There goes the sun? New net metering rules receive mixed reviews

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Upcoming changes to net metering rules for Iowa’s two largest utilities could help or hurt the state’s growing solar industry, depending on whom you ask.

Officials with Alliant Energy and MidAmerican Energy say the changes — announced Tuesday by the Iowa Utilities Board — are a step in the right direction for all customers. But some renewable energy proponents see red flags for the future of solar in Iowa.

Businesses and homeowners who generate their own electricity — most commonly through wind or solar — can apply the energy they produce back to their utility provider through net metering to offset their monthly bill.

With net metering, customers are billed only for their net energy use.

Alliant has more than 1,300 customers who net meter and MidAmerican reports 332.

The board’s changes to net metering include increasing the number of customers who are eligible to net meter, incorporating service fees into net metered energy and implementing a mandatory annual cash-out of excess energy credits at the start of the year.

Barry Shear, president of Dubuque’s Eagle Point Solar, said his biggest concern lies with the cash-out, which he noted will be a fraction the energy’s original value.

Much of the appeal to solar has been lower utility bills because of the benefits of net metering.

“Over the life of a solar array, those differences add up and are important to the economics of solar. (The cash-out change) is a significant disincentive for people to adopt solar,” Shear said. “I don’t think there’s any way that you can say this encourages solar development.”

With the cash-out change, customers will no longer be able to roll over credits into low energy-production months of January and February.

State Rep. Chuck Isenhart, D-Dubuque, agreed the new cash-out policy could make solar much less appealing to customers. He suggested moving the cash-out date into March or April.

“I say this as an existing Alliant residential customer with rooftop solar, I would never agree to cash out for a penny a watt and then immediately start paying 10 cents a watt to cover the energy need that my solar array can’t keep up with in the dead of winter because I just gave away my credits,” Isenhart said. “A spring cash-out would be fair.”

In addition, cash-out funds would be split evenly between the customer and the utility, with the utility’s share going into its customer-assistance programs.

Isenhart argued the contributions to a customer-assistance fund should be voluntary or applied to all customers, not just those with solar.

‘The right direction’

But while some say the net metering changes go too far, utility officials say they don’t go far enough.

“The Iowa Utilities Board’s order does not fully address the issue of customer pricing for solar and the shifting of costs from private solar customers onto the majority of customers who don’t own private solar,” MidAmerican’s media relations representative Ashton Hockman said in a Wednesday email. “While some aspects of the order are a step in the right direction, we believe it’s important to balance the needs of all customers.”

Hockman said MidAmerican officials plan to re-evaluate the solar, energy storage and rate fairness concept the utility filed with the board earlier this year.

Alliant spokesman Justin Foss also called the changes a positive step.

Foss said the issue with the current net metering structure is that while customers benefit from the ability to move energy credits in and out of the power grid depending on need, utility companies are stuck holding the bill for infrastructure, service and administrative costs associated with maintaining the grid.

“In reality, it’s every other customer that’s making up that difference. When your neighbor is generating solar energy, you’re paying the difference for them to do that,” Foss said. “We like solar, don’t get us wrong, but those installing solar energy are getting benefits on the backs of everyone else.

“So we’re trying to say, what’s the right way to create fairness and parity for not only you who are generating, but also for you who are not generating living next to them?”

But Shear likened charging solar customers more for their power to a grocery store charging higher produce costs to a customer who owns a garden.

“I think we’d all be pretty upset if Hy-Vee imposed a surcharge on customers that grow their own vegetables,” Shear said. Utility companies “want to retain monopoly privilege and they don’t want their revenue degraded by people growing their own vegetables — it’s that simple.”

Meanwhile, others — including Mark Schuling, Iowa’s consumer advocate — are pleased with the utility board’s changes, which come with a three-year sunset clause. The utilities board will take data collected over the three-year period to decide if changes should be permanent.

“We’re really in a place in Iowa where we’re really new to renewable energy and we need additional information,” Schuling said. “I see this as more direction from the board, and I see it as a positive and consistent with renewable energy direction in Iowa.”

The utilities board in early 2014 began seeking input from stakeholders on possible updates to state rules for distributed generation — that is, energy produced at or near the location it is used. The discussion soon centered on net metering.

Alliant and MidAmerican have until Aug. 15 to file specific language for how they will adopt these changes, with the utilities board having final approval.

Customers on the current net metering plan will have the option of participating in new the rules. However, those customers who choose to take part under new net metering rules cannot switch back during the three-year period.

Moreover, new customers who seek net metering services once the new rules are in effect must take part in the new rules.

Josh Mandelbaum, staff attorney with the Environmental Law and Policy Center. said the biggest positive in utility board’s rules isn’t so much the changes, but that they maintain a net metering structure.

“Overall, the take-away is that the board has left the structure of net metering in place and focused on ways to potentially expand net metering in a very narrow way,” Mandelbaum said.

“On the whole, I think the board order is positive and part of that is from what the board didn’t do.”

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