DES MOINES — Utility companies could impose an additional fee on solar energy users under a proposal being considered by lawmakers.
Supporters, including the state’s biggest utility company, say the proposal creates fairness among customers who use energy infrastructure and with the energy companies. Energy companies would use the fee to help pay for upgrades like power lines and poles.
But the proposal has been met with resistance, and its future is uncertain as some lawmakers express concern that the new fee could stunt the growth of solar energy, including among farmers who use solar panels to lessen energy costs.
At the heart of the issue is the flow of electricity produced by solar panels. Customers with solar panels pay fees on the electricity sent from the energy companies to them. But some solar customers have panels that at certain times produce more electricity than they need. That excess electricity goes back to the utility companies; customers sell the energy for credits and do not pay a fee on that transmission.
The proposal being considered at the Iowa Capitol would allow utilities to add a fee when that excess energy goes back to the companies.
“Anyone who uses the energy grid, I think, needs to pay their fair share,” said Rep. Gary Mohr, R-Bettendorf, who is guiding the proposal through the Iowa House. “I’m a big solar fan, but I don’t understand why solar people who sell energy back to a utility wouldn’t have to pay for use of the energy grid. Whether they buy electricity or sell electricity, they’re still using the energy grid.”
Des Moines-based MidAmerican Energy, which says it serves 770,000 Iowa customers, supports the proposal and says the existing system is unfair to customers without solar panels because those with the panels use the grid more often but pay the same amount of fees.
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“We embrace and value our solar customers, but we must not allow the cost-shift that exists to negatively impact our other customers,” MidAmerican Energy President and Chief Executive Officer Adam Wright said in a statement. “Private solar customers use the grid for all but about 40 seconds of an average day because they’re almost always either receiving or sending energy. This means they are not off the grid, and it’s reasonable to expect all customers to equitably share the costs of it — whether they receive energy, send it, or both.”
The company argues an additional fee actually will help boost solar energy use in the future. But solar industry advocates and other opponents of the proposal see a different future if the proposal becomes law.
“It will destroy my industry,” Dolf Ivener, a Sioux City businessman who installs solar panels for smaller users, told the Sioux City Journal. “They’re going to show that the Legislature is in the palm of MidAmerican (Energy’s) hand.”
Opponents of the proposal say it will make solar projects less affordable. Solar arrays already installed would be exempt from the new fees, but utility companies would be able to charge the fees on any new installations.
Urbandale Democratic Rep. John Forbes, who has solar panels on his Urbandale pharmacy, said a new fee would cause Iowans to hesitate when considering solar installation. He said such a fee would have increased the payback period on his installation from eight to 14 years.
“So in that case I have to make a business decision whether I would have even wanted to invest in that because I invested about $100,000 into my business to bring that,” Forbes said during recording of the latest episode of “Iowa Press” on Iowa Public Television.
The proposal has passed through the Iowa Senate. Senate File 583 was approved by a 28-19 vote with mostly Republicans supporting and Democrats opposing.
A similar proposal is under consideration in the Iowa House. But House File 669 has not been debated by the chamber. Typically, leaders do not call up a bill for debate until they are sure there are enough votes to pass it.
Forbes said he thinks there may not be enough House support yet.
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Rep. Jarad Klein, R-Keota, said he cannot support the proposal because so many farmers in his district use solar panels to defray energy costs. Washington County from 2012 to 2018 was one of three Iowa counties to claim more than 300 solar energy system tax credits, according to state revenue department data. (The others were Linn and Winneshiek counties.)
Klein said solar panels are particularly prevalent on hog-finishing operations.
“This is one of the few ways that farmers have been able to offset that peak cost they face,” Klein said. “In a lot of ways, distributing that peak power generation out, I would argue, in my district has really helped to save us from having to upgrade a bunch of our transmission lines, transmission poles and substations, all of that, for nearly a decade now. Because we’ve spread out that peak generation, we’ve been able to help subsidize or support the grid.”
Mohr said some Republican House members have questions about the proposal, and he is answering them and encouraging their support.
While Forbes doubted whether there is sufficient support for the proposal to pass the House, Mohr said he expects to see it debated and voted on before the Legislature finishes its work for the year, which could be yet this month.
“I think there’s growing support in the chamber for it once people understand it. And part of my responsibility is to help educate people as to why this is the fairest way to do this,” Mohr said.