Center for Property Rights

Duel⁠i⁠ng Solar Amendmen⁠t⁠s De⁠t⁠erm⁠i⁠ne Who W⁠i⁠ll Pay

By: Guest Author / 2016

Sunshine may be free and abundant in the Sunshine State, but there’s no free lunch when it comes to paying for solar energy.

That much should be clear as day at this stage in Florida’s long-running solar wars, even as election season ads focus on good-guys and bad-guys.

Next month, voters will consider the first of two proposed constitutional amendments offering decidedly different approaches for how to pay for solar power. Those pushing the proposals also make for otherwise strange bedfellows.

Amendment 1is a straightforward pay-to-play proposition: You want it you pay for it.

It allows residents the right to own or lease solar energy equipment for personal use. It would also ensure that those who do not produce their own solar energy would not be required to subsidizethe costs of maintaining electric grid access for those who do.

As a popular ballot initiative, Amendment 1 received more than720,000 petition signatures — about 37,000 more than needed to appear on the November ballot.

Amendment 4would exempt solar equipment from residential, commercial and industrial property taxes. It’s the latest statewide public incentive designed to make solar power more affordable and thereby more widely used.

Many Amendment 4 supporters oppose Amendment 1 on the grounds that failing to offset costs makes solar energy more expensive for those who want it.

Amendment 4was createdby the Legislature, and required no public signatures. Legislatively approved amendments appear on stateprimary ballots. Voters will weigh-in on Aug. 30.

The amendments do not cancel each other out, but they will go a long way to determine who will pay.Another tax break for solar users? Higher utility bills for some or all ratepayers?

In both cases, a 60 percent supermajority is necessary for an amendment to be added to the state constitution.

Known as the “Choice Initiative,” Amendment 1 is backed by a political action committee calledConsumers for Smart Solar. The group self-identifies as a coalition of business, civic, and faith-based organizations working for commonsense consumer protections. Some of those businesses are utilities, which naturally don’t want to have to subsidize the competition.

A review of the PAC’s financial recordsshowsDuke Energy has contributed $2.7 million to the cause since November of last year. Gulf Power Company has contributed $1.66 million, Tampa Electric Company $2.35 million and Florida Power and Light $4.14 million.

The Florida League of Women Voters, which last week endorsed the tax exemption/spread-the-cost approach, decried Amendment 1 as being “almost fully funded by utilities anxious to cement their control of solar power.”

Unmentioned by the League was the $1.6 million contributed to the anti-subsidy movement by socially conscious interest groups, including the National Black Chamber of Commerce, the Energy and Social Justice Project, the Hispanic Council for Reform and Education, and the 60-Plus Association.

Their shared concern is the passing of expensive solar costs onto those who can least afford it, a circumstance that new tax breaks could exacerbate.

The consumer-protection groups say they oppose exposing their members to solar companies with questionable sales and installation practices, and to subsidizing wealthier solar enthusiasts who will still require grid access and reliable back-up electricity.

“As the ‘oldest state in the nation,’ it is vital that Florida’s seniors are protected from bad actors in the solar industry, as they remain the most vulnerable age group to higher utility bills,”Matthew Kandrach, vice president of the 60 Plus Association, said in a statement.

The Orlando chapter of theNational Congress for Black Women added, “Persons who cannot afford solar energy will not have the benefit of solar energy. Yet, those persons will suffer utility rate increases needed to subsidize the use or intermittent use of the utility grid by solar energy users.”

Other groups uncharacteristically aligned with the utilities are the Florida Council of Safe Communities, Floridians for Government Accountability and the Florida Chapter of the NAACP.

Not to be outdone, backers of Amendment 4 bring their own muscle to the fight, most notably theFlorida Legislature.

The tax exemption measure was filed directly with the Secretary of State after unanimously clearing both the Republican-dominatedHouseandSenate. Out of 48 total prior committee votes, only 1 committee member voted against it.

If successful, the exemptions would begin in 2018, and continue for 20 years.

The largelyRepublican-driven proposal has garnered the support of theSouthern Alliance for Clean Energy, an environmental activist group whose political arm has targeted legislative conservatives in recent years with respect to the organization’s climate-change agenda.

According to records lodged with the state Division of Elections, the Southern Alliance for Clean Energy Action Fund has contributed well over half the $2 million funding total forFloridians for Solar Choice, a confusingly similar name of the lead PAC opposing the pay-as-you-goamendment.

Stephen Smith, executive director for the Southern Alliance, has had choice words for the Amendment 1 solar Choice Initiative, while curiously overlooking its minority supporters.

“The deceptive utility company backed Amendment 1 in November is designed to limit customer-owned solar power, thus protecting utility profits,” he said.

Utility companies are widelyunpopular, but in reality their profits are determined by the Florida Public Service Commission, a state government regulatory body.

“The Public Service Commission has the responsibility to set rates that are fair, just and reasonable,”declares the PSC website. “It is also required to set rates to allow utility investors an opportunity to earn a reasonable return on their investment.”

Floridians for Solar Choice failed to obtain enough signatures for a different solar friendly, cost-shifting amendment in 2015. But if successful this time, next month’s tax-exemption proposal would go a long way toward making solar co-ops more cost-effective, at least for those being subsidized.

FL-SUN, a project of theCommunity Power Network, a Washington D.C.-based solar advocacy organization receivingpublic grants and private foundation funding, is developing cooperative pools of interested residents in St. Petersburg and Orange County to negotiate bulk discounts from solar installation companies. It’s also looking to expand into Brevard, Volusia, Sarasota and Alachua counties.

Much of the plan’s financial viability, however, hinges on the success or failure of Amendment 1.

The Sarasota-basedGulf Coast Community Foundationwas an early supporter of the co-op model, according to the Florida League of Women Voters.

“We are excited about this creative free-market approach, which places power in the hands of our Gulf Coast citizens,”said CEO Mark Pritchett.

Pritchett, a former vice president atEnterprise Florida, the state government’s tax incentive behemoth, might find plenty of disagreement with his definition of “free-market approach.”

On top of shifting costs among ratepayers and creating new tax exemptions, a number of public incentives already exist to make solar equipment and solar energy production artificially cheaper.

Dozens of local, state and utility perksare available in the form of tax credits, green building incentives, loan programs, performance-based initiatives, grants and rebates. That’s in addition to the30-percent federal tax creditfor homes and commercial properties.

Not exactly a free-market, contends James Taylor, senior fellow at theJames Madison Institute, a Tallahassee-based free-market think tank.

Taylor sounded alarm bells the last time Floridians for Solar Choice and its supporters attempted to tinker with the state constitution.

In a paper calledSolar Carve Outs in the Sunshine State, he warned of special-interest subsidies distorting energy prices thatwould then be passed onto ratepayers in the form of higher utility bills. Taylor added that regulatory perks would create a permanent dependency on government and enshrine a lasting advantage over competitors.