Indiana HB 1320 (2015) would change relationship of customer-owned solar and utilities; It won’t be good either

Posted by Laura Arnold  /   January 21, 2015  /   Posted in 2015 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC), Net Metering, solar, Uncategorized  /   2 Comments

Darrell Boggess installed solar panels to supplement his electric consumption on his home east of Bloomington, Ind. last year. The new panels are on his roof and he has had a solar heated furnace for nearly 30 years, pictured at right, that supplements his homes heat during the winter months on Friday, January 16, 2015. Chris Howell | Herald-Times

State bill would change relationship with solar energy for consumers, utilities

Michael Reschke, Herald-Times

With the sun on his shoulders and frosty grass crunching under his feet, Darrell Boggess walked to the back of his house Friday to take a look at his electrical meter. Just as he predicted, it was running backward.  "I love that," he said.
Boggess participates in Duke Energy's net metering program. When the solar panels on the roof of his home generate more energy than he needs, the excess goes out onto the power grid for others to use.
"My electrons are going out to my neighbors, and they're using my solar energy," he said.
In return, Duke Energy credits him for the power he's generating. For Boggess, it's a great program, but Indiana's utility companies don't think it's fair. And there's a bill in the Indiana General Assembly this session they feel will address the issue. Some, however, say it will effectively end net metering.
Rep. Eric Koch, R-Bedford, authored House Bill 1320, which would amend Indiana Code concerning utilities. The bill has been referred to the utilities, energy and telecommunications committee, of which Koch is chairman.
"The purpose of the bill is to promote and grow net metering," Koch said.
Rep. Matt Pierce, D-Bloomington, is a member of the committee that will review the legislation. He said from what he's seen of the bill, it appears to do the opposite.
"It’s a very complicated bill, but it seems it would effectively end net metering by lowering the credit so that it’s no longer a good economic investment," he said.
Right now, utility companies charge and credit net metering customers at the same rate. So a kilowatt hour of electricity generated by a utility company's power plant has the same value as a kilowatt hour generated by Boggess' solar panels. The utility companies say they're getting the short end of the stick on that deal because it doesn't account for the cost to maintain the lines, transformers and other equipment that makes up the power grid.
"Net metering forces other people to pay more for the cost of electrical grid upkeep," said Dave Arland, media contact with the Indiana Energy Association, which represents 14 member utilities.
Right now, only about 500 entities participate in the net metering program in the state, so it's not a huge issue in Indiana, but in states like California, the disparity has become so large it's a $1 billion problem, Arland said referring to a report from the California Public Utilities Commission.
"That's why we want to address it now," he said.
Critics, though, say utility companies aren't factoring in the benefits of distributed generation.
"They claim when people conserve or generate energy they’re avoiding paying their fair share of grid maintenance," said Brad Klein, senior attorney with the Environmental Law & Policy Center. "That makes sense in theory, but the utilities have not done studies."
But other states have, he said. What states like Nevada, Mississippi, Utah and Louisiana have found is that net metering does a good job of roughly compensating at a fair rate, Klein said, referring to studies conducted by public utility commission's in those states.
"If you look at cost versus benefits, there’s no real subsidy," he said, referring to language in the bill. "The bill just reached that conclusion. It skipped the study step."
Arland said no studies have been done in Indiana to his knowledge. Koch, however, said when utility companies petition the Indiana Regulatory Commission to adjust their rates, that essentially is a study. He said when one of Indiana's five investor-owned utilities petitions the Commission, it must present evidence to make its case. A group that doesn't agree with the utility's findings could then present its evidence at a public hearing. He said the commission then weighs the evidence and makes a decision.
"It's a much better way," he said.
Klein doesn't understand that argument.
"The Commission couldn't determine to keep the existing net metering model because the bill requires the Commission to use a different, much lower credit based on avoided costs that do not reflect the grid benefits of solar," he said.
If a study was conducted in Indiana, Klein thinks it would find, as studies in other states have, that the existing credit is more than fair to utility companies because of the benefits net metering customers provide to the power grid.
"It's high-value energy," he said. "It's generated with sun, so it adds energy during high-use times when people are using their air conditioning."
Pierce agreed, saying when energy is transported long distances, like from a power plant in southwestern Indiana to Indianapolis, there is resistance in the lines, so some power dissipates, resulting in something called line loss. When customers are closer to the source, less energy is lost.
In addition, when there are more power generators, the system is less susceptible to a terrorist attack or a natural disaster, he said. The prices of renewable sources of energy, such as wind and solar, are also more stable than fossil fuels.
"The sun isn't going to call you up and raise the price of photons," he said. "Coal and other fossil fuels are down now, but they will go up."
Arland said Indiana utility companies are not against renewable sources of energy for all the reasons Pierce and Klein mentioned. Koch said that's why the bill includes provisions that allow net metering customers to lease renewable energy systems. Now they are required to purchase them, he said.
In addition, the bill will require consumer protections for those who lease systems and remove regulatory obstacles that would prevent people from installing those systems on buildings, with a few exceptions, Koch said.
"This is all designed to promote distributed generation," he said. "But as it grows, we have to protect other ratepayers."
The bill also allows people who are already net metering customers to be grandfathered in so they won't be affected, Arland said. The utilities just want to be able to account for the effects of a growing trend, he said.
"It's an issue of fairness," he said.
Klein isn't buying that argument, though. He thinks it's an attempt by utility companies to preserve their existing business model and stifle acceptance of new technologies.
"Utilities see a future where customers have more energy options and they’re afraid," he said. "They’re trying to prevent that."

 

2 Comments

  1. Gary Reese January 21, 2015 10:37 am Reply

    Obviously Mr Koch feels net metering intrudes on his families empire. He doesn’t realize the alternative would be for these people to live off grid entirely, I believe it’s called cutting off your nose to spite your face. :-)

  2. David Mann January 21, 2015 6:33 pm Reply

    I’m not sure how to feel about Eric Koch’s statement that the bill is designed to promote net metering. Either he doesn’t understand the bill or he isn’t being honest.

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