In an attempt to report on the public hearings scheduled by the Indiana Utility Regulatory Commission (IURC) on net metering and to provide guidance to others who wish to testify at the additional public hearings on June 16 in Ellettsville and June 21 in South Bend, please find below the remarks of Eric Cotton, President of ECI Wind and Solar.
9005 East 1125 South
Fairmount, IN 46928
Ph/Fax: 888-432-4927
Indiana Utility Regulatory Commission
C/O David Lott Hardy - Chairman
National City Center
101 West Washington Street
Ste. 1500E
Indianapolis, IN 46204
Commissioners:
This letter is to serve as a written summary of the comments made by Eric Cotton, President ECI Wind and Solar Inc., to the Indiana Utility Regulatory Commission on June 3rd, 2010 in regards to net metering in the state of Indiana.
ECI Wind and Solar Inc. has been professionally installing wind, solar Photovoltaics, and solar thermal systems in Indiana, Illinois, and Ohio for over five years. We have installed over 30 systems around the state. By far the vast majority of our customers are net metering customers. With the exception of off grid systems, only 2 of all of our customers do not net meter. One may consider this a success for the current net metering rules, but I consider it differently. We realized that all of the customers we provide payback estimates based on systems without net metering see some very salient facts. I will elaborate on these further later, but in short, business customer and customers that would like to have larger systems simply do not see the return on investment that customers who can participate in net metering see. This stifles investment in the technology and in small business.
There are many issues surrounding net metering: safety, cross–subsidization, system size limits, limits on participation, customer class, eligible technologies, etc. There are many sides to the issue as well; ranging from keeping the status quo to vast increases in all categories. This is our perspective as an Indiana business and business owner in the distributed generation (DG) industry.
Competitive Disadvantage:
Net Metering in Indiana was on par in 2005 with most of the states surrounding us. This is important because the DG businesses in Indiana compete regularly with DG businesses in other states. In the last 5 years, every single state surrounding us has increased its respective net metering policies. This has allowed the DG business in these states to grow into a very real competitive advantage. In fact, solar systems in downtown Indianapolis have been installed by an Ohio DG business. Renewable energy systems in Indiana schools have been installed by businesses from other states. Their competitive advantage has allowed them to grow to the point where they can very effectively market and compete with the companies in the state because they are handicapped by their own state policy.
System Size Limits:
The current 10 KW limit needs an increase. The “environmental groups” would advocate an aggressive increase to 2 MW of system size or more. Very real concerns have been raised about the safety of interconnecting large generation facilities. Very valid comments have been made about the cost to upgrade substations equipment to properly protect distribution circuits with large generation facilities. There is the argument that an increase needs to address the demand in the marketplace. From our perspective, a simple 10 fold increase in nameplate capacity will address a significant portion of the needs of all but the most power intensive energy customers. At the same time, this limits the need for substation upgrade costs as most circuits will be rated to deal with generating facilities of this size. Safety concerns at this level are reasonable and inexpensively addressed. While a limit in the 100 KW range will certainly eliminate some customers, and some parties that are currently interested in net metering specific projects, it will include far more customers than it will eliminate.
Customer Class:
As a DG business in Indiana we are not guaranteed the ability to net meter even a small system. No business, city hall, library, police station, or non-profit is guaranteed a net metered system under the current rules. We have one small country church that has a 1200 watt wind turbine that was refused a net metering contract with AEP. Indiana promotes itself as a business friendly state, but in this regard the business customers that will most readily be able to invest in DG technology are eliminated from the net metering rules.
Cross–Subsidization:
It is true that in essence we are asking the rate base to pick up the difference between the avoided cost and the retail rate. At worst they get the economic development that comes along with the installation of the DG system. At best they get the economic benefit and other benefits like support of the grid during some peaking times and delayed upgrades in distribution. Even if you consider it a pure subsidy, the worst case scenario is that a 10 million dollar investment in solar energy would result in only a 1.5 cent increase in a customer’s monthly bill in a 1 million customer rate base. Only 0.3 cents per month spread out over 5 million rate payers. This assumes absolutely no positive benefit to the rate payer.
Summary:
Current net metering rules are putting Indiana DG business and the industry as a whole at a competitive disadvantage. A simple 10 fold increase in the system size and expansion of the eligible customer classes to include all Hoosiers will go a long way to include the most possible people while limiting the rate payer exposure to added costs, and safety risks. For us, we can summarize it as this: We have been doing this for 5 years. In those 5 years we have become a fairly successful DG business in the state. Our competitors both in and out of the state have positioned themselves to be strategically located near a state with more aggressive policies. While our company has been successful, I don’t think there is one DG business in Indiana that can support high level employees. Personally, my wife and I are each 2 years away from earning PhD’s in chemistry at Purdue University. If the DG industry in Indiana has not gotten to the point that it can support talented individuals with our qualifications, then frankly, we will look for opportunities for our level of training elsewhere. With this in mind, we respectfully request that you open an informal rulemaking that would address the concerns that I outlined above.
Sincerely,
Eric Cotton
President, ECI Wind and Solar Inc.