In 2015, Florida energy consumers paid less on average per kilowatt hour than 14 states in deregulated markets. Among the top 20 US states that paid the lowest per kilowatt on average in 2015, 14 operate regulated markets.

Only utilities are legally permitted to sell electricity in a regulated market.

Amendment 1 guarantees customers the right to own and lease solar equipment for the purpose of producing electricity. What Amendment 1 does NOT allow is for customers to generate their own electricity and sell it to consumers as third parties. Opponents of the amendment see it as a road block to solar-producing companies other than utilities selling solar power to willing consumers, a scenario they see as a “fair market solution.”

Third parties are not legally permitted to sell electricity in a regulated market. Whether Amendment 1 passes or not, that fact won’t change.

Many solar proponents in the Sunshine State, especially those who oppose Amendment 1, would love to see Florida implement solar farms like the ones recently approved in Massachusetts, which allow solar producing entities other than traditional utilities to sell solar generated electricity to consumers.

This scenario can occur in deregulated markets. Massachusetts is a part of a deregulated New England energy market whose grid is overseen by ISO-New England, a non profit entity tasked with preserving the balance of electricity’s supply and demand on the New England Grid.

But what has been voted into law in Massachusetts can’t happen in a regulated energy market, which is structured so that only the utilities—who have endured rigorous safety regulation—can sell energy to customers.

Opponents of Amendment 1 cling to the point that without competition utilities will thwart solar’s growth in Florida for their own revenue-generating benefit.

Perhaps the rage that fuels the opposition’s fight against Amendment 1 would be better suited fighting to change Florida’s entire energy market structure. Although, we’ve already discussed how consumers in deregulated markets don’t always enjoy cheaper electricity than consumers in regulated markets.  

Regardless, what’s at stake with Amendment 1’s vote has nothing to do with Florida’s utilities trying to maintain marketshare.  

Utilities support this Amendment and have spent more than $20 million to see that it passes. Why?

Across America, utilities aren't particularly liked by consumers.

Here in Florida, we really dislike them. So when we see the big money utilities are throwing at this amendment, it’s only natural to wonder if something is afoul. Consumers just don't trust our electric utilities, especially in Florida where we serve a life sentence with them with no chance for parole.

Utilities, for the most part, know where they stand in the minds of most consumers. That's why their preferred method of progress is to raise money and lobby the government as opposed to running public relations and community outreach to mend the relationship they have with consumers.

It's understandable why the opposition to Amendment 1 is urging voters to "follow the money" and learn the truth. The hope with this kind of education tactic is that the opposition can grow its base by tapping into Florida residents’ distrust of utilities.

There is much more truth to understand in order to make a voting decision that won't derail solar's future in Florida before it really has a chance to begin. Amendment 1 isn’t about utilities protecting their marketshare. It’s about protecting consumers, whether they choose to go solar or not.         

Amendment 1 will not affect solar customers' lawful right to sell excess electricity back to the utility.

Solar customers are connected to the grid. When the sun goes down, solar customers continue to consume power distributed from the grid. In the language of Amendment 1, this is called back up power. It refers to the power solar customers draw from the grid during the times of the day when they are unable to generate electricity from their solar equipment.

One of the benefits of solar is the potential for customers to create more energy that they consume and sell that surplus back to the grid. This is a process called net metering and it exists as a safety measure—the kind utilities are mandated by law to provide.

Energy is not easily stored. When you generate it, you must use it immediately. Solar-generated energy that is unused by the solar customer has to go somewhere, otherwise the system that generated it is in danger. Enter net metering, a process that is mandated by law in both regulated and deregulated markets. Florida statute 366.91(6) requires utilities buy excess energy produced by solar customers.

Solar customers love net metering, and for good reason. It’s a way to potentially earn money. By selling energy back to the grid, solar customers can earn credits from the utility. Not only are they generating clean energy and saving money by not having to buy energy from the utility, but they’re also offsetting the cost of the energy they purchase from the grid (back up power) through what they earn thanks to net metering.

Amendment 1 supporters cry foul at any attempt to disrupt net metering, claiming that monopolistic utilities are trying to maintain their stranglehold on the energy revenue paid by consumers.

Amendment 1 does not involve net metering in any way. Whether the bill passes or not, net metering will continue to exist in Florida by law, allowing solar customers to sell excess generation back to the utility.

As we’ve discussed, the profits that utilities in Florida can make are capped at a defined percentage range so the TECOs, FP&Ls, and Dukes of the Sunshine State can’t act as monopolies.

Utilities in Florida may very well choose to invest in solar generation as they evolve their infrastructures to include cleaner energy sources. If they do, they have the legal right to sell that electricity to consumers. Their doing so, however, will in no way thwart Florida residents from owning or leasing their own solar equipment and using it to generate electricity for their own consumption. That right is currently guaranteed by Florida Statute 163.04 and will become constitutional law should Amendment 1 pass this November.

Whether Amendment 1 passes or not, solar customers will be able to sell their excess energy back to the utility, who must purchase it as mandated by Florida Statute 366.91(6). What solar customers can’t do today, nor will they be able to do in the future so long as Florida operates a regulated energy market, is sell energy as third parties.     

Amendment 1 seeks to solve the key issue that has halted solar’s growth across America.

We need only look at a handful of other states, many of which are in deregulated markets, to realize that lack of competition isn’t stopping solar’s growth. Consumers are.

When solar drastically penetrates an energy market, a shift in costs occurs that places a heavy burden on customers who chose not to install solar. In effect, solar customers are being subsidized by non-solar customers. Across the US, this shift in costs and the tenacious debate on how to handle it has halted solar expansion in its tracks.

At its core, Amendment 1 seeks to preemptively solve the problem by ensuring that non-solar customers “are not required to subsidize the costs of backup power and electric grid access” of solar customers.

This is what we’re really voting on in November. It’s worth repeating: state and local governments will ensure “that consumers who do not choose to install solar are not required to subsidize the costs of backup power and electric grid access to those who do.”  

This is the key to the amendment.

Ahmad Faruqui is an energy economist who has testified before energy commissions in 19 states. He’s advised eight governments and lectured on six continents. His areas of expertise include rate design, energy efficiency, distributed energy resources, advanced metering infrastructure, plug-in electric vehicles, energy storage, inter-fuel substitution, combined heat and power, microgrids, and demand forecasting.

In 2014 I interviewed Mr. Faruqui about the future of solar generation in the US. This is what he had to say about the problem that he felt had brought solar growth in the US to a point of inflection:

“Even when the sun goes down, solar customers are still consuming power. Where is that coming from? It’s coming from the grid—the grid being the wires, the transformers, the circuits, the feeders—all of that is still there even if you have solar on your roof. That currently is something that solar customers are not paying for. They’re essentially using the grid as a free battery. The issue is, the battery is not free. Someone has to pay for it.”

Mr. Faruqui continued to describe biggest problem he believes solar faces in America:

“The bill savings that solar customers get are really not coming from the utility, they’re coming from their neighbors. In large measure, this concept has created an inequity among customers. If you don’t have solar, you’re basically paying for the savings that the solar customer is getting. The bill reductions [for solar customers] are not real bill reductions. There is a cross subsidy going on. In a sense, it’s a tax on the [non-solar] neighbors. Every time one neighbor puts solar on their roof, they’re taxing the other neighbors…without them knowing about it. That was OK, when solar was small. But at some point, we have to level the playing field.”      

That was in 2014. Two years later, solar customers in just about every state with more advanced solar pursuits than Florida (which is just about every state with solar pursuits) have woken up to the inequity and are demanding the playing field be leveled.  

Other sunny states in the US are dealing with the conundrum brought about by cost shifting as solar has become increasingly ubiquitous. Nevada, Arizona, California, and Texas are just a few of the larger states with plenty of sun whose solar aspirations have hit a wall now that non-solar customers have realized en masse they’re paying higher costs as a result of their solar neighbors paying less.  

When it comes to solar penetration, the Sunshine State is at the back of the pack in the US—which means we can learn from the triumphs and missteps of our fellow states.

The real problem, unfortunately, is that none of the more advanced solar states have a definitive solution for cost shifting. Several of these states are exploring the possibility of intricate rate designs that aim to ensure fairness for solar and non-solar customers.

If Florida hopes for a solar future, the issue of cost-shifting must be met head-on. Amendment 1 is a crucial initial step because it would preemptively solve at the state’s constitutional level the problems cost shifting will inevitably stir in Florida.

Amendment 1’s language states exactly what the bill aims to accomplish.

It’s worth noting (again) that Florida statute 163.04 grants citizens the right to own and lease solar equipment and to generate their own electricity. Amendment 1 affirms those rights and guarantees them in the Florida’s constitution.

It’s also worth noting that state and local governments are currently tasked with protecting consumer rights and public health, safety and welfare. Amendment 1 also affirms this truth.

Opponents of Amendment 1 assert the language of the bill is an attempt to deceive and sound pro-solar, when it’s not. They often point to two sets of circumstances the amendment proposes that are already law. Florida’s Supreme Court disagreed when it ruled 4-3 that Amendment 1’s language is unambiguous and meets the legal standards to go before voters.

Opponents of Amendment 1 still think the bill’s language is misleading and believe the fact that it narrowly passed the Court’s vote on clarity is all the more reason to label the amendment a dirty trick to fool voters on election day.

The words of Amendment 1 had their day in court and a majority of Florida justices affirmed their intention to be forthright and legally sound.

Now, it’s up to voters.   

Whether Amendment 1 passes on not, several circumstances will continue to exist in Florida under full protection of the law:
 

Florida will still be a regulated energy market.

​

State and local governments will still have the responsibility to protect consumer rights and public health, safety and welfare.

 

Electric utilities will still be regulated by Florida’s Public Service Commission, which ensures utilities cannot act as monopolies and overcharge for electricity due to high demand and lack of competition.

 

Florida residents will still be allowed to buy or lease solar equipment and generate their own electricity.

 

Net metering will still be legal, thereby allowing solar customers to sell excess energy back to the utility.  

 

Third parties will not be permitted to sell electricity (solar or other) to customers.

Hanging in the balance with Amendment 1 is the future of cost shifting from solar customers to those who choose not to install solar. The problem Amendment 1 seeks to resolve has proven to be solar’s biggest roadblock in both regulated and deregulated energy markets throughout the US.  

If the rest of the country’s tribulations of growing solar’s presence in a way that’s fair and just to all electricity consumers are any indication of what Florida can expect as solar generation penetrates our market, then voting YES on Amendment 1 is essential to ensure solar’s path to growth in the Sunshine State doesn’t reach a dead end before it really begins.        

Fred Smith is a resident of Florida’s Hillsborough County and a customer of Tampa Electric Company (TECO). He has no professional association with any electric utilities or solar generation companies. Since 2014 he has worked closely with experts in the energy industry whose companies specialize in demand side energy management in deregulated markets nationwide. Email Fred HERE.

William Cratty was consulted to ensure this article’s accuracy concerning energy markets and utilities. William has worked in the energy industry since 1965, and has been a technical sales executive for CPower Energy Management since 2007. He holds a bachelor’s degree in engineering from the US Merchant Marine Academy and has been granted three US patents for his design of a high availability power system.


Reference articles:

5 State Energy Races to Watch this November

Solar Advocated Ramp up Pressure on Florida Ballot Initiative

Coalition Activists Team Oppose Utility Supported Solar Power Amendment in Florida

Florida Solar Energy Subsidies and Personal Solar Use Amendment 1 (2016)

Fact checking Amendment 1

Florida’s Regulated Monopoly Utility Model Discourages Competition, Costs Customers Dearly

Florida Energy Regulation

Proposed Florida amendments would set solar energy policy

Ahmad Faruqui BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA

The History of US Energy Markets

Arizona Turns to Solar Valuation After Demand Charge Decision

Inside Arizona Utilities Push to Reform Net Metering

Are Residential Demand Charges the Best Rate Reform for DERs?

10 State Rooftop Solar Debates to Watch in 2016 and Beyond

Inside the Contentious Fight Over Rooftop Solar in Florida

A common confusion over net metering is undermining utilities and the grid

As the solar industry matures, business gets a little more complicated

Florida Public Service Commission

Electric Utilities, Deregulation and Restructuring of U.S. and Restructuring of U.S. Electricity Markets

History of Deregulation of Energy Prices in the United States: How will this trend affect investment in renewables?

Are Big Power Companies Pulling a Fast One on Florida Voters?

Amendment 1 would preserve rights, protect consumers

Energy Primer: a handbook of energy market basics

How Florida Residents May Lose The Battle For Attainable Solar Energy