Why Louisiana Solar Sucks

Since the Obama administration took office, solar net energy metering in Louisiana has grown 180 percent on an average annual basis. So what’s the problem?

The answer is that Louisiana solar incentives are welfare for the state’s wealthy, according to a Louisiana Public Services Commission report (PDF). It was drafted by Louisiana State University professor David Dismukes, an economist with “extensive experience in all aspects of the natural gas industry.” Dismukes admits in its early pages that net metering’s exponential growth ballooned state tax incentives to an average of $23 million a year since 2009, which led to “concerns raised by utilities” about breached capacity limits while filing complaints with the LPSC, who in turn decided to revisit its NEM policy.

Hence, Dismukes’ report, which notes that it was unable to acquire “detailed hourly information…from the LPSC-jurisdictional utilities” it was charged with studying. Maybe this is why the study doesn’t appear anywhere on the LPSC’s official news page, which hasn’t been updated since last year — and barely updated at that.

There are a few variables to factor into LPSC and Dismukes’ study, which offers “no explicit policy recommendations” other than the “noncontroversial” suggestion that “at its earliest opportunity the Commission adopt a standardized reporting format for utilities to provide solar NEM information on an annual basis.” One variable is that, as Wikipedia elegantly puts it, “Louisiana’s petroleum and gas industry, as well as its subsidiary industries such as transport and refining, have dominated Louisiana’s economy since the 1940s.” Another is Louisiana governor Bobby Jindal’s recent budget, which targeted the state’s generous solar incentives for rollback while blaming its $1.6 billion shortfall on cratering oil prices. Considering that claim was demolished by one of only two economists in charge of revenue projections for Louisiana’s state government, and that Jindal has received more than a cool million dollars in donations from the petroleum and gas industry — which Jindal saved billions last year by signing a bill killing off environmental lawsuits — and suddenly $23 million a year for solar net energy metering subsidies starts looking like serious chump change.

“Solar energy is a permanent part of the electrical grid, and it’s time that an unbiased assessment is conducted of how it fits into our existing infrastructure,” Gulf States Renewable Energy Industries Association president Tucker Crawford said last year, explaining that Dismukes’ “direct conflict of interest and blatant bias” toward the natural gas industry should have disqualified him from consideration by LPSC. “This study is a distortion of the truth, an assault on consumer energy choice and property rights by the monopoly utilities and certain allies on the Commission,” GSREIA added this month in a pretty thorough takedown, after Dismukes’ study finally arrived “several months overdue.”

But you don’t really need GSREIA’s detailed rebuttal, or even Dismukes’ wonky 115-page study itself, to see the greater power struggle at play in Louisiana, which was once sued by the U.S. government for ownership of its rich oil and gas deposits in the Gulf of Mexico. Tectonic energy infrastructure shifts, in this case from oil to solar, are messy but necessary, and there’s no way to stop them — which is why Dismukes’ only explicit policy recommendation is that the LPSC starts demanding better reporting standards from the utilities when it comes to net metering. The Alliance for Affordable Energy had the best headline on the flame war: “Pro-Utility Consultant Inadvertently Writes Pro-Solar Report.” Once AAE “corrected” Dismukes’ tardy study — “which mistakenly applied the state tax credit as a cost in the analysis” rather than a benefit to customers, which it is “in all cases of utility electric rate treatment” — the “direct conflict of interest” GSREIA complained of became harder to ignore.

“At no time ever, have these tax credits been added to the rate as a cost to customers,” AAE added, mentioning that it’s releasing a white paper in April to “clear up the confusion” of Dismukes’ “math-olympics.” Until then, it’s safe to say that even if Dismukes’ number-crunching survives the controversy, $23 million a year for a net metering subsidy is a drop in Louisiana’s bucket compared to the hundred of billions it annually generates in gross state product. LPSC could have saved the state money by not paying for Dismukes’ study in the first place.