JOHN POLOS, of Battle Ground, points to a meter on his home that measures the electricity generated by solar panels on his roof. Polos is one of more than 500 county residents who use state and federal financial incentives to generate electricity and sell excess to Clark Public Utilities.
Following a commissioners' executive session July 12, officials of Clark Public Utilities have decided to use general utility revenues to boost funding for two solar programs for which state incentive funding has reached a statutory limit.
The decision is good news for the more than 500 utility customers who have installed roof-top solar power generating systems and for investors who put up money for ground-level, “community” solar projects constructed last year.
Utility spokesperson Erika Erland said the subsidy will cost the utility about $1 million over the next five years and maybe less. She said power rates will not be raised to pay for the subsidies.
The rapid increase in roof-top solar installations in 2015, combined with the construction of the community solar projects, put the solar program over the cap for incentives allowed in state law. Incentives could have been reduced for all of those involved in the two programs had not the utility decided to pay the subsidies from general revenues.
The situation is not as dire as forecast when the commissioners met in February. At that time, reductions of 12-25 percent in incentive payments were discussed whereas officials now estimate that planned incentives will be only 2 percent over the legal limit.
While the exact amount of incentive payments was never promised or included in written guarantees, nevertheless customers were led to believe that payments would continue at planned levels, said Erland. Payments varied based on the size of solar systems installed.The utility recently notified those involved in solar programs that they would continue to receive incentive payments: “The utility unintentionally provided inaccurate information that was relied upon by contractors and participants regarding the amount of state incentives,” wrote the utility. “Additional funding required to meet the reasonable expectations of all those impacted will be provided by the utility.”
Here's how roof-top works:
John Polos of Battle Ground had solar panels installed on his roof in 2014 at a cost of about $44,500. He signed agreements with Clark Public Utilities that provided for the utility to purchase power from him that was in excess to his needs, that is, during sunny weather, while allowing him to purchase power from the utility when he needed to do so.
State and federal incentives convinced Polos to install a solar system.
For his size system, the state government offered an incentive of $5,000 a year for six years. Polos understood that, as long as his system generated 9,500 kilowatt hours of electricity a year, he would receive the $5,000 annual check.
Federal tax credits provided further inducement, along with lower power bills. Polos also figured that the system added to the value of his home while not increasing his property taxes—another benefit in law.
Polos wasn't alone.
About 260 utility customers had installed solar systems by the end of 2014, but one year later, the total had reached 497. In the last half of 2015, more systems were added than had been constructed in all the years up to 2014. The total reached 535 before the utility halted incentives for new projects in February 2016.
Community solar
proved popular
Also in 2015, the utility solicited investors and raised about $1.35 million for the construction of a field of solar panels near its Operations Center on SR-503 in Orchards. Some 740 people invested from $100 to the maximum of $10,000 each to fund the projects.
Erland said investors were eager to participate and that the first phase, a 74.8 kilowatt project, “sold out” in hours. The next four projects also sold out quickly in 3-23 days.
Erland said a $10,000 investor expected to receive payments totaling $16,000 over five years, followed by lesser amounts in future years, all adding up to $20,100 over the 20 year life of the project.
State incentives pay for the return on investment to program participants. The returns on investment are not taxable.
The community solar projects occupy about three acres of land and can create enough electricity to power 20 homes.
Limit on state incentives
State law places a limit on incentives for both roof-top and community solar programs. In
Clark County, the annual incentive limit is calculated as one-half of one percent of taxable power sales by Clark Public Utilities.
For Clark Public Utilities, that cap calculation results in annual incentives of about $1.7 million.
According to Erland, Utility officials had initially believed that both programs had separate caps of about $1.7 million each, but learned late last year that a single cap applied to both programs.
The commissioners were told in February that state law requires the utility to proportionally reduce the incentives equally across all participants if the cap is exceeded. That could have resulted in a decrease in payments for those involved in solar programs and participants were advised of this possibility.
The commissioners opted for a “pause” in offering state incentives for new roof-top installations and decided to wait until June 30 for final cap calculations. Using full year data—July 1, 2015 through June 30, 2016—officials calculated that incentives were about 2 percent, or $40,000, over the cap, and would rise over the years as newly-installed systems began creating power. Utility official Rick Dyer said work is underway to clarify and finalize solar production meter readings.
Erland said the pause in program expansion remains in place although, she said, customers can still install solar, pay less for electricity, sell power to the utility, and receive federal tax credits, but without the state incentive money.
Erland also said that 31 community solar investors had returned their shares for refunds by a June 30, 2016, deadline for doing so. Refunds totaled $74,100. The utility does not plan to resell the returned investment shares. No record was kept, she said, as to why investors chose to seek refunds.
Utility commissioner Jim Malinowski defended the decision to use general revenues to maintain incentive payments. He compared the action to the utility's support of conservation programs. Solar is a form of conservation, said Malinowski. “We don't need to buy power from other sources.”
The commissioners were advised that the incentive subsidy is an “operational” matter and not a policy issue. Therefore no commissioner action or approval was required.
Kim Schmanke of the state Department of Revenue said that anything the utility pays over the cap is not eligible for reimbursement from the state.
