SMECO newsletter

volume 66 - issue 10- October 2016

Contested rate structure slows foray into community solar

When the state legislature directed the Maryland Public Service Commission (PSC) to establish a community solar pilot program, SMECO was excited about participating. Community solar was seen as an attractive, viable option for those customer-members who could not or did not want to put solar panels on their homes or businesses. Community solar systems would be located around our service area, and individual retail customer-members would become "subscribers." The energy would travel across SMECO's delivery system to the subscriber. Electric utilities, like SMECO, would credit subscribers' bills for the solar energy they used. The utilities would also be required to purchase "unsubscribed energy"—that is, any solar energy produced that was in excess of what subscribers purchased.

Once the legislature passed the law, the State's electric utilities, the PSC staff, numerous solar companies, and others met as a working group to develop rules and procedures for the pilot. The working group also recommended rates to be paid for the energy generated by community solar projects, but, in SMECO's opinion, and several other participants, those rates were out of line. The PSC adopted them anyway.

Some of these rates (such as those for bill credits) are properly determined by the PSC. SMECO believes it is important for it to credit customers only for what they are receiving from the community solar projects—energy. But the PSC is requiring SMECO to pay customers bill credits valued at more than just energy. The required credit will be the equivalent to the full retail rate, which includes the cost of the poles, wires, and other equipment the customer uses to receive the energy, as well as the cost of State programs like EmPOWER Maryland, surcharges, and county taxes. It is not fair for the Cooperative to be charged the full retail rate for energy—which could easily be double the wholesale cost of energy—and it is not fair to expect our customer-members to subsidize those charges.

Other rates (wholesale rates) are directed or set by the Federal Energy Regulatory Commission (FERC). SMECO believes that energy it is required to "use" under the Maryland community solar law and then resell falls into this category. But the PSC has instead determined to set those rates too. After providing input and filing comments with the PSC, SMECO submitted a petition with FERC regarding the matter. Choptank Electric Cooperative joined SMECO in filing the petition, which identifies the Public Utility Regulatory Policies Act and the Federal Power Act as the federal laws that would regulate energy rates in this situation. That petition is currently pending before FERC.

As an electric cooperative, SMECO works to fulfill its obligation to its customer-members, and we take our mission seriously. We are also committed to sustainability.

• We have assisted thousands of customers who have installed solar panels at their homes with streamlined, hassle-free connections of net meters.

• Our customer-members can use online tools which simplify the application process and can be used to evaluate the cost effectiveness of installing solar panels at their homes and businesses.

• SMECO has stated clearly its interest in participating in the Maryland community solar pilot program, but only if the rules and compensation are set fairly so as not to disadvantage its customer-members.

• We are enthusiastic supporters of solar and wind energy, as evidenced by our commitment to purchasing renewable energy from several solar and wind projects in Maryland and Pennsylvania.

• SMECO is a leader in advocating for policies that foster sound environmental practices and engaging in activities that improve energy efficiency and reduce our carbon footprint. (

As SMECO works to resolve the issues involved with the community solar pilot, we hope to come to an agreeable resolution. And we hope to be able to develop a community solar project here in Southern Maryland that will benefit all of our customer-members.