The Maine lawmakers who last month defeated a landmark bill that would have expanded solar energy had unusual allies: national companies that are the country’s largest installers of rooftop solar panels.

The companies, led by California-based Sunrun Inc. and SolarCity, hired lobbyists to fight the bill, donated money to political action committees that benefit the bill’s opponents and used social media to push an alternative measure that created a smokescreen for the bill’s detractors.

The conflict between national solar companies and their Maine counterparts reflects deep divisions over how to credit the homeowners and small businesses for the power they generate on rooftops and in backyards.

Those credits are seen as essential to the expansion of solar power because they provide a payback for the upfront investments in solar equipment. A solar-electric system can cost $15,000 to $18,000 for a typical Maine home, with a payback period of up to 12 years after a 30 percent federal tax credit, depending on electricity prices.

But the credit system, known in the industry as net metering, is also politically unpopular – especially with Gov. Paul LePage – because it is seen as a subsidy, funded by all utility customers, that increases the price of electricity.

In the end, LePage vetoed the measure and the Legislature failed to override the veto by two votes.

Assistant House Majority Leader Sara Gideon, a Freeport Democrat who was the principal champion of the bill, said national solar company support for a Republican effort to amend the bill – which the bill’s supporters rejected – created confusion around an already complex piece of legislation.

“Instead of fighting a lobbying effort with one opponent,” she said, “now there were multiple opponents, and one was the solar industry itself. That’s hard to overcome. It creates confusion and was the final nail in the coffin, when you come down to a two-vote margin.”

SOUGHT TO PROTECT NET METERING

The Maine solar bill would have replaced net metering with an innovative but untested alternative credit system that was crafted by a coalition of local solar installers, top Democrats, the state’s public advocate, utility companies and the state’s clean-energy and conservation groups.

But the national solar installers, committed to the net metering system, didn’t like Maine’s alternative proposal. They were afraid it would catch on in other states where net metering is also under fire, so they came to Augusta to fight it.

“If Maine had abandoned net metering (for an alternative) it would have been unprecedented in New England and across the country,” said Suzanne Merkelson, a spokeswoman for SolarCity. “We just wanted to protect net metering, at all costs.”

Although the solar bill was defeated, the conflict over compensation for utility customers who generate power with small solar systems isn’t over. It’s moving now to a new battleground: the Public Utilities Commission.

Under an existing Maine law, the PUC must review net metering once the amount of energy generated by the sun hits 1 percent of total power generation. That threshold was crossed on a hot day last summer in Central Maine Power’s service area.

The PUC is expected to announce its review plan soon, and the national solar installers will once again be fully engaged in the process.

But their strategy is a gamble. The three PUC commissioners were appointed by LePage. Democrats and clean-energy advocates fear the panel will modify net metering in ways that will stunt the growth of solar power and the 400 jobs it now provides for local installers.

THE ‘NEXT METERING’ ALTERNATIVE

The number of Mainers with solar arrays on their rooftops or in their yards is still relatively small – about 1,900 homes and 200 small businesses or institutions in CMP’s service area in southern and central Maine.

Customers who own those systems are getting a one-to-one credit on their electric bills at the so-called retail rate, the total of power supply, distribution and transmission costs. Maintaining this retail rate is the definition of net metering.

The failed solar bill would have replaced the current form of net metering with an untested alternative that supporters dubbed “next metering.” Utilities would have bought the solar power in combined, long-term contracts at rates that would have decreased over time as prices fell and solar penetration grew. This idea had drawn national interest, as a possible model for updating net-metering policies.

That was a threat to the national installers, SolarCity and Sunrun, the lead member of The Alliance for Solar Choice, a trade group made up of roughly 15 big installers and the country’s chief advocate for rooftop solar.

Chris Rauscher, public policy director for Sunrun, said he worked with all sides to try to craft a bill that also maintained net metering in its current form, but he was unsuccessful in persuading lawmakers to embrace a side-by-side pilot program. He said the failed solar bill would have given excessive control to utilities and created uncertainty in the market over time.

“So now we will need the (PUC) to step in and ensure the full value of solar net metering to Maine’s economy is recognized,” Rauscher said.

A POTENTIAL NATIONAL MODEL

Merkelson, the SolarCity spokeswoman, said Maine’s solar bill would have hurt rooftop customers in the long run. It would have favored larger-scale projects and given utilities too much control of solar. That’s why Central Maine Power and Emera Maine embraced it, she said, and why the utility industry saw Maine’s bill as a potential national model.

SolarCity hired Steve Hudson, a lobbyist and partner at the Preti Flaherty law firm. Hudson declined to discuss his role, although he acknowledged making a minor addition to a letter to Senate Republicans from Ken Fletcher, a former Republican lawmaker and LePage’s first energy director. The letter detailed the high cost ratepayers would endure if the bill passed.

The bill that was finally voted on by lawmakers contained compromises developed with the help of two Republicans on the Legislature’s Energy, Utilities and Technology Committee. But LePage sought additional, last-minute concessions, including a request to slash the rate solar customers get for net metering in half over 18 months. Maine solar installers and environmental groups said that cut would kill the industry, and Democratic leaders rejected it.

It was a climax to earlier attempts by Republicans to find an alternative that LePage would accept.

During a mid-March public hearing on the solar bill, Rep. Nathan Wadsworth of Hiram, the ranking House Republican on the energy committee, surprised participants by releasing a statement asking the PUC to decide the fate of net metering.

The statement was supported by House Minority Leader Ken Fredette, R-Newport, and, solar advocates suspect, orchestrated by him. Fredette said the solar bill was too complex to be considered so late in the session.

Days later, that statement was transformed into an amendment to the solar bill, and sponsored by Wadsworth. While it was a non-starter with Democrats and was never voted on, it served as a tactic to distract solar supporters and conceal the true intentions of adversaries, said Vaughan Woodruff, the owner of InSource Renewables, a solar installer in Pittsfield.

“It gave shelter to opponents,” said Woodruff, who was heavily involved in promoting the failed solar bill. “It gave some Republicans cover to say they were for solar energy, and that the bill just needed some tweaks.”

WHERE THE DONATIONS WENT

Wadsworth said he worked on the alternative with the help of Patrick Woodcock, the governor’s energy director, Fredette, Republican Sen. Garrett Mason of Lisbon and Republicans on the energy committee. Both he and Fredette said the national solar companies weren’t involved.

Wadsworth said he supported the full retail rate for net metering because the penetration rate of solar was so low that it didn’t currently hurt ratepayers. That position is in conflict with LePage, however. Negotiations on the solar bill finally broke down because the governor insisted on a much lower compensation rate to replace net metering.

For his part, Fredette said his goal was to find a compromise that LePage could support. He dismissed the idea of influence from SolarCity or Sunrun, saying lawmakers and state officials wrote the amendment.

Whatever influence the national installers had, Sunrun spent the most money fighting the solar bill, as detailed in financial reports filed with the state ethics commission. Lobbyist disclosure reports for March show that Rauscher, the company’s public policy director, was paid $8,614 for his work. Reports for April aren’t available yet.

Disclosure documents also show Sunrun contributed $5,500 between November and March to political action committees that benefited Republican leaders. The largest single share – $2,500 – went to Fredette’s PAC; $250 went to a PAC benefiting Fredette and Rep. Ellie Espling, R-New Gloucester, the assistant minority leader.

The company also donated $1,000 to a PAC benefiting Wadsworth, the freshman lawmaker from Hiram on the legislative committee that handles energy matters and a key player in defeating the solar bill.

Sunrun gave $1,250 to PACs benefiting Senate President Mike Thibodeau, R-Winterport. It gave $250 each to PACs benefiting Sen. Tom Saviello, R-Wilton, and Sen. Andre Cushing, R-Hampden, the assistant majority leader.

By contrast, Sunrun donated $750 so far this year to Democratic PACs, state records show, with $500 going to House Speaker Mark Eves, D-North Berwick.

Rauscher said his company donates to both parties because it has learned from other states that all sides must be engaged to enact good solar policy.

FREDETTE: NOT AWARE OF DONATION

Asked about Sunrun’s donation to his PAC, Fredette said he wasn’t aware of it because he doesn’t go back and check on who donated and who didn’t. Records show that in the last quarter of 2015, Sunrun’s $2,500 contribution to Fredette’s PAC was topped only by $2,750 from Altria Client Services. Altria is the parent company of Philip Morris USA, the cigarette maker.

Fredette also said he didn’t know who Rauscher was.

“If he walked up to me today, I wouldn’t recognize him,” Fredette said.

He also said he thought it was “disingenuous” for solar advocates to insinuate that the PUC can’t be trusted to fairly rule on net metering.

“Let’s see what the PUC gives us back,” he said.

What the PUC gives back will be critical to the national installers, who are laboring under a cloud of uncertainty over net metering.

That uncertainty continues to cast a shadow over solar markets. Share prices in SolarCity and Sunrun fell for the quarter ending in March, and are down 66.8 percent and 45 percent, respectively, for the year.

An analyst told the Reuters news service last week that solar’s long-term prospects are strong, but that Wall Street has lost confidence in the regulatory environment at the state level.

Fortunat Mueller, a co-founder of ReVision Energy in Portland, said he has come to understand why the national installers would come to Maine and side with politicians who actually are against the policy.

“They employed bare-knuckle tactics that local solar advocates probably wouldn’t use,” Mueller said. “They think they can do better at the PUC. I hope that’s true.”

 


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