Large utilities and state legislators in Indiana have joined together to push for a bill that undermines state oversight of the electric utility industry and makes distributed and rooftop solar less appealing to consumers. HB 1320, proposed by state Rep. Eric Koch (R), would lower the amount of money solar customers get for selling excess power back to the grid while also allowing utilities to add a fixed monthly charge to solar users’ bills, as well as interconnection fees.
This is clearly an attack by utilities on customers’ energy choices.
“This is clearly an attack by utilities on customers’ energy choices in an attempt to restrict the freedom of individuals to lower their power bills,” Amy Heart, Midwest spokesperson for the Alliance for Solar Choice (TASC), told ThinkProgress. Heart said that there are only about 500 solar customers in Indiana and that this is a “concerted effort to quash the industry” before it gets on its feet.
The Indiana Energy Association, a group made up of the state’s investor-owned natural gas and electric utilities, supports the bill, arguing that it “corrects the inequities for customers” who don’t use solar and protects the reliability of the grid. They state that the new law would help “level the playing field” and make it so that consumers and generators are paying for grid upkeep.
Angeline Protogere, communications manager at Duke Energy in Indiana, said that the legislation developed by Rep. Koch has the goal of “beginning the Indiana discussion as to what is right policy for customer-owned generation — one that balances the interests of customers who have their own generation such as solar with those who don’t.”
Koch, for his part, said that the bill, and especially the proposition of a fixed charge, is designed “to make sure the costs of the grid are fairly apportioned to those who use it.”
Net metering laws allow solar producers to get paid for the excess energy they put back into the grid. Customers using solar panels can be credited at the retail rate, the cost they would have paid for electricity at the time, or the avoided cost rate, which is the amount the utility estimates it saves by not having to produce the power that a solar customer feeds into the grid. There can also be some combination of this as determined by a formula.
The Indiana bill proposes to pay solar users the avoided cost rate, which is significantly lower than the retail rate. For example in Wisconsin, avoided cost rates for utilities are three to four cents per kWh while retail rates are around 11 to 14 cents per kWh. In Indiana, switching from the retail rate to the avoided cost rate could cut the amount solar producers earn by as much as 60 to 70 percent.
Jodi Perras, an Indiana representative for the Sierra Club, told ThinkProgress that the bill was proposed at the beginning of the legislative session without any consultation with the solar industry, and that they are “trying to push it through as quickly as possible.” She said utilities are “trying to talk about it in terms of fairness to all ratepayers, but have nothing to back that up.”
They are trying to push it through as quickly as possible.
Indiana first instituted net metering rules in 2005 and in 2011 expanded them to include up to one megawatt of power. Forty-four states and the District of Columbia currently have net metering policies.
Koch and Indiana’s entrenched energy interests, while proposing a novel take on an anti-clean energy bill, are perpetuating a common knee-jerk reaction by utilities across the country when faced with growing distributed solar markets. The established utility business model, in which they produce and sell energy to customers, is inherently at odds with solar-generating customers. Imposing additional solar fees without appropriate consultation with all stakeholders has frequently been met with significant backlash.
In 2014, this dynamic has made news in Arizona and New Mexico, where fixed fees were imposed on solar installers; Utah, where it led to customer outrage; Wisconsin, where a proposed fixed charge escalated the already heated debate; and in Wyoming, where a utility withdrew a proposed rate change due to customer backlash.
Distributed solar advocates argue that solar can generate energy for the grid during peak demand hours when costs are highest, thus reducing strain on utilities and conventional power sources like coal, gas, and nuclear. In helping reduce the amount utilities rely on fossil fuel generation, renewables likes solar and wind also reduce emissions that may otherwise prove costly under new regulations such as the Clean Power Plan, which aims to cut back on greenhouse gas pollution. A recent study found that rooftop solar systems can add add $15,000 to the value of a home, as well.
Clean energy advocates are especially frustrated by Duke Energy’s support of the bill, considering the company recently reached an amenable net metering compromise with all parties in South Carolina. In the agreement Duke allows distributed generation customers to be credited at the retail rate of production and also specifies that no additional solar-specific fees will be levied by utilities for at least six years. In a letter to Duke Energy, TASC said they see this new model as a turning point in the war between utilities and solar companies.
Randy Wheeless with Duke Energy told ThinkProgress that the South Carolina solar law and net metering agreement involved a number of stakeholders with a give-and-take from all sides.
In Indiana this type of collaboration is yet to be exhibited.
On Tuesday, February 24, House Speaker Brian Bosma, (R-Indianapolis), pulled HB 1320 off the calendar stating that “a whole variety of issues” have arisen around it and that it “just seemed to be a little weighty.” Indiana’s legislative session ended on Wednesday, and Bosma said the bill or a similar version could be considered again next year.
Over the last month, the bill’s sponsor, state Rep. Eric Koch (R), Chairman of House Utilities and Energy Committee, came under fire for his personal investments in at least 30 oil and gas companies, some with operations in Indiana. This caused him to withdraw support for another bill that would have prohibited local governments from regulating or prohibiting “oil and gas exploration, development, or production activities.”
Koch has also received more than $39,000 in campaign cash from Indiana’s utility industry since 2002.