Ind. Senate committee approves bill to kill net metering in 2022

Source: Jeffrey Tomich, E&E News reporter • Posted: Wednesday, February 22, 2017

A week after a lengthy and contentious hearing, the Indiana Senate Utilities Committee yesterday passed a controversial bill that would end net metering in the state in five years.

Members voted 8-2, mostly along party lines, to approve an amended version of S.B. 309. The bill would change how customer-generators are compensated for excess energy they produce, replacing net metering with a system that credits utility customers at a rate 25 percent greater than the utility’s wholesale energy cost.

The amendment would actually end net metering five years sooner than the original bill filed by Sen. Brandt Hershman (R). Still, committee members said the amended version represents an improvement because it extends the period during which existing net-metering customers are grandfathered under the existing tariff.

Customers who have net-metered energy systems installed by June 30 will continue to receive the retail rate for excess generation for the next 30 years. Customers who install systems between July 1 and June 30, 2022, would be grandfathered for 15 years.

After June 30, 2022, customers who install rooftop solar systems will be credited at 1.25 times the utility’s wholesale energy costs.

The bill also raises the cap on cumulative participation for net-metering programs to a maximum 1.5 percent of a utility’s summer peak demand.

But Kerwin Olson, executive director of the Citizens Action Coalition, an environmental and consumer advocacy group, said the cap is a red herring and the 1.5 percent figure will never be reached within five years.

“If we think 1.5 percent is the right number, then why are we killing [net metering] before we hit that number?” he said.

Immediate effects

While the bill still has to win support of the full Senate before the House takes it up, the legislation is already having an effect on Indiana’s solar market, Olson said.

N. Ryan Zaricki, the president of Whole Sun Designs Inc., a small residential solar installer based in Wadesville, Ind., said the bill could lead to an uptick in business this spring, with homeowners rushing to get systems installed before grandfathering terms change in midyear.

Ultimately, he said, it would kill the rooftop solar industry in Indiana.

“We’re going to have a boom for six months, and then we’re going to have a bust,” Zaricki said.

Supporters of S.B. 309 include the Indiana Energy Association, the Indiana Chamber of Commerce and Americans for Prosperity, which testified last week that net metering results in utility customers subsidizing customers with rooftop solar systems.

“Yes, there is a subsidy,” Hershman told the committee yesterday, citing reports by a Massachusetts Institute of Technology economics professor and the Indiana Utility Regulatory Commission (IURC).

Hershman said it has been the policy of the Indiana Legislature to prioritize renewable energy. “The only question is at what rate,” he said.

He also acknowledged that the compensation rate specified in the bill (25 percent above the utility’s wholesale energy cost) is “arbitrary.” But, he said, it is simple and avoids an overly complex calculation.

“What that number is is open to debate among all the members of this committee and the [General Assembly], and I’m happy to have that discussion,” he said.

Bill opponents, citing a lack of specific utility data in the net-metering debate, have urged the committee to turn the issue over to the IURC to conduct a study that considers all of the costs and benefits of rooftop solar on a utility’s grid, and then determine appropriate compensation (Energywire, Feb. 10).

State Sen. Tim Lanane (D) drafted an amendment that would require an interim legislative committee to prepare a study on net-metering tariffs. But the committee chairman, Sen. James Merritt (R), did not allow the committee to vote on it.

“We are not a ratemaking body, and we are ratemaking in this bill,” Lanane said. “I do not know why we don’t trust the Utility Regulatory Commission to do their job. They have the expertise.”

Correction: A previous version of this story misstated the credit that would be given to customers who install rooftop solar systems after June 30, 2022.