost, but the company suggested that could change.
Appalachian said in its filing that it is “currently in the process of determining the necessary work to reprogram its customer information and billing systems to accommodate the shared solar program” and is using the $1 figure “until it has gathered sufficient information and experience to justify a different amount.”
Smithwood said he thinks the minimum bill should just be the cost of administering the program because of the many benefits that solar brings to the grid.
He hopes the SCC case will provide clarity on what the minimum bill will be and what the administrative cost will be.
“We’ve got to be thinking about these projects on a 25-year life cycle. Just because it’s a dollar today because Apco hasn’t figured out what the cost is, we know they won’t necessarily come back and say it’s a dollar in five years. … I think we will have a clear view once the commission issues its order later this year of whether this is a viable opportunity,” he said.
Developer says shared solar could ease conflict
Smithwood sees shared solar as a potential bridge between those who want more solar energy to help Virginia meet legislatively mandated energy goals and those who resist large, utility-scale projects.
Shared solar facilities have no more than 5 megawatts of generation capacity, compared to the 40 megawatts of an average utility-scale solar project in Virginia.
They typically top out at 40 acres, compared to the sometimes hundreds of acres that a utility-scale project uses.
“Fixing the minimum bill, we’ll be in a place to say, all right, we’ve resolved the concern here with the numbers at the SCC — let’s really scale this up to something that can help the state meet its goals while getting around some of the tensions that have held back a lot of bigger projects,” Smithwood said.
Solving the matter could also lead to Appalachian’s program growing beyond its initial 50-megawatt cap, he said.
“The main reason for keeping the program small, the main public policy argument that the utilities have, is ‘Well, this just isn’t a great deal.’ This is our forum to say, ‘No, this is a great deal. Not only if you sign up for it, but for everyone,’” Smithwood said.