State to utilities: No risk to share

Panel hears on metering pact

— Attorneys for the state argued before the Public Service Commission on Tuesday that ratepayers should not have to agree to protect utility companies from harm or to get liability insurance in order to build solar panels, wind turbines, or other electricity generating facilities that can earn them credits against their utility bills.

A facility that wants to generate its own electricity currently has to sign a “net metering agreement.” Under the agreement, the facility is charged for electricity that it uses from a utility company, and receives credits for power it generates and feeds back to the utility.

The standard net metering agreement in use now, which was approved by the commission in 2002, includes a requirement that “each party shall indemnify the other party” against losses, damage expenses, and liability for injury to person or property, or death of someone coming in contact with the other party’s equipment.

But last year the Arkansas Court of Appeals ruled that a state agency cannot sign a contract with such a provision, prompting the commission to seek comments about how it can revise its standard agreement to encourage net metering.

“I wouldn’t want this commission’s rules to be a barrier to the development of renewable resources,” commission Chairman Colette Honorable said.

Utility companies think that ratepayers who generate their own electricity should have to agree to protect the utility. They’ve proposed a new net metering agreement that requires state and federal agencies, municipalities and counties to obtain an insurance policy that has a minimum limit of liability of $2 million per occurrence and $2 million in the aggregate per year.

For other customers, the original indemnification clause would remain in place.

The state and the commission’s staff have argued that is unnecessary because in the 10 years since net metering has been allowed in Arkansas, there have been no reports of incidents where an indemnity clause was invoked.

As of 2011 there were 214 electricity generating installations, mostly solar panels, according to a brief filed by commission staff.

The Arkansas Court of Appeals ruling last year related to a different type of agreement between Entergy and Arkansas Tech University. The sixjudge panel said it would be unconstitutional for an agency to agree to an indemnity clause, pointing to Article 12, Section 12 of the state constitution, which says “the state shall never assume, or pay the debt or liability of any county, town, city or other corporation whatever.”

The indemnification clause is the reason that solar panels installed at a state-owned building at 900 W. Capitol Ave. have not yet been brought online.

The state attorney general’s office argued in filings and before the commission that adding the indemnity requirement to the contract in 2002 was a compromise, and one that is no longer necessary.

“It appears that the possibility of any liability has proven to be more remote than was even predicted by the APSC in 2002,” Assistant Attorney General Emon Mahony wrote.

The utility companies said they still need some kind of insurance or protection.

“A good safety record does not mean that there is no appreciable risk of harm,” the utility companies wrote in a comment submitted jointly by Entergy Arkansas Inc., Southwestern Electric Power Co., the Empire District Electric Co., Oklahoma Gas and Electric Co. and the Electric Cooperatives of Arkansas.

Business, Pages 23 on 04/11/2012

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