Here’s the statement in favor of Net Metering we submitted to the Alabama Public Service Commission in November of 2007.
Statement to Alabama Public Service Commission
Docket No. 30066 – Consideration of Section 1251 of the Energy Policy Act of 2005
November 12, 2007
Our names are Lee and Amanda Borden. We plan to build a house in rural Elmore County within the next seven years. We are working to make it as energy efficient as possible, so we have a personal interest in the deliberations you are conducting now about net metering. The majority of this testimony is general and describes why it’s good for Alabama to encourage net metering. A portion of it, however, is our personal plea for logical regulation for ourselves and others like us.
We are delighted that the Alabama Public Service Commission is soliciting comment on net metering in the state. We hope and expect that this will be just one more step in a continuing discussion about ways we can stabilize the energy supply for the state and reduce demand. We believe in, and we encourage you to support, solutions that are less about mega-projects and more about distributing energy efficiency and energy production so that energy gets produced as close as practicable to where it is consumed. This lowers transmission costs and makes the grid inherently more durable.
I. The Challenge We Face for Electrical Service
Alabama gets too much of its electrical power from coal (67% in 2006, according to our quick research online). This is a problem for two reasons. First, coal is dirty, and getting dirtier. The low-sulfur coal that burned relatively cleanly to produce our electrical power in prior decades is more or less depleted now, leaving the dirtiest, least energy-dense, and most sulfur-laden coal as the only energy source still widely available. Not only is coal widely derided as a key source of dangerous carbon dioxide that causes global warming; it is also a rich source of a cocktail of other dangerous chemicals that are making all of us sicker right now, including nitrogen oxide, sulfur dioxide, mercury, lead, cadmium, and chromium.
Second, coal is not as plentiful as we think. We hear David Ratcliffe, the president of the Southern Company, make statements like “At current usage rates, we have a 200-year supply of coal here in the United States,” and then in the very next sentence report that our use of coal will increase by 59% by 2030. Of what relevance, then, is a statement about how long coal will last “at current usage rates”?
And then we read that the respected researchers at the Energy Watch Group (who, unlike Ratcliffe, have no vested interest in convincing you to permit the burning of more coal) report that the world’s supply of coal will peak by 2025. This will cause a rapid rise in the price of coal and all things depending on coal, notably electrical power.
We read about FutureGen, the project financed by billions of dollars in federal government subsidies, and the distant but unproven hope that it will produce a handful of plants within 20 years that might burn coal without dangerous emissions. That’s good, but likely to be too little, too late. If the Energy Watch Group is correct and coal is likely to peak within 18 years, all the money we are investing to burn coal more cleanly will be ready for commercial production just in time to be useless, because by then coal will be rising in price rapidly (as oil is now) and no longer be feasible as a feedstock for new power plants.
Many of us will expect nuclear energy (now providing 15% of the electrical energy in Alabama) to fill the gap, and whether we like it or not, we probably will increase our use of it. However, NIMBY (Not In My Back Yard) will inhibit the kind of growth that would be needed to come anywhere close to filling the gap, and if humans ramp up their use of nuclear energy significantly, as seems likely, we will quickly approach the peaking of the available supply of fissionable uranium. Breeder reactors hold some distant promise, but the technology of breeder reactors is several decades away from practical production. So nuclear energy will be at best a temporary and incomplete solution for the Alabama energy gap.
The persistent and crippling drought of 2007 makes all of us reluctant to expect more electrical power from hydroelectric plants (now producing 13% of our electrical power in Alabama), so we can’t depend on that.
Natural gas accounted for only 1% of the electricity produced in Alabama in 2006. That’s good. Although natural gas is comparatively cheap today, we read that the U.S. supply of natural gas is dwindling. We also read that Canada is exporting 2/3 of its natural gas to the U.S. and beginning to resent it as its own demand increases. We can import natural gas from the Middle East, but it’s much more difficult to transport natural gas across the ocean. It takes facilities specially designed to work with LNG, the liquid form of natural gas, and keep it at minus 259 degrees Fahrenheit. No one likes having that kind of facility close by, including us. Natural gas is about to increase in price dramatically, so we’re relieved it’s not a significant part of Alabama’s electrical feedstock.
To sum up the challenge of electrical power in Alabama, it is that there is no source of power that promises to deliver the quantities of power we will need in the future. More quickly than most of us realize, we will be short of power and looking for electricity anywhere we can find it, at an inevitably higher price. And there will be no silver bullet.
II. Net Metering Is an Important Part of the Solution
The solution to Alabama’s electrical power challenge will be a cluster of several measures. First and most important (because it’s by far the easiest and cheapest technique), we will equip our houses, offices, plants, churches, and vehicles to conserve every morsel of energy so that we use less. We will phase out the dirtiest and most dangerous methods of power generation and increase our use of solar, tidal, geothermal, and (a little bit of) wind.
One way to encourage the use of sustainable energy production is to encourage net metering. If homeowners and business owners know they can get a fair price for excess electricity they generate, they will have a ready incentive to invest the capital necessary to generate power at the neighborhood and town level. Their excess capacity will enrich the grid and be consumed by their neighbors (again, with almost zero loss in transmission).
Because wind is feasible only in small pockets of Alabama, and because the other renewable sources are not widely available, net metering in Alabama is essentially about solar. And that’s good. We read of companies like Nanosolar, which is planning to ship solar thin film cells this year at a dramatically lower cost than existing photovoltaic cell technology. Nanosolar promises prices for its new thin film cells that will compete economically with existing grid electrical rates.
Solar cells reach their peak output during the peak daylight hours. This doesn’t match the peak demand hours for the grid exactly (as you know, they extend into the evening), but it comes close. When the utility company is most taxed as it works to meet the demands placed on the grid, solar cells that are net metered would be taking up the slack. That sounds to us like it’s good for everyone, the solar cell owner, the utility, and the other users on the grid.
III. Measures We Need to Take
Alabama needs to overhaul its net metering regulations. By encouraging net metering, Alabama would be joining Georgia, Florida, North Carolina, Louisiana, Arkansas, and 30 other states. We recommend the Net Metering Standards suggested by the Environmental Law & Policy Center. These standards are designed to protect the utility, ensure a fair compensation approach, and strike a smart balance between the utility’s need to control and protect its grid and the individual’s need for certainty.
The insurance requirement in Alabama’s present standards needs to go. We don’t know who decided to insert this requirement that each individual homeowner desiring net metering pay for $1 million of liability insurance, but you can hardly forgive us for suspecting that someone was working to discourage anyone from attempting net metering. Whether this was the goal or not, it certainly has been the result. We are not aware of any individual homeowner or small business owner who has chosen to navigate that mine field. Instead, they tend to read about the requirement and quietly give up.
The insurance requirement is unnecessary. Plenty of states are already encouraging net metering, so the solutions are freely available. The standards can require the interface between the individual’s installation and the grid to have state-of-the-art protections built in so that the individual stops supplying power the instant the grid goes down. This is crucial to the safety of other users and the line staff of the utility, but it’s not difficult to do. And if insurance is part of the solution, it would be far cheaper for the utility to purchase it, not the individual customer.
IV. A Personal Plea
We are designing our house now, and we would like to design in significant photovoltaic electricity. Unfortunately, we’re hampered in doing so, because of uncertainty about net metering. If we knew net metering were going to be genuinely available, we would be generous with PV, knowing that we could design in enough capacity for heavier usage times and get a fair credit for the excess from the utility. We can’t do that now, however, because we don’t know whether this will be the case.
We are not alone. There are others like us who want to be part of the solution, who want to make the Alabama electrical grid stronger and more stable, and who need from you the certainty that the capital investment they are contemplating would be rewarded fairly.
We welcome your consideration of significant revision to the net metering standards in Alabama, and we look forward to continuing this discussion with you. Thank you for considering this issue, and thank you for reading our statement.
Lee Borden & Amanda Welch Borden
3350 Misty Lane
Birmingham, AL 35243