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  • Writer's pictureThe San Juan Daily Star

Solar industry group: Fiscal board’s determination could put net metering at risk

P.J. Wilson, spokesman for the Solar and Energy Storage Association of Puerto Rico

By The Star Staff

While Puerto Rico’s use of rooftop solar systems grew to 12% from 4% in three years, the objections raised by the Financial Oversight and Management Board against Act 10 of 2024, which would stop the Puerto Rico Energy Bureau (PREB) from making any changes to the net metering and energy distribution policy until at least 2031, could hurt the sector’s growth.

The Financial Oversight and Management Board recently told the government to refrain from executing Act 10 of 2024 because it is inconsistent with the Puerto Rico Oversight, Management and Economic Stability Act and the Puerto Rico Electric Power Authority’s (PREPA) certified fiscal plan.

The law would prevent the PREB from changing the current net metering program, which allows consumers to get credit for energy produced.

“The Oversight Board has significant concerns about the implications of the Act on Puerto Rico’s energy transformation under the Fiscal Plans, namely its effect on PREB. The PREPA Fiscal Plan requires that PREB determine whether to make changes to the net metering system and initiate those changes by April 11, 2024,” a letter from the oversight board said. “Act 10 postpones that date by at least six years and price modifications for current and new net metering program participants for 20 years after PREB changes the net metering policy. As such, the Act is directly at odds with the PREPA Fiscal Plan.”

Act 10 is also significantly inconsistent with the fiscal plan’s requirement that the PREB be able to operate independently and “free from any direct or indirect political influence or interference,” the board said.

Solar and Energy Storage Association of Puerto Rico (SESA-PR) spokesman P.J. Wilson said at a recent seminar that net metering would positively impact the island’s finances.

One of the principal arguments critics of continuing the net metering policy use is an allegation that it provides a subsidy to customers who have solar projects on their sites at the expense of other customers of LUMA, the private operator of the island’s electricity transmission and distribution system. By allowing the solar customer to receive a credit at roughly the retail rate, which equates to some 24 cents per kilowatt-hour (kWh), critics of net metering argue that this subsidizes the electricity use of onsite solar customers at the expense of all other customers.

SESA-PR released a report by Gabel Associates that places the financial value of net metered solar energy in Puerto Rico at $0.33 per kWh, more than the net metering credit of $0.24 per kWh.

“The direct benefit to the grid and all other ratepayers is 33 cents per kWh, which is 36% greater than the retail rate of 24 cents per kWh,” the Gabel report notes. “Accordingly, there is no subsidy flowing from other ratepayers to on-site solar customers and, in fact, there are benefits flowing to all other customers from the excess solar power produced by net metered solar customers.”

The avoided energy costs or charges that are eliminated by making a change to solar are $0.27 per kWh, according to the report.

The oversight board said net metering programs can be an effective way to encourage individual consumers to invest in green energy and, therefore, require careful study and calibration by an experienced regulator insulated from political influence that compromises the objective evaluation of the policy.

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