Like many other business leaders in Arkansas, I was disappointed by the one-sided recent Arkansas Business article, which addresses the development of private solar projects and the firms constructing those facilities. The article lacked any perspective from the numerous Arkansas businesses that, along with their employees and customers, are forced to pay higher electric rates to subsidize those projects. As Arkansans are confronted with the economic and public health concerns surrounding the COVID-19 pandemic, the last thing anyone needs is an unfair, multi-million dollar increase in electric rates to subsidize a small group of private solar developers.
Maintaining the status quo for these private solar systems is bad public policy, which is something the Arkansas Public Service Commission should avoid. The 99 percent of Arkansas businesses and citizens without private solar systems do not need rate increases just so the 1 percent with solar projects and their developers can financially benefit. Job gains for the private solar developers offset by job losses in other sectors is not good for the Arkansas economy.
The private solar developers depict themselves as competitors in the market for electricity, yet Arkansas businesses are currently forced to pay these private solar systems more than three times the wholesale market price for electricity. It is outrageous and wrong to prop up these projects by forcing Arkansas businesses to pay artificially high prices for energy when electricity, including solar, is available in the market for a fraction of the cost. That is not competition; it is subsidization.
Government entities and their citizens were struggling financially before the COVID-19 pandemic hit us. For governments and school districts, there are more economic options to reduce electricity costs and pursue renewable energy objectives. Many electric utilities in Arkansas have invested in renewable energy resources both within Arkansas and in neighboring states. Just this week, the City of Conway’s municipal electric utility announced a new 132 MW solar project to supply the city with long-term cost-effective solar energy. These large-scale facilities are the best way to bring renewable energy to the most Arkansans at the lowest cost.
Neither the Arkansas General Assembly nor the Governor intended for Arkansas businesses, their employees and their customers to pay higher electric rates to benefit a small group of private solar systems. The legislation passed in 2015 and again in 2019 requires the APSC to establish rates for these private solar facilities that ensure that they pay their fair share of the cost of the electric grid that they use. As the legislative records reflect, during the 2019 legislative hearings, APSC Chairman Ted Thomas testified that the 2019 legislation does not advocate continuation of the existing subsidy. Private solar developers are trying to force Arkansans to provide a subsidy to their industry that the U.S. Congress refused to include in the recently passed Coronavirus Aid, Relief, and Economic Security Act.
Customers who want to invest in private solar projects should be able to do so, as long as they pay for their fair share of the electric grid that they use and their doing so should not require other customers to buy that electricity at three times the price. Under no circumstance should businesses and other customers in Arkansas be forced to pay higher electric rates to subsidize private solar projects. Low electric rates are a valuable economic development tool for Arkansas, and they will be critical to our economic recovery and stability.
Ray Dillon is the former President and CEO of Deltic Timber Corporation. He currently serves as Chairman of the Board of America’s Car Mart and is a Director on Stone Bank’s Board of Directors. He also served terms as Chairman of both the Arkansas State Chamber of Commerce and the Associated Industries of Arkansas. He remains active in economic development in Arkansas.
Editor’s Note: The opinions expressed in op-eds are those of the authors and do not necessarily reflect those of Arkansas Money & Politics or About You Media Group.