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Louisiana Ends Solar Power Subsidy Program

December 4, 2019

The Louisiana Public Service Commission (PSC) has voted to end the state’s net metering program.

The Louisiana Public Service Commission (PSC) has voted to end the state’s net metering program for solar power.

By a three-to-two vote, PSC decided in September to end net metering subsidies for new homes and businesses installing rooftop solar panels. Louisiana has had the net metering program since 2007.

Higher Payments for Excess Power

Under net metering programs, utility customers who generate their own electricity, generally from rooftop solar panels, sell the utilities any excess power they produce, typically at retail rates, for resale to other customers. Thirty-nine states and the District of Columbia currently have some form of net metering program.

Echoing arguments by utilities and ratepayer groups in other states, Louisiana utilities say the net metering program unfairly forces the vast majority of ratepayers, who cannot afford to install solar panels on their homes or businesses, to subsidize relatively wealthy people who have the panels. Utilities say net metering customers do not bear the cost of their share of the electric grid or the special equipment needed to allow them to be both electricity consumers and providers.

Regulated utilities indicated if Louisiana’s net metering program continued unchanged, they would probably have to raise electricity rates to pay for the increasing amount of net metered solar power being added to the grid.

Protecting the Majority

PSC’s decision grandfathers in existing rooftop solar customers, including those installing new rooftop panels before the end of 2019, paying about 10 cents per kilowatt hour (kWh) for any electricity they provide back to the electric grid for 15 years. That rate is much higher than the wholesale rate utilities pay for electricity from other providers in the state.

Beginning in 2020, new rooftop solar installations will receive approximately 3 cents per kWh, equal to what the utilities would have to pay for new electric power from other sources.

PSC’s decision is good for the great majority of electric power customers in Louisiana, says utility Entergy Louisiana, in a statement.

“The commission’s proposed rule appropriately balances the interests of the one percent of customers that use solar to self-generate and export excess generation to the electric grid with the interests of the 99 percent that pay for excess solar output,” Entergy’s statement said.

Net Metering ‘Unfair’

Net metering programs wrongly force average ratepayers to pay for unreliable power from customers with rooftop solar panels, says Tim Benson, a policy analyst with The Heartland Institute, which publishes Environment & Climate News.

“Although owners of rooftop solar panels in Louisiana should be paid for the electricity they sell back to the grid, the PSC was right to ensure, going forward, these owners will be paid at the same rate conventional sources are paid, reflecting the true wholesale cost of electricity,” Benson said. “It is unfair for solar owners not to bear the costs of maintaining the grid, because the intermittency of solar power actually increases those costs.

“These maintenance costs are shifted to the owners of homes without solar panels, unfairly raising their monthly bills,” Benson said.

H. Sterling Burnett, Ph.D. (hsburnett@heartland.org) is a senior fellow at The Heartland Institute.

Author
H. Sterling Burnett, Ph.D. is a Heartland senior fellow on environmental policy and the managing editor of Environment & Climate News.
hsburnett@heartland.org