For the past 12 years, Indiana's net metering policy has credited homeowners and businesses with rooftop solar systems for the excess power their panels generate and send to the grid. However, Senate Bill 309 (SB309), authored by Republican State Senator Brandt Hershman, aims to eliminate this scheme by 2027 and replace it with a controversial "sell all, buy all" system.
#BREAKING: SB309 threatens your right 2 rooftop #solar. Tell your senator 2 protect solar. Lookup your senator here… https://t.co/rAQtbbWQwv— CAC Indiana (@CAC Indiana)1484012595.0
Under this proposed bill, rooftop solar owners would be forced to sell their electricity to the utility at a lower rate and buy it back at a higher rate. According to PV-Tech, solar consumers would have to sell their energy to the utility at wholesale rate of around US$0.03/kWh and then buy it back at the higher retail rate of around US$0.11/kWh. Apparently, the balance goes towards the utility's expenses for maintaining the grid.
"Mandatory 'buy-all/sell-all' approaches greatly infringe on customers' energy independence and this bill should be cause for great alarm for consumers in the state of Indiana," Sean Gallagher, vice president of state affairs for Solar Energy Industries Association (SEIA), told EcoWatch.
"Rooftop solar power that is exported from customers' homes or businesses to the grid is quickly absorbed by neighboring homes and businesses. Compensating that local power at average wholesale prices significantly undervalues the benefits of producing that power—such as avoiding the need to build new power lines—and ignores the fact that solar power is produced during daytime peak periods when wholesale energy prices are higher," Gallagher added. "Whether it's installing energy efficiency measures or consuming on-site generation, customers should always receive the full retail price value for behind-the-meter choices that reduce grid-supplied energy consumption, resulting in benefits for the entire community."
"It's like saying, 'Yeah, you can have your solar panels but you really don't own them because you can't decide what to do with the electricity you're producing yourself,'" Arnold said.
While the bill aims to stop net metering in 10 years, as the Indiana Business Journal noted, the state could put an end to it even earlier:
Language in the measure stipulates that net metering would end no later than July 2027—which supporters say gives the solar industry plenty of time to adjust.
But it could happen sooner. According to current rules, a utility such as Indianapolis Power & Light Co. doesn't have to offer net metering to customers once it reaches a cap of providing net metering equal to 1 percent of its summer peak generation.
PV-Tech says the bill "has not yet been seen in other states and is a unique approach from the Indianan legislators."
Opponents of the bill say it would discourage homeowners and businesses from investing in solar systems, which can be costly to install.
"One of the fundamental reasons people put solar panels on their roofs is to reduce consumption from the grid—to be self-reliant, sustainable, efficient," Kerwin Olson, executive director of Citizens Action Coalition, told Indiana Business Journal. "That should be encouraged to the highest degree."
Additionally, the bill could have ramifications for Indiana's nascent solar sector. More than 72 solar companies operate in the state and employs about 1,567 people.
Incidentally, renewable energy is poised for massive growth in the U.S. The U.S. Department of Energy recently announced in a report that U.S. solar employs more workers than any other energy industry, including coal, oil and natural gas combined.
"SB 309's anti-American limitations on how consumers can use their own rooftops could significantly undermine the state's clean energy progress and, in turn, the well-paying jobs that solar now provides the state of Indiana," Gallagher said.
Solar Employs More Workers Than Coal, Oil and Natural Gas Combined https://t.co/rWWibCQUzq @SolarEnergyNews @votesolar— EcoWatch (@EcoWatch)1484692808.0
But critics of net metering contend that solar customers are not paying their fair share for use of the grid.
"Net metering creates a situation where customers with solar panels are being paid by customers without solar panels," Mark Maassel, president of the Indiana Energy Association, told Indiana Business Journal. "That's just not fair."
The legislation is set for a hearing before the Senate Utilities Committee on Feb. 2.
Indiana's net metering system actually survived an attack two years ago. In 2015, state representative Eric Koch (no relation to the Charles and David Koch) introduced a bill that would have reduced net metering payments and added fees to solar customers. That bill failed to advance.
So-called " solar wars" are waging in several states such as Nevada, Florida and Arizona. Reports have emerged of billionaire oil barons Charles and David Koch and their political allies trying to kill net metering as they see growth in renewable energy as a threat to their businesses.
America Has a Koch Problem https://t.co/9h23NXifZe @prwatch @DeSmogBlog— EcoWatch (@EcoWatch)1485381914.0
Hershman, the state senator who introduced the bill, has not commented to media about the measure.
An April 2016 report from the Center for Biological Diversity determined that Indiana was among the top 10 sunniest states in the country actively blocking rooftop solar development through overtly lacking and destructive policy landscapes.
Indiana, along with Alabama, Florida, Georgia,, Michigan, Oklahoma, Tennessee, Texas, Virginia and Wisconsin, account for more than 35 percent of the total rooftop-solar technical potential in the contiguous U.S., but only 6 percent of total installed capacity.
"Thanks to weak and nonexistent policies, the distributed-solar markets in these states have never been given a chance to shine," said Greer Ryan, sustainability research associate with the Center for Biological Diversity and author of the report. "There's room for improvement in solar policies across all 50 states, but it's especially shameful to see the sunniest states fail to lead the transition from fossil fuels to clean, renewable energy."
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By Climate Denier Roundup
In Nevada, the utility NV Energy is fighting against rooftop solar, specifically opposing the net metering policy that gives rooftop solar users credit for the power their panels produce. They've been releasing 30-second ads, with the most recent alleging that solar subsidies would send a billion Nevada tax dollars to out-of-state solar companies.
So how did we get to this point, where outlandish claims are the subject of ads? Last year, the state's Public Utilities Commission slashed the net metering rates, cutting how much NV Energy paid to solar power producers by 75 percent. This led to an exodus of solar companies from the state and came as a major blow to rooftop solar customers. In response, solar advocates are pushing for a ballot initiative that would restore the rates and in the process of the fight, NV Energy offers yet another shining example of how the dark art of propaganda works by co-opting language to hide its true intentions.
Like most utilities, NV Energy doesn't have a sunny outlook on the competition from distributed rooftop solar. After the solar industry and clean energy advocates started to push back on the rate change, last February, NV Energy hired an attorney to create a PAC to lobby to prevent any rollbacks to the solar credit cuts. And like its counterpart in Florida named "Consumers for Smart Solar," they chose a rosy name that conveys the opposite of what it really is: Citizens for Solar and Energy Fairness. Opposing policies that pay solar users for the power it produces hardly seems fair.
Their main contention is that non-solar customers shouldn't subsidize those with solar, which on its face does make sense. But when one factors in the benefits of solar power to the grid, public health and the planet, as Solarcity and the NRDC did, a different picture comes to light. It turns out the clean energy these solar customers are delivering provides between $7-$14 million in net benefits, every single year. Even if you assume that such a figure is a little high, that's still a huge return on investment.
It's worth reiterating that's a "net" benefit, meaning the perks of net metering provide as much as $14 million in benefits above and beyond the increase in power bills that the site claims residents will pay (and it oddly contradicts itself on that, claiming it's both $10-12 million and $16 million, on the same page…)
So net metering nets Nevada a net benefit, despite what's said on the net by solar's shady oppon-nets.
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A case going before the Ohio Supreme Court could have a major impact on distributed generation in the state, while raising questions about corporate separation and possible conflicts of interest for regulated utilities.
The PUCO’s recent decision holds that customers who provide excess electricity to the grid are entitled to the full value that would be charged under the electricity part of their bills. Photo courtesy of Shutterstock
The Public Utilities Commission of Ohio (PUCO) recently confirmed that net-metering customers are entitled to the full value of the electricity they feed back into the grid from renewable energy and other distributed generation technologies.
However, FirstEnergy and American Electric Power (AEP)’s Ohio utilities are trying to reduce the amounts customers will get for that excess electricity. The utilities, along with Dayton Power & Light and Duke Energy, also raised other objections to the rules.
On July 23 the PUCO denied FirstEnergy’s third request for rehearing. AEP’s Ohio Power Company has already appealed the case to the Supreme Court of Ohio. FirstEnergy has not yet announced whether it will appeal as well.
Power in and power out
Net metering is a way for customers who produce some or all of their power to avoid overcharges for electricity they do not need. Those customer-generators may have solar panels, wind turbines, certain types of combined heat and power systems or other types of on-site generation.
Net metering also provides a way for those customers to get compensation for any excess electricity they feed into the grid. In those cases, Ohio law says customers are entitled to the value of “that electricity.”
The big question in the PUCO case is what that value is.
Because of a 1999 deregulation law in Ohio, customers have a choice of which company provides their electricity. Electric distribution utilities are still regulated monopolies, however.
The regulated utility handles all the billing, but customers’ bills have two main parts: distribution and generation.
Ohio customers’ electric bills have two main parts: distribution and generation. Image by Kathiann M. Kowalski.
Distribution includes the equipment and work the utility does to carry and deliver electricity to its customers.
The other main part of customers’ bills covers electricity generation. If the utility is not the generation provider, it transmits payment to the electrical services company.
The PUCO’s recent decision holds that customers who provide excess electricity to the grid are entitled to the full value that would be charged under the electricity part of their bills.
Most of that charge depends on the market value of energy, which fluctuates. The rate also reflects a fixed “capacity” price, which is determined from annual auctions by the grid operator, PJM.
“It’s about 15 percent of the generation portion of the customer’s electric bill,” said FirstEnergy spokesperson Doug Colafella.
The utilities say customers producing excess electricity should only get the energy part of the electricity rate, and nothing for capacity. That’s how things have been handled so far, Colafella said. “We’re saying let’s follow the original rules that were put in place.”
“If a customer generates excess power, essentially they would be credited just for the energy that they produced and didn’t need,” Colafella explained. Including capacity would require larger payments.
“The PUCO is now saying that we would have to credit that kind of customer an average of about 15 percent more,” Colafella observed.
Utility company filings cite a 2002 Ohio Supreme Court case, which held that customers providing excess electricity to the grid should not get reimbursed for amounts covered by the distribution portion of the bill.
“The court stated that the net-metered customer did not contribute to the cost of PIPP [low-income support] charges, transmission, distribution, etc.,” explained Dan Sawmiller at the Sierra Club’s Beyond Coal campaign. “Inasmuch as the Court holding said that customers were entitled to the full generation rate, that would include capacity and energy.”
The PUCO said that its rulemaking decision complies with both the 2002 court case and the Ohio statute.
The PUCO also noted that Ohio law bars utilities from charging higher retail rates to net-metering customers than they would pay without their own generation.
Not compensating for part of the electricity charge could result in a different rate.
“The net metering rules require utilities to provide net metered customers compensation for electricity delivered to the grid at the same price that the utility would charge (including capacity and energy) for delivering electricity to the customer,” said Lawrence Friedeman, vice president for regulatory affairs and compliance at IGS Energy in Dublin, Ohio. The company promotes the development of distributed generation projects.
“IGS supported the Commission’s net metering rules because they provide reasonable compensation to distributed generation resources and enable them to compete on more level footing with traditional power plants,” Friedeman said.
Encouraging distributed generation with reasonable compensation for electricity going into the grid is “good public policy,” Friedeman stressed. “Distributed generation projects are on-site, reliable and local, energy efficient, and are cleaner than traditional power plants."
Both camps in the net metering dispute see the other side gaining an unfair advantage if their position prevails.
“For most customer-generators there is no way to ascertain whether they have contributed to a reduction in capacity costs,” Colafella said. “If they don’t provide capacity, they should not be paid for capacity.”
On the flip side, any excess electricity fed into the grid can be sold to other customers. Those other customers would almost certainly pay the full generation rate, without getting any discount for capacity.
“There’s certainly the potential for a windfall” to utilities, said Martin Kushler, a senior fellow at the American Council for an Energy-Efficient Economy (ACEEE).
Conflicts of interest
Indeed, Ohio’s four large electric utilities have unregulated affiliates that sell electricity.
“It creates this very direct conflict of interest,” said Kushler.
The less customers can get for electricity they put into the grid, the longer it takes to pay off the capital costs for their own generation. Less financial incentive to choose those technologies would reinforce demand from existing electricity suppliers.
“This seems to get into even more issues of corporate separation—yet another attempt by an Ohio distribution utility to make its generation affiliate more profitable,” Sawmiller agreed.
Similar reasoning explains why FirstEnergy and other utilities supported the recent rollback of Ohio’s energy efficiency standard, Kushler said. “Arguably, at least under traditional regulation, the utility would have some obligation to minimize costs to their customers.”
However, that’s not what happened with Ohio Senate Bill 310, he says. The new law, signed by Gov. John Kasich (R) in June, freezes the renewable energy and energy efficiency standards for two years and then scales them back significantly.
“Energy efficiency was saving electricity at about 2 cents a kilowatt-hour—far cheaper than any source of supply—and yet the vested interests were successful in decimating Ohio’s energy efficiency policy,” Kushler said.
So far, three of Ohio’s four electric distribution utilities have said their energy programs will continue for at least part of the freeze period under SB 310. FirstEnergy is the exception.
“At this point we have not made any decision as to whether we’re going to make any changes to our current plan,” Colafella said.
“I would be totally shocked if they do anything but cancel those programs,” said Rob Kelter, an attorney with the Environmental Law and Policy Center. “It would negatively affect FirstEnergy customers, but it would help their unregulated affiliate sell more electricity.”
Meanwhile, on the federal level, FirstEnergy’s ongoing FERC challenge aims to exclude demand response from the results of May’s capacity auction for 2017-2018.
“We believe that removing these demand resources from the capacity market is going to provide vital compensation for essential physical assets like nuclear, coal, [and] gas base load plants,” Colafella said. “It’s going to help foster properly functioning capacity markets.”
“Demand response presents absolutely zero reliability concerns,” Sawmiller noted. “It won’t freeze like a coal plant did during the polar vortex. In addition, it’s incredibly cheap. This applies downward pressure to capacity prices, lowering electric bills for all customers.”
“If FirstEnergy is able to reduce the amount of demand response that goes into these auctions, it will raise prices for customers,” Sawmiller added.
“Having demand response bid in lowers the price for all the generators that bid in,” Kushler agreed. Conversely, keeping demand response out would raise the auction’s closing price. In Kushler’s view, FirstEnergy’s attempt to exclude it is yet another “classic conflict of interest.”
ACEEE, the Sierra Club, and the Environmental Law & Policy Center are members of RE-AMP, which publishes Midwest Energy News.
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