As a general rule, but especially in times of economic hardship, we want government to run as efficiently as possible. That’s exactly what the municipal government in the tiny hamlet of Burdett sought to do with the construction of a 150-foot tall windmill, built to offset its electrical bill.
As recently reported by the Arkansas News Bureau, the turbine sits idle because the Mississippi County town of less than 200 can’t afford the $1 million insurance policy Entergy Arkansas requires to connect to its electrical grid.
In Little Rock Tuesday the Public Service Commission held a hearing with regard to Entergy’s policy of requiring these policies.
Burdette Mayor Tim Sullivan was among business people and lawyers for the Attorney General’s office, the University of Arkansas and some state agencies who asked the PSC to strike the insurance requirement, known as an indemnification clause, saying it is too expensive and hinders the development of alternative forms of energy in the state.
Sullivan told the PSC that the town’s wind turbine, acquired and installed with a $430,000 federal stimulus grant, is projected to save his city about $10,000 a year in utility costs. The mayor said it will cost the city about $11,000 annually for the $1 million insurance policy required by Entergy.
Independent reporting for Pine Bluff & Jefferson County since 1879.
“It’s ridiculous,” the mayor said.
In similar circumstances, the indemnification clause has kept solar panels, purchased with $550,000 in federal stimulus money and designed to reduce energy costs at the new State Library, from becoming operational.
Ronna Abshure, a staff attorney for the PSC, spoke against the indemnification clause requirement during Tuesday’s hearing.
“Staff believes that indemnification is unwarranted,” she said, adding that it impedes the growth of net metering, which measures the difference between electricity supplied by a utility and electricity generated by alternative forms of energy, such as wind turbines and solar panels.
Entergy has balked at the proposal, saying the protections are necessary.
Laura Landreaux, senior counsel for Entergy, argued the indemnification clause is essential to help protect ratepayers from any harm or damage caused by a malfunction.
“Essentially, what the state asks is that net metering customers receive all the benefits from net metering without any of the responsibility,” Landreaux said. “They want the benefits of the credit on their bill for net metering and propose to the utilities they (take) all the risk.”
But in reality, there has been shown to be no real risk involved, considering that in the 10 years that the indemnity clause has been in effect, there have been no incidents that have triggered the use of the clause. The AG’s office has also stated in filings that the clause was put in place in 2002 as a compromise that is no longer necessary.
Consequently, the indemnity clause today looks more like a hindrance to those entities that would create energy rather than a safety protection for the utility.
This is one instance where the philosophy of a free market should be embraced. As such, we hope the PSC will do the right thing and free the people of Arkansas from this meaningless indemnification requirement.