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Former Ward 3 Councilmember Mary Cheh snuck a giveaway to the solar industry into her last big environmental bill, bowing to the whims of connected lobbyists and jacking up electric bills across the city in the process. At least, that’s one way you could tell this story.
Here’s another: One of Cheh’s last acts as a lawmaker was to help save solar power in D.C. from a looming crisis, forcing the local utility monopoly to continue subsidizing businesses leading the city’s clean energy transition, offering good jobs for residents, and slashing utility costs for low-income people. There are kernels of truth in both versions of this particular policy debate; as ever, the reality of the situation defies simple, pithy explanations, no matter how much writers like Loose Lips may hope otherwise.
This much LL can say with confidence: Cheh, the longtime head of the Council’s transportation and environment committee, worked with solar power providers to shore up a sector facing some serious headwinds. Her legislation, which passed 12-1 during the Council’s Dec. 20, 2022, meeting, may result in small increases in D.C. utility bills but could also generate a variety of other benefits. And it will certainly help solar companies in the city and the (often wealthy) people who have installed solar panels on their homes.
Whether you think that’s an unforgivable sin, however, is a matter of perspective. LL will note that this country has been subsidizing the fossil fuel industry for hundreds of years while barely lifting a finger to encourage green energy in the face of climate disaster. In the absence of sweeping federal efforts to confront climate change, perhaps this effort to support local solar is the best D.C. can do.
At the very least, it is safe to say that this legislative dispute defies easy explanation. And it became one of the stranger fights in recent Wilson Building history, pitting environmental activists and solar developers against each other in a very unusual bit of intracoalitional turmoil.
“I’m not used to being sideways with them, but there were some in the environmental community who regarded this as some kind of a giveaway to a big energy industry,” Cheh tells LL. “It was a caricature. It was really like a joke, almost. They’re not big oil or gas or anything like that.”
Specifically, advocates called the bill “at best an expensive and roundabout way to get the things we want and at worst a blank check for a group of private companies written by the rest of us,” according to a document prepared by environmentalists that was sent to lawmakers and subsequently forwarded to LL. So what does the legislation actually do? Buckle up.
Back in 2005, the Council followed the lead of other states in requiring local utility companies to adhere to a “renewable portfolio standard,” mandating that 10 percent of their energy supply must come from solar sources in a bid to accelerate the transition away from fossil fuels. Six years later, lawmakers took an even bigger step: They required that this solar energy must be produced locally, so utility giants like Pepco couldn’t simply buy energy from the owners of faraway solar panels to meet this minimum.
The idea was to spur the adoption of solar power by homeowners and property managers in the city, and, by all accounts, the policy was a success: The District has seen roughly a tenfold increase in solar energy capacity connected to its grid over the past 11 years, according to data from the city’s Public Service Commission, which regulates D.C. utilities. Homes with solar panels attached generally generate more energy than their owners need, allowing them to essentially sell that power back to the utility companies in the form of solar renewable energy credits (or SRECs). The companies can meet the renewable portfolio standard by buying those credits or paying an “alternative compliance payment” to the D.C. government, whichever is cheaper.
This system was all working well enough until 2021 rolled around. The city actually began generating so much solar energy that the utilities met the 10 percent threshold, and that pattern should hold through at least 2023. Without the same demand for additional solar, the price of those credits began dropping precipitously: This was bad news not only for homeowners who appreciated making some extra cash, but also the solar installers, who often maintain ownership of the panels to make the process more affordable for new customers (and then get to secure healthy income streams by selling those SRECs).
This shift so alarmed the solar companies that they believed it threatened their entire business model. Without the ability to make money off those credits, they feared their ability to attract outside investment would be completely undermined, limiting their capacity to keep installing new panels. And so they approached Cheh with a solution.
They helped write legislation that would increase the amount of solar energy utilities have to use (up to 15 percent of all local power by 2041), and keep the alternative payments at their current values when they were otherwise set to decline steeply (ensuring that utilities still have the incentive to buy solar credits instead of just paying the city). Cheh became convinced of the wisdom of the idea, particularly after examining Maryland’s experience—outgoing Gov. Larry Hogan vetoed similar attempts to require utilities to use more solar energy in 2016, and renewable credit prices cratered and massively impacted the industry.
“Building solar is capital intensive and the District’s program has just begun attracting outside capital over the past few years; this is enabling more solar to be built faster at less cost to customers and building owners while also making solar accessible to people who have limited capital to invest,” Nicole Rentz, the director of market development and policy for New Columbia Solar, tells LL via email. She spent six years working in Cheh’s office (and three as the Department of Energy & Environment’s legislative director) and helped craft the bill. “That’s good for climate, resilience, equity, and the District’s economy. It displaces fossil fuel use and keeps more money in District residents’ pockets rather than being sent to out-of-state energy suppliers,” she adds.
But these changes would primarily impact Pepco, and the utility monopoly is used to getting its way around the Wilson Building. So Cheh’s bill also allows it to pass some of the increased costs associated with complying with the new solar standard along to its ratepayers, though the exact size of these extra fees have been hotly debated; Cheh thinks it will work out to an extra $1.40 a month, since Pepco will save money on transmission costs as it uses more solar, but economists working with the local chapter of the Sierra Club estimated it would be more like $8 a month.
Accordingly, the legislation caught the eye of the Office of the People’s Counsel, a government agency designed to advocate for utility ratepayers’ interests. It promptly sent out a consumer alert urging the Council to defeat the bill, arguing that it amounts to a $1 billion subsidy for Pepco “paid through higher electric bills for everyone else.” The Council Office of Racial Equity echoed those concerns, writing in its racial equity impact assessment that Cheh’s cost estimates were unrealistic and the legislation was likely to help “wealthy residents (most likely white) gain more wealth at the expense of everyone else (most likely residents of color),” noting that many low-income households are already burdened by high utility costs.
Many prominent environmental groups, including the Sierra Club, raised similar issues as the bill advanced. That put them on the same side as some of their frequent enemies (particularly the influential Apartment and Office Building Association of Metropolitan Washington, which lobbied against the bill over fears it would increase utility costs for landlords) and crosswise with their traditional allies in the solar developers and Cheh.
“Rent is high in this city and now we’re trying to make energy prices even higher,” says Ward 4 Councilmember Janeese Lewis George, a prominent voice on environmental issues through her Green New Deal advocacy but an opponent of Cheh’s bill. “D.C. is already a national leader in solar and we should do even more, but we should not put the cost on working families.”
Lewis George would prove to be the only lawmaker to vote against the bill, so it sailed to an easy passage at the Council’s final meeting of 2022. Yet she gave voice to a growing suspicion among some D.C. politicos about the influence of solar companies on the process. Rentz made for an easy target, with several sources around the Wilson Building whispering to LL about her close ties to Cheh and the big gains she helped secure for her industry.
“They employ people and they say jobs will be saved here, but it all comes at a very high price,” Lewis George says, pointing to estimates from environmentalists that utility customers will pay $1 million per solar job the bill helps support. “It’s skirting around the fact that they’re placing this burden on working people and working families.”
Cheh finds all these intimations about the industry a bit “myopic.” Though she admits to working with solar companies on the bill, she also believes she didn’t deliver every policy change they were asking for. And, more than that, Cheh feels it’s a bit odd to fear the influence of companies in a “nascent industry” like solar that needs government support if it’s to compete with fossil fuel companies and help D.C. manage its energy transition.
“That was a very distorted and not really legitimate way to look at the bill,” Cheh says of such concerns, adding she’d meet Lewis George at “any debate club in the city and debate her ’til the cows come home” on this point. She’s off the Council, after all, so she has some time on her hands.
Cheh certainly has some points in her favor. For one, the solar energy requirements on Pepco have not resulted in rate increases over the past 10 years, according to an analysis of the bill prepared by solar companies and sent to LL. And if these changes buck that trend, the legislation also funds programs designed to help low-income ratepayers. The alternative compliance payments utilities make, for instance, seed the city’s “Solar for All” program, which installs solar panels for people who wouldn’t otherwise be able to afford them and slashes electricity bills in the process.
Lewis George has facts on her side too. She notes that these utility bill programs are nice, but many people simply don’t know about them (“Solar for All” has only reached 9,000 people so far, with a stated goal of 100,000 by 2032). Others may fall just outside the programs’ income thresholds but still struggle to pay their utility bills, given the city’s rising rents.
She would much rather have seen the city provide direct grants to solar companies via a tax on the wealthy instead of pursuing such a complex mechanism to help the industry. And she fully expects to reevaluate the 15 percent solar standard before that far-off target of 2041 arrives.
“When people start seeing bills go up, I think that will be the opportunity to reevaluate how to better invest in solar energy,” Lewis George says. “Every constituent who emails me, I’m going to forward it to the other councilmembers, and I’ll reply saying, ‘Look, everyone else on the Council thought it would be OK for you to pay more.’”