Net Metering

EnergyWire: ELPC’s Brad Klein Says Net-Metering Does Not Raise Rates Paid by Non-Solar Customers

EnergyWireNet-Metering Proposal Raises Subsidy Questions in Ind.
February 10, 2017
By Jeffrey Tomich

Indiana joined the cavalcade of states debating the factious topic of net metering as the utility industry squared off with solar advocates and other supporters over how to fairly compensate consumers who generate their own electricity.

A hearing before the Senate Utilities Committee included familiar arguments about jobs, the environment and whether the state’s current policy, initially adopted in 2005, is forcing non-solar customers to subsidize their neighbors with solar panels.

From Nevada to Arizona and beyond, legislatures and utility commissions have debated proposals to eliminate or weaken net-metering policies — changes pushed by utilities who say increasing solar penetration hurts their ability to recover costs of maintaining the grid.

Currently, Indiana net metering customers are credited for the excess power they put on the grid at the retail electricity rate. On average, the retail rate in Indiana is about 11 cents per kilowatt-hour.

State Sen. Brandt Hershman (R) filed S.B. 309 last month. It addresses more than rooftop solar. But the debate over net metering consumed most of yesterday’s five-hour hearing. In the end, the committee adjourned without taking a vote.

As filed, S.B. 309 would end net metering in Indiana in 2027 and replace it with a “buy-all, sell-all” model under which customer-generators would sell their electric output to utilities at the wholesale rate and purchase energy for their home or business at the retail rate.

The bill prompted an immediate backlash, and Hershman offered an amendment yesterday that replaced the “buy-all, sell-all” proposal with a system to credit customer-generators at a rate equal to the utility’s average wholesale energy price, plus a 25 percent premium. Based on testimony from the Indiana Energy Association (IEA), the lobbying group for investor-owned utilities, that wholesale rate is presently about 3 cents per kWh.

The amendment would end net metering in 2022 — five years sooner than the initial bill. Customers who participate in net-metering tariffs when the programs end would be grandfathered for a decade.

“We want to encourage a technology to a degree,” Hershman said. “But at such point as that technology’s cost is dropping dramatically and that policy stays static, what you’re doing is creating an increasing subsidy.

“It’s a heck of a deal if you can get it,” he added. “But the question is, is that good public policy?”

Subsidy Questions

At the heart of the debate was to what extent, if any, net metering creates subsidies among Indiana utility customers.

Bill supporters including the IEA, the Indiana Chamber of Commerce and Americans for Prosperity told the committee there is no doubt that solar-owning customers in Indiana are being subsidized by customers without rooftop solar systems.

“While we’re growing an industry, while we’re developing an industry, that kind of solar support with a subsidy is not a bad idea,” said Mark Maassel, IEA’s executive director. “But at some point, we do need to transition away from asking someone to pay for someone else’s facilities.”

Even Hershman’s amendment that would compensate customer generators at 25 percent above the wholesale energy price wouldn’t change that, he said.

“It does continue a subsidy,” Maassel said. “It’s less than there is today, but it does continue a subsidy.”

Bill supporters, however, had no answer when they were asked to quantify the amount of any subsidy or provide data to back up their claims.

“If the utility believes there is a subsidy, then the burden of proof is theirs,” said Kerwin Olson, executive director of the Citizens Action Coalition, an environmental and consumer advocacy group. “They have no burden of proof in this building. We should not blindly accept their false narrative.”

Brad Klein, senior attorney for the Chicago-based Environmental Law and Policy Center, a Midwest advocacy group, cited studies from other states and the Lawrence Berkeley National Laboratory that showed net metering has little if any impact on the rates paid by non-solar customers.

If anything, he said, the benefits of distributed generation are too often overlooked.

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Midwest Energy News: ELPC’s Mandelbaum Discusses Open Door to More Net Metering

Net metering will be available to more electricity customers in Iowa as a result of a decision made on Tuesday by state regulators.

As part of a long-running discussion about distributed generation, the Iowa Utilities Board ruled that the state’s two major utilities – MidAmerican and Alliant Energy – must increase their net metering cap from 500 kilowatts to 1 megawatt. Also, the new tariffs will have to make net metering available to all classes of customers but will change some rules for compensation.

“They’ve left the structure of net metering in place, and focused on how to expand that in a very narrow way that is on the whole positive,” said Josh Mandelbaum, an attorney in Des Moines with the Environmental Law & Policy Center. “They didn’t invite any of the changes you’ve seen in the utility pilot project. They could have, but they kept the pilot projects separate, and to me, that is a positive.”

As part of the board’s distributed-generation docket, the board last October asked MidAmerican and Alliant to submit pilot projects to encourage the development of distributed generation in the state. For the most part, the utilities did the opposite: proposing rate changes that would penalize solar customers.

The new rules regarding net metering will be adopted on a temporary basis. At the end of three years, the board will assess the experiment and decide whether to make the changes permanent. Customers of the two utilities who currently have solar panels can choose to continue in their current net metering arrangement, or can opt to try the new net metering tariff. Those choosing the new tariff may not return to the former tariff.

Any customer installing solar panels after the new tariffs are adopted will be required to operate under the new rules. Under existing rules, net meterers can roll over excess credits indefinitely, to be applied against future bills. There is no option for trading credits for cash.

The new tariffs will institute a yearly true-up. Early in the year, excess credits will be removed from the books, compensated at the avoided-cost rate and the proceeds divided in two: half will go to a utility fund to aid low-income customers, and half will return to the customer.

Although he praised the board’s directive overall, Mandelbaum said the cashout piece “could potentially be losses and gains. I don’t think the cashout is going to make much difference on most projects, but there is some potential for it to impact some projects.”

The ruling will eliminate any incentive a solar customer might have felt to overproduce. The increased cap of 1 megawatt will apply only up to 100 percent of the solar customer’s load. And while the new rules will extend net metering to a couple of groups of customers who are currently excluded, the rules stipulate that each customer’s generation will only offset the energy charge and will not apply to demand or customer charges.

One class that now will gain access is customers who obtain solar power through third-party power-purchase agreements or lease arrangements. After a customer filed a complaint, Alliant changed its policy a year ago to allow third-party customers – generally public and non-profit entities – to net meter. While Alliant extended net metering to that group, MidAmerican did not, according to Mandelbaum. The ruling made yesterday requires that MidAmerican adopt the same standard.

The other class that now will be able to net meter is the large general service category, such as manufacturing plants and wastewater-treatment facilities. Barry Shear, a solar developer in Iowa, went to the utilities board because Alliant’s policy stymied one city’s attempt to install a solar array at its water treatment plant.

Although the new rules will allow large general service customers to net meter, the presence of a large demand fee as part of their bill may continue to interfere with the economics of net metering.

The board’s Tuesday ruling did something else: it seemed to bypass much of the pilot projects that Alliant and MidAmerican submitted in March. Although the board instructed the utilities to devise pilot projects that would experiment with ways to expand rooftop solar, clean-energy supporters in the state mostly viewed the pilots as designed to discourage people from generating their own power. Alliant proposed paying less to solar customers, and MidAmerican suggested imposing a demand charge on them. Both of them, however, also said they wanted to experiment with community solar.

The message in Tuesday’s ruling, as Mandelbaum sees it, was, “You can continue working on community solar projects,” he said, “The rate-design pilots – it essentially rejects those.”

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Inside Climate News: ELPC’s Brad Klein Speaks on Solar Market’s Tipping Point

By Zahra Hirji, Inside Climate News

How low-income families can get access to affordable solar power is a question communities nationwide are increasingly confronting. New solar policy guidelines released last week begin to deliver answers.

For the first time, a national overview is available via the “Low-Income Solar Policy Guide,” jointly produced by the nonprofit groups GRID Alternatives, Vote Solar and the Center for Social Inclusion. It explains the myriad challenges, benefits and opportunities for low-income families who go solar.

Policymakers, nonprofits, companies and community organizers are all looking for ways to improve solar access, said one of the report’s authors, Sean Garren, a regional manager at Vote Solar. “We pulled together the guide to try to catch this wave of interest and provide them the resources they need to turn it into concrete expanded access in low-income communities,” he said.

But even as solar is expanding and getting cheaper, few options for buying or leasing solar panels are affordable for low-income families, Stan Greschner, vice president of government relations and market development at GRID Alternatives, told InsideClimate News.

“The number one issue is cost,” said Greschner, noting that families don’t have $15,000 to drop on a solar panel investment, or even the smaller deposits needed for leasing or renting panels. They also probably don’t have strong enough credit to qualify them for such programs.

Last year, more than 7 gigawatts of new solar capacity was installed in the United States and experts expect far more solar will come online in 2016. At the same time, solar costs are plunging. For example, the average installed price for residential solar systems dropped 9 percent between 2013 and 2014.

According to the guide, the key is to develop policies and programs that target low-income families living in single-family homes and multi-family homes, as well as renters.

States that are already tackling the access issue include California, Colorado, Massachusetts and Washington, D.C. For example, California has a policy to provide solar installations on the roofs of single-family and multi-family homes at no up-front cost to the users.

Meanwhile, Colorado has a program that ensures some low-income families can benefit from receiving solar power—and the related energy savings—from shared community solar arrays.

“Shared renewable energy is a nascent market” said Sara Baldwin Auck, regulatory program director at Interstate Renewable Energy Council. Shared solar is growing rapidly and much more is anticipated, she said, and many states are in the process of passing new policies and programs to take advantage of it. Last week, IREC released their own solar policy guide for low- and moderate- income families focused specifically on shared solar.

All of the programs designed to expand solar access offer customers savings on their electric bills, but some go a step farther—providing solar-related job training and career opportunities. It’s important for many of the participating communities that these programs not be thought of as a handout, said Greschner, who added, “they want it to be part of the community and run by the community.”

“We are … close to a tipping point,” Bradley Klein, senior attorney at the Illinois-based Environmental Law & Policy Center, told InsideClimate News. “As the cost of solar continues to fall, and we have these new models that we are testing and experimenting with and learning from, this is really the point where we can take this to scale and replicate some of these programs at much larger levels.”

Klein also said the report can help counter the attacks, often led by utilities, on pro-solar policies currently taking place in many states. In Nevada, for example, state regulators decided to gradually reduce a major solar credit called net metering, as well as increase rates specifically for solar customers. The regulatory review was prompted by a request by utility NV Energy to change the state’s solar policies.

“We often hear this false narrative about solar, particularly from some utilities, that solar is really only for wealthy people and it’s not available for all,” said Klein.

Moreover, utilities such as those in Nevada are pushing the idea that solar is hurting non-solar customers, especially low-income customers.

“It’s really not the case,” said Klein. “In fact by creating a strong, stable market for solar you provide opportunities for all customers to begin taking more control of their electricity bills, to participate in a clean energy economy, and help create jobs in their communities…. This report is so valuable to counter that false narrative with real information about how solar really provides great opportunities for everybody.”

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ELPC’s Josh Mandelbaum Tells Midwest Energy News Why No News is Good News for Iowa Net Metering

Nearly two years into an examination of the state’s policies towards distributed generation, the Iowa Utilities Board has signaled that it sees no reason at this point to make any major changes.

And no news, in this case, is good news, in the views of some of the state’s clean-energy promoters.

“I think it’s a positive order and potentially a model for thoughtful, data-driven distributed generation policy,” said Josh Mandelbaum, a staff attorney in Des Moines for the Environmental Law & Policy Center.

Spokespeople for the state’s major utilities could not be reached for comment.

The board on Oct. 30 filed a document in which it said, “The Board declines to adopt a policy statement with respect to renewable distributed generation.” The three board members also indicated they would be open to more information about the impact of renewables on the state’s power system.

To that end, they invited the state’s municipal utilities and rural electric cooperatives to submit plans for pilot projects investigating various aspects of distributed generation and net metering. The board required the state’s two major investor-owned utilities – MidAmerican Energy and Alliant Energy – to provide pilot proposals by the end of January.

Keep Reading

Good News for Solar From Our Iowa Office

AP

Alliant Reverses Stance That Hindered Solar Projects in Iowa

By Ryan J. Foley, Associated Press

IOWA CITY, Iowa (AP) — Facing a new legal challenge, Iowa’s second-largest power company has abandoned a business practice that critics say improperly slowed the adoption of solar energy across the state.

Over the last year, Alliant Energy had told schools and municipalities that it wouldn’t allow net metering for rooftop power-generating systems financed by third-party solar companies. That meant customers would not be credited on their bills for excess energy they generate during peak sun times and return to the grid, making many of the projects economically unfeasible. In response, customers delayed, downsized and shelved solar projects meant to reduce their energy costs and impact on the environment.

But in a surprise reversal, Alliant said in a legal filing last week it will allow net metering for many such projects. Alliant spokesman Justin Foss said the company “revised our stance” after receiving the first formal applications for interconnection from customers entering into such arrangements.

“Since this is a relatively new issue, we adjusted to find the most customer-focused solution,” Foss said.

Joshua Mandelbaum, an attorney with the Environmental Law and Policy Center in Des Moines, called that explanation disingenuous, noting Alliant hadn’t received other applications because customers were told earlier in the process that net metering wouldn’t be allowed.

He said the change was positive and would allow “a number of customers who are interested in pursuing solar to be able to finance their systems.”

“I’m still puzzled why it took so long for Alliant to come around to this position. Nothing has changed on the ground in the last year,” he said. “It only served to delay customers’ ability to take advantage of this option and create unnecessary tension and bad feelings with customers.”

The reversal came days after Mandelbaum, on behalf of a coalition of solar advocates, told the Iowa Utilities Board that Alliant’s position violated the state’s net metering rule and was thwarting renewable energy projects proposed by nonprofits and government agencies. Such entities, which don’t pay taxes, often enter into agreements to purchase power directly from solar companies that install generating systems on their buildings. The arrangements allow them to benefit from federal tax breaks designed to promote solar energy.

The Iowa Supreme Court ruled last year that the so-called power purchase agreements were legal, rejecting a challenge by Alliant.

After the ruling, Alliant argued that net metering for those projects wasn’t allowed because the solar companies were reselling power within its service territory, which was barred by its state operating agreements. That position has now been dropped.

Alliant notified the Iowa Falls Community School District — which dropped a proposal to install solar arrays on four school buildings — and other customers of its reversal in recent days.

“I was shocked,” said Cresco city councilor Amy Bouska, who learned the news from Alliant last week. Bouska said her city’s exploration of solar came “to a screeching halt” last spring when Alliant said net metering wouldn’t be allowed. She praised Alliant’s change but noted the utility still won’t allow net metering at buildings classified as large industrial users, such as the city’s fitness center and wastewater treatment plant.

Eagle Point Solar, a Dubuque-based company which had prevailed in last year’s Iowa Supreme Court case, filed a complaint with the utilities board in June alleging Alliant’s policy was illegal and forced it to scale back a plan to install solar arrays on buildings for the city of Asbury. Company President Barry Shear said he was surprised by Alliant’s “amazing rollover.”

“This change in policy from Alliant is going to have significant impact on the feasibility of projects that fall into the general service rate category,” he said.

 

Clean Renewable Energy Bonds

Interconnection Standards

Net Metering Standards

Model Standards

Promoting State Policy Changes

Repowering the Midwest

Clean Renewable Energy Bonds

The Energy Policy Act of 2005 (P.L. 109-58) created Clean Renewable Energy Bonds (CREBs) as a new financing tool for electric cooperatives, public power systems and units of state and local government to build renewable electricity projects. CREBs are special-purpose tax credit bonds which provide the equivalent of an interest-free loan. Bondholders receive a tax credit on their federal income taxes instead of an interest payment from the bond issuer. This is a valuable incentive for entities that are otherwise ineligible for the federal Production Tax Credit (PTC) which is available only to for-profit entities. Consult the following documents to learn more about the CREBs program and application procedures:

IRS Guidelines on the CREB Program (issued 3/6/06)

Guide to CREBs written by the law firm of Hunton & Williams [pdf file]

Guide to CREBs written by National Rural Electric Cooperative Association [pdf file]

IRS Disclosure Report on 2007 CREB awardees [pdf file]

Internal Revenue Service Bulletin – March 2006

Interconnection Standards

ELPC is working on many fronts to increase the use of less-polluting, energy efficient, and renewable electricity generation. One goal is to reduce reliance on old, dirty, centralized power plants and advance “distributed generation” – literally shifting some generation of electricity to wind turbines, photovoltaic panels, combined heat & power (CHP) systems, and other clean and efficient resources that are distributed across the electric grid and are often sited at a customer’s home or small business.

In order to accomplish this structural shift, state policies must be reformed. Statewide interconnection standards make it easier to connect solar panels, wind turbines and other clean energy systems to the electric grid. These standards streamline the interconnection process by including uniform engineering requirements, reasonable fees and timelines, standard application forms and legal agreements, and “expedited review” for small projects.

Net Metering Standards

Net metering is a special metering and billing agreement between utilities and their customers that allows customers to sell excess electricity back to the grid and gives customers a financial incentive to invest in renewable sources of energy. When a net metering customer’s renewable generator is producing more power than the customer needs, the electric meter runs backward, generating credits. At the end of the billing period, the customer is only charged for the “net” power that they consume.

Model Standards

ELPC’s “Model Net Metering and Interconnection Standards for Renewable Energy Systems” were developed with the input of industry experts and reflect recent best practices at the state level. Although the model contains both net metering and interconnection standards, these two parts can be used separately. To make it easier, the Net Metering Standards [pdf file] and Interconnection Standards [pdf file] are also available as two separate documents.

Promoting State Policy Changes

ELPC leads broad coalitions of clean energy advocates and entrepreneurs to promote distributed generation and the necessary state policy changes across the Midwest and Great Plains. ELPC’s advocacy and technical expertise has helped Illinois, Michigan and South Dakota finalize their interconnection standards, and has moved Iowa’s rules toward completion.

In addition to our leadership in Iowa, Illinois, Michigan and South Dakota, ELPC is providing key regional perspective and expertise to support similar projects across the region. We expect our current and future work to significantly reduce existing barriers to distributed generation, which will help diversify electricity generation, provide economic benefits, and encourage the development of efficient and clean sources of power in the Midwest and Great Plains.

Repowering the Midwest

The boom in clean energy development, especially wind power, presents a tremendous opportunity for economic growth in the Midwest, and some of the best long-term opportunities will come directly from the manufacturing of wind turbine components. Visit RepoweringtheMidwest.org, ELPC’s website devoted to news, research reports and other resources aimed at advancing the region’s clean energy revolution.

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