City board members heard the first reading of Ordinance 20-10 regarding net-metering during the city board meeting on May 19.
This ordinance proposes change to the current renewable energy policy in place, which presently allows a one to one credit of 9.78 cents per kilowatt-hour (kWh) for energy used by the customer, according to a staff report prepared on May 13 by Phil Stokes, electric director. Any excess energy generated is credited back at 2.6 cents per kWh, which is the avoided cost the city would pay to the Grand River Dam Authority (GRDA) for electricity, Stokes said.
Under the new policy the customer will be credited 2.6 cents per kWh for all electricity made, Stokes said. The new policy will also meter all the renewable energy the customer makes and separately meter all the energy the customer uses, Stokes said. Customers will be limited to 10 kW and non-residents 100 kW, which is the size of the solar panels installed on homes, Stokes said.
“If you go over 10 kW and if you have a lot of residents putting solar on their house, then we would have to potentially upgrade our system to handle this additional load,” Stokes said.
Customers who have an existing interconnected renewable energy facility on or before the effective date of the ordinance will be grandfathered into the current policy for a period of 12 years, Stokes said. After that period the new policy will take effect for those who are grandfathered in, Stokes said.
The city presently has 26 solar customers, according to Holland Hayden communications manager.
‘A bad contract’
In 1989, Siloam Springs entered into a contract with GRDA to purchase wholesale electricity, Stokes said. This contract was renewed in 2007 and expires in 2042, Stokes said.
The contract limits the amount of renewable energy the city can generate itself and also limits the amount of renewable energy customers can generate without the city being charged a penalty fee, Stokes said. The penalty fee is $260 annually, according to Director Mindy Hunt. The city began incurring this penalty on April 1, 2019, Hayden said.
According to the contract between the city and GRDA, solar customers are limited to a total cumulative amount of energy equal to 20 percent of their energy peak established during the calendar year before the date the customer’s solar facility went online.
Larry Kenmore, a board member of the Arkansas Environmental Education Association and Siloam Springs resident, was at the board meeting. He called the contract into question saying that the city signed a bad contract with GRDA. Kenmore also said the city is trying to pass the penalty onto the citizens who have installed solar panels or other renewable energy.
“This contract is a bad contract for the citizens of Siloam Springs,” Kenmore said. “GRDA set a very low amount of renewable energy production number in this contract, which has been exceeded by the citizens of Siloam Springs.”
When the time came for public comments, other solar panel customers had unfavorable reactions to the ordinance. Breck Castleman, who recently had his solar panels installed in January, said the letter he received from the city seemed unclear about certain things.
Castleman asked about fixed electric costs, which seemed to be a primary issue driving the ordinance. A fixed electric cost is the ongoing annual cost to operate the electrical distribution system, Hayden said.
Castleman also wanted to know since the city buys back excess solar energy at the 2.6 cents per kWh and resells that energy to residents at a higher rate, is the profit from the sale of excess energy figured into how this might offset the fixed electric cost of the solar customer.
Castleman’s wife, Robbie Castleman, said in an email to Mayor John Mark Turner this will seriously kill incentives for investing in solar panels in terms of the economic benefit and utility company profit in Siloam Springs. Robbie Castleman further said in an email to the Herald-Leader the limit for solar energy must be very low if the city is worried about 26 solar customers.
She also said she doesn’t begrudge the city for wanting to make a profit, and referenced Clarksville, Ark., as a city that invested in solar panels for their communities and are turning a profit from their utilities.
Trish Youmans, another solar panel owner, wanted to know why the city needs information on how much energy she produces from her solar panels.
The city’s response is in order to ensure fuses and transformers are sized properly, the city needs to know how much electricity solar customers are producing.
Youmans said the solar panels belong to her and disagrees with the notion of the city charging her 9.78 cents per kWh for electricity she produced.
“The idea is kind of a government overreach,” Youmans said. “You are letting the city come in and basically charge me for my own produced electricity.”
Youmans also said the cut in credit for energy used in her home will cut into her and her husband’s savings by 75 percent. She said with the current system in place most solar users are able to pay 0ff their panels in 10-15 years. Under the new system it would take about 40 years to pay off the panels, Youmans said.
“If the city passes this ordinance, it will make owning solar panels financially impossible to own and basically eliminate all future residential solar energy in Siloam Springs,” Youmans said.
Most of the board members responded sympathetically with the solar customers but still had to consider the bottom line of the city needing to make money in order to keep providing the services they do.
Hunt said she was in favor of extending the grandfather clause for current solar owners to 15 or 20 years instead of just 12 years. Hunt also said she would like to have the questions asked during the public input portion of the ordinance answered and to have a clear policy for new solar customers.
Hunt said the city also needs to consider electric is a large source of revenue for the city, as well as those citizens who do not have renewable electric facilities.
“Grandfathering existing solar panel customers and making our new policy very clear to citizens considering solar panels seems to be fair,” Hunt said. “… We just need to have some sort of clear policy that says, ‘This is what you can expect, is it worth your time and money to do this?'”
Director Brad Burns said he supports green energy and a neighbor of his has solar panels on his home. However, Burns understands the importance of maintaining a healthy revenue stream for the city. He said the city should have a plan in place as people decide to go green so the city doesn’t end up in a future dilemma with revenue.
“I just want to remind my fellow board members that we’ve got to do the greatest good for the greatest amount of people and try to be as fair as possible,” Burns said.
Director Marla Sappington said she is a fan of solar energy and understands why residents who own them (solar panels) feel like they are not being treated fairly. Sappington said she also understands how much of an impact the electric department has on the city budget and all the amenities that come with it.
“I am so concerned about the environment, but I don’t want our city to shut down,” Sappington said.
Director Lesa Rissler said she supported extending the grandfather period. People have purchased these systems and have already made this large investment and are a part of the community, Rissler said.
“I understand why we have to do net-metering, but I want to see that we raise that grandfathering to support the people that have already put these panels in,” Rissler said.
Director Reid Carroll agreed with extending the ordinance to 15 years. He said he enjoyed hearing from everyone and looked forward to more interaction.
“Hearing thoughts and opinions and also hearing some real numbers on what we’re looking at here so we can make a decisive move on this,” Carroll said.
Director Carol Smiley said she would also like to have answers to some of the questions the citizens asked during the meeting. Smiley said 40 years seems like a long time to recoup money when purchasing something.
“I would like these people to get the answers that they are looking for,” Smiley said.