Oct. 18--The policy director of a think tank hired by Florida's largest electric utilities admitted at a conference this month what opponents have claimed for months: The industry attempted to deceive voters into supporting restrictions on the expansion of solar by shrouding Amendment 1 as a pro-solar amendment.
Sal Nuzzo, a vice president at the James Madison Institute in Tallahassee, detailed the strategy used by the state's largest utilities to create and finance Amendment 1 at the State Energy/Environment Leadership Summit in Nashville on Oct. 2.
Nuzzo called the amendment, which has received more than $21 million in utility industry financing, "an incredibly savvy maneuver" that "would completely negate anything they (pro-solar interests) would try to do either legislatively or constitutionally down the road," according to an audio recording of the event supplied to the Herald/Times.
He offered others a recommendation: "As you guys look at policy in your state, or constitutional ballot initiatives in your state, remember this: Solar polls very well," he said.
"To the degree that we can use a little bit of political jiu-jitsu and take what they're kind of pinning us on and use it to our benefit either in policy, in legislation or in constitutional referendums -- if that's the direction you want to take -- use the language of promoting solar, and kind of, kind of put in these protections for consumers that choose not to install rooftop."
The comments underscore the claims made by opponents to Amendment 1 on the November ballot that the utility-backed political committee, Consumers for Smart Solar, was formed to undercut attempts to allow third-party sales of rooftop solar by leaving voters with the impression that their alternative amendment will expand solar generation in Florida.
Spokeperson for Consumers for Smart Solar, Sarah Bascom, however, contradicted Nuzzo's claims and told the Herald/Times late Tuesday that "Consumers for Smart Solar did not engage or hire or ask JMI to do research regarding the effort."
The solar industry-backed group, Floridians for Solar Choice, wants to encourage a broad-scale solar market in the Sunshine State by using the state Constitution to remove the ban on third-party sales and require lawmakers to allow customers to lease their solar generation to neighbors or building tenants. But the effort failed to get enough signatures to appear on the November ballot. It is expected to return in 2018.
Threat to utilities
Utility investors, like Warren Buffett, and the industry's trade group have warned that distributed energy from solar and wind are long-term threats to the monopoly economics model of the investor-owned utilities. Floridians for Solar Choice claim that the amendment attempts to convince voters that it is pro-solar when it "paves the way for barriers that would penalize solar customers" and adds to the state Constitution "the false assumption that solar customers are 'subsidized' by non-solar customers."
Nuzzo confirmed Tuesday that he made the comments while on a panel for the conference. He disagreed that the strategy was deceptive and instead claimed that the opponents of Amendment 1 "have been rather deceptive about the degree to which solar is already incentivized and already propped up and subject to more crony carve-outs than anything else."
In mailers and television ads for Amendment 1, the utility industry says it will allow customers to "strengthen your right to generate your own solar energy ... protect consumers, particularly our seniors, from scam artists ... and protect consumers who don't choose solar from having to pay higher monthly electric bills."
The Florida Supreme Court approved the amendment language in a 4-3 vote, concluding the proposal was not misleading but did enshrine into the Constitution protections consumers already had.
Justice Barbara Pariente, in her dissenting opinion, called the language "a wolf in sheep's clothing" because it would allow utilities to raise fees on solar customers and was "masquerading as a pro-solar energy initiative."
In the hourlong audio recording acquired by the left-leaning Center for Media and Democracy and the Energy and Policy Institute, Nuzzo told the group that the utility-backed amendment was motivated in part by the popularity of the solar industry's proposal and their ability to win the support of free-market advocates.
"They actually leveraged some of the less savvy, less informed, tea party groups and formed what is now called the Green Tea Movement -- God help us, we're dead and destroyed," Nuzzo said.
"So they come in and they merge and they start a constitutional ballot initiative," he said. "...They go out and sell a ballot initiative saying if you put solar on our rooftop, shouldn't you have ability to sell to your neighbor? Yes, that's free-market ... that's exactly what they were marketing as a free market principle and the tea party got behind this."
Who pays for grid?
He said JMI, a free-market research and policy organization that has ties to the Florida utility industry, saw it differently. Nuzzo explained that they believe that solar users are being subsidized by non-solar users because they don't pay for the fixed costs of maintaining the electricity grid.
"So here's the James Madison Institute, this right-wing think tank, the Koch Brothers-funded group, part of the vast right-wing conspiracy going 'please stop!' " he said. "They wouldn't stop, so the idea was that they were completely and vehemently opposed to any grid maintenance cost being spread out."
Nuzzo said Tuesday that his reference to the Koch brothers was "in jest" but that they had given money to JMI. Nuzzo would not say how much.
According to federal tax documents, JMI has received more than $120,000 from the Charles Koch Institute and Charles Koch Foundation, and Stan Connally, the CEO of Gulf Power, sits on JMI's board of directors. Gulf Power and its affiliates have contributed more than $2.3 million to the utility-backed amendment, which also has received funding from Florida Power & Light, Duke Energy, Tampa Electric Co., and non-profit groups primarily funded by Exxon and the Koch brothers.
Adding to the utility industry's dilemma, Nuzzo told the panel, was the fact that the solar-industry-backed amendment "was actually polling in the 70s."
"Why? Because the tea party was behind it," he said. "We even saw some folks that we would normally play pretty well with -- the chambers of commerce locally, the business community -- was kind of galvanizing behind it. Why? Because if you're not a utility generating organization, this kind of helps you because it makes it a little bit easier for you to go that route and sell it."
He said the other problem with the pro-solar amendment was that "the language of the ballot initiative is mandating in the Florida Constitution that solar is the preferred energy source in the state of Florida. It directed in the Constitution that the Legislature create policy to advance solar interests in the state."
So the utility industry "came to JMI and said you guys are the adults in the room, you're the ones that have access to the research, to the scholarship ... to a lot of the national organizations. We need some help," he said.
Nuzzo said that the utilities also created a political committee, Consumers for Smart Solar, that not only funded the JMI research but then "also, in what I would consider an incredibly savvy maneuver, they put forth their own constitutional ballot initiative.
"That ballot initiative also gathered the 700,000 signatures, but what it said was individuals have the right to own solar equipment, they have the right to install solar equipment and lease it, they have the right to generate as much electricity as they can."
Nuzzo said JMI partnered with the conservative Heartland Institute and a free-market researcher from Florida State University's Devoe Moore Center to conduct the research requested by the utility industry. Consumers for Smart Solar said did not clarify whether or not the organization reached out to these groups for the research assistance.
Together they "built a model" and, in a report released in December, concluded that over 10 years if the solar industry-backed amendment was approved, the cost of maintaining the electricity grid would be shifted from solar customers to non-solar customers -- a $1 billion cost shift "from wealthy solar consumers on to the folks who were not able to install and to the rest of the ratepayers."
It's an argument solar promoters vigorously disagree with. They argue that instead of costing non-solar customers more, solar energy brings more value to the electricity distribution system than it takes away.
Floridians for Solar Choice argues that instead of protecting customers, Amendment 1 imposes barriers to solar expansion in Florida that will cost customers more money in utility bills.
They point to a Brookings Institution study in May that concluded that when solar customers sell their power back to the electric utility through a billing system known as net metering, it helps non-solar customers by reducing the need to build new power plants to meet peak demand, reduces the need for costly grid maintenance, reduces reliance on oil and gas power generation, lowers utility rates, increases energy security and saves customers money.
"The economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers," the Brookings report concluded. "Far from a net cost, net metering is in most cases a net benefit -- for the utility and for non-solar rate-payers." The report also cited several state-based studies that offered similar conclusions.
Nuzzo acknowledged Tuesday that the JMI research looked only at the hypothetical impact of the solar industry-backed proposal and did not take into consideration the net metering studies done by governments in many other states, including those that allow third-party leasing. He said he considers Florida's current net metering law, which pays customers retail rates for the excess energy they sell back to utilities "absolutely the subsidization of solar."
Also at the Oct. 2 meeting, Todd Wynn, director of external affairs at Edison Electric Institute, the trade association for investor-owned utilities, detailed the threat net metering poses to the industry. None of the presenters made any mention of the Brookings report or the reports from several states that have studied the impact of net metering on customer bills.
"If a homeowner had a large enough solar power system, they could essentially zero out their bill," Wynn said, arguing that the cost of maintaining the electrical grid would then be borne by the non-solar customers.
He suggested two solutions are to charge all customers to access the grid, and the other is to reduce the net metering rate so that the utility will not have to pay retail rates for the excess energy.
When asked about what impact Amendment 1 would have to any pro-solar amendment in the future, Nuzzo told the Energy Summit that it is likely to severely limit the Solar Choice amendment in 2018.
"If Amendment 1 passes, in my opinion and the opinion of people far smarter than me, it would completely negate the ability of the Green Tea movement folks to make a ballot initiative that would include subsidization and a cost shift on it," he said. "It would cancel -- it would attempt to cancel -- that one out."
David Pomerantz, executive director of the Energy and Policy Institute, one of the groups that obtained the tape, said the audio reveals that the groups behind Amendment 1 "were very clear about the utilities' plan when they thought the public wasn't listening: They're trying to confuse voters into believing their utility-backed ballot initiative is pro-solar.
"It's a dirty trick, and Floridians should show them that they're too smart to let them get away with it."
Mary Ellen Klas can be reached at meklas@MiamiHerald.com. Follow her on Twitter @MaryEllenKlas
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