Indiana’s new law eventually eliminates net metering—but is the battle over?
With the stroke of a pen May 2, the controversial Indiana Senate Bill (SB) 309 morphed into the law now known as Senate Enrolled Act (SEA) No. 309, which gives state investor-owned utilities the win they wanted over net metering. For now.
Republican Gov. Eric Holcomb signed SB 309, agreeing with the big utilities that have argued solar users have been compensated much too generously under net metering, a billing mechanism that lets anyone with a solar panel or wind turbine receive a financial credit on their utility bill for sending excess electricity they generate back to the electric grid.
Currently, there are roughly 1,000 net metering participants across the state, including homeowners, businesses, schools, churches and others. Net metering participants get the retail rate for that power; it’s the same rate customers pay each month on their electric bill.
The utilities have argued that the people, non-profits and companies producing renewable energy and selling it at a retail rate are getting an unfair subsidy. And when net metering customers sell at the higher retail rate, they’re using the transmission infrastructure—the grid—for free. In comparison, the utilities sell the power they buy from power plants at wholesale rates to customers at higher rates to pay for the grid.
“This is a tough issue because of the subsidy,” Mark Maassel, president of the Indiana Energy Association, told Daily Energy Insider this week.
“The state does need more renewable energy and in my mind, SB 309 does an excellent job of balancing Indiana’s large-scale and small-scale renewables,” said Maassel, whose group supported the bill.
“But what I think is forward-thinking is that it also addresses the subsidies in a way that doesn’t harm anyone who has decided to install renewables,” he said.
And net metering will be left in place for a period of time, which is also a good balance, Maassel added.
While the law “doesn’t put the solar business out of business,” as Maassel put it, solar users eventually will lose the now-available financial incentive they have under SB 309 since SEA 309 cuts net metering, which has helped offset the cost of installing the technology to generate renewable energy. For customers who install renewable systems by the end of 2017, they will be grandfathered into net metering for 30 years.
Solar generators now receive 11 cents per kilowatt-hour for the extra electricity they produce. SEA 309 will reduce that rate to about 3 cents per kilowatt-hour, plus a 25 percent premium. The full-phase out deadline for net metering is 2047.
Focused opponents
Opponents of SEA 309 say the Indiana legislature has set “an arbitrary rate” for the expiring net metering, a job that’s supposed to be under the jurisdiction of the Indiana Utility Regulatory Commission.
SEA 309 also leaves the door open for the big utilities to come in and ask for more fees to be set on net metering customers, law opponents say.
Solar energy supporters lobbied hard against the bill. On Monday, several even dragged a life-sized solar panel into Holcomb’s office signed by 350 Hoosiers who wanted the governor to veto the bill.
A coalition of 14 Indiana tech CEOs also urged Holcomb to veto the bill in an April 18 letter in which they said SB 309 would:
– Impose numerous roadblocks to customer-owned renewable energy, “seriously hamper the growth of this sector,” and deter companies from using their own capital to invest in cost-saving, on-site renewables generation;
– Signal that the state is “afraid of a vibrant, competitive marketplace when it comes to the renewable energy sector;”
– Send the wrong signal to recent graduates, particularly those in the science, technology, engineering and math, or STEM, fields; and
– Not bode well for those business leaders who value data-driven decision-making both with respect to public policy and the tech and renewable energy sectors.
Now, SEA 309 opponents say, the law could make it harder to grow solar in the state because of its prohibitive punch on net metering that even restricts utilities from using it in the future if they decided to do so; they can’t under this statutory law.
In addition, the new law lets utilities increase rates on all customers to recover cost of credits due to net metering, a provision that’s expected to largely affect low- and middle-income residents, they contend.
The governor—who said in a statement that he “supports solar as an important part of Indiana’s comprehensive energy mix”—in total received almost 1,900 emails, 2,300 petitions and 800 phones call supporting a veto of SB 309.
“I understand the concerns some have expressed,” Holcomb said in a statement May 2. “But this legislation ensures that those who currently have interests in small solar operations will not be affected for decades.”
That very same day, state House Rep. Terri Austin, D-Anderson, told the press during a public appearance: “The good thing about laws is that they can be repealed.”
Pro-solar types said during debate of SB 309 in the legislature that they were considering court challenges if the bill became law. Their sentiments reportedly remain the same now, as well.
