LITTLE ROCK — After a rule change from the state Public Service Commission, solar panels on a state-owned building in Little Rock were activated for the first time Tuesday.
In 2009, the Arkansas Building Authority spent $552,251 in federal stimulus funds that Arkansas had received to outfit a building it was leasing at 900 W. Capitol Ave. in Little Rock with the solar panels, said Susan Wilson, deputy director of the building authority.
When the authority purchased the building in 2010, it discovered it could not use the panels unless it signed a contract with Entergy Corp. containing a clause — called an indemnity clause — that required it to reimburse Entergy for any damage the panels might do to the utility’s equipment.
Public Service Commission rules had required such a clause, but the authority was not legally allowed to sign one.
The inability of a state agency to sign an indemnity clause stems from a 2009 issue between Arkansas Tech University and Entergy that was appealed from the commission to the Arkansas Court of Appeals.
Court of Appeals Judge David Glover wrote in the 2011 appeal in Entergy v. Arkansas Public Service Commission that if a state agency signs an indemnity clause and takes on the debt of a utility, it violates Article 12, Section 12 of the Arkansas Constitution.
That section says “the state shall never assume, or pay the debt or liability of any county, town, city or other corporation whatever.”
In the opinion, Glover wrote that signing such a clause would also unlawfully waive the state’s sovereign immunity, found in Article 5, Section 20 of the Arkansas Constitution, which states that Arkansas “shall never be made defendant in any of her courts.”
Glover wrote that an indemnity clause “is in irreconcilable conflict” with the two sections.
In June, the commission changed its rules to exempt the state, local and federal governments from signing such agreements.
Commission Director John Bethel said the rule went into effect in July.
“That was giving difficulty to state and federal and local government entities that owned a facility because there are constitutional provisions that prevent them from agreeing to indemnity,” Bethel said.
Authority Director Anne Laidlaw said Tuesday that with the indemnity issue resolved, the paperwork with Entergy has been completed and the authority could connect the panels, which face east in a parking lot at the Chester Street and Capitol Avenue.
The building was once the Dillard’s headquarters. It houses the State Library, the Arkansas Development Finance Authority, the Arkansas Science and Technology Authority and the Arkansas Economic Development Commission.
The building was constructed in 1948 and had been vacant for several years before a $12.5 million renovation with high-efficiency-energy features by a private company. Federal stimulus funds were used for $1.3 million of the renovation.
The authority initially agreed to lease the space with an option to buy, and in March 2010, the state purchased the building for $18.5 million, Wilson said.
The building has been touted as Arkansas’ first “green” building because it meets several environmental and energyefficient standards.
On the basis of the building’s electricity usage and available sunlight, the panels are expected to produce between 3 percent and 7 percent of the energy the building needs, said Scott Hamilton, director of the Arkansas Energy Office.
He said other state agencies, particularly universities, have shown interest in solar panels.
“They were certainly waiting to see how this would be resolved,” Hamilton said.
In late August, Lt. Gov. Mark Darr criticized in his weekly column efforts by the government to “go green.” “We have a $500,000 solar panel at a state building in Little Rock that was paid for with “stimulus” money. No energy has been saved with this as it has never even been turned on, yet we have been told that it was “100 percent worth the money.”
His spokesman, Sarah Beth Lowe, clarified that Darr was speaking about the building managed by the Arkansas Building Authority.
Bethel said he knew of only one other solar-energy project on hold because of the indemnity clause issue.
The National Park Service will now be able to turn on the solar panels it installed in Hot Springs National Park, Bethel said.
Superintendent of Hot Springs National Park Josie Fernandez said she hasn’t heard anything official from the commission. She said panels were installed in the park’s maintenance division in 2006 and on the roof of the Lamar Bathhouse on Bathhouse Row in Hot Springs in 2010.
“We’ve been battling this thing back and forth. We were stuck with the panels and not being able to connect them,” Fernandez said. “We just wanted to harness the power of the sun for electricity.”
Federal and Arkansas law requires utility companies to offer net metering, where customers can use solar, wind, hydroelectric geothermal or biomass resources to generate electricity to offset the cost of energy provided by the utility.
Upon request, the utility must install metering equipment to measure the amount of electricity supplied by the utility and the amount of electricity generated by the customer that is fed back to the utility company, resulting in a net usage amount.
“The meter runs forward and backward,” Bethel said.
If the customer produces more energy than he consumes then the balance is applied to the next month’s bill for up to one year.
As of the end of 2011, there were 214 installed net metering systems in the state, Bethel said. There were more than 1.35 million electric utility customers, meaning about 0.0158 percent of customers participate in the net metering program, Bethel said.
Bethel said the energy is limited to 25 kilowatts for residential systems and 300 kilowatts for commercial systems.
A kilowatt is equal to 1,000 watts. A watt is equal to one volt-ampere.
He said 211 systems are capable of producing 25 kilowatts or less. Only one system is capable of producing 100 kilowatts.
Information for this article was contributed by Michael R. Wickline of the Arkansas Democrat-Gazette.
Front Section, Pages 1 on 09/12/2012