During the summer, this Wisconsin home produces more energy than it consumes. (Photo courtesy TE Studio)

Wisconsin passive house at center of co-op solar dispute

Gary Konkol’s home annually produces more energy than it consumes, but his energy bill is about to go up.

Konkol is one of just eleven customers of Wisconsin’s St. Croix Electric Cooperative who own solar electric panels on their home.

A new policy that took effect in May means those homeowners will see much lower payments for the extra electricity they generate on sunny days.

For Konkol and the others, that means waiting several more years to break even on their investments — if they break even at all.

The utility, which serves about 10,000 customers in western Wisconsin, says it’s only protecting other ratepayers from subsidizing a select few.

“Unfortunately, the terms of service and [solar] rate issue has become a few members’ personal interests versus all the other cooperative members’ interests,” said Mark Pendergast, President and CEO of St. Croix Electric Cooperative, in an email to Midwest Energy News.

But solar advocates say the cooperative’s new policy doesn’t recognize the true value of customer-generated solar power.

“It isn’t fair,” Konkol said. “I would argue it’s the other way around; that we’re subsidizing the cooperative.”

The Passive House in the Woods

In 2010, Konkol built what may be the most energy efficient home in the Midwest. St. Croix Electric Cooperative actually sponsored the construction, waiving a standard $2,000 new hook-up fee for the passive house, which attracted local and national media coverage.

The 2,000-square-foot, two-story walkout just outside of Hudson, Wisconsin, features thick insulation, high-performance windows and no furnace whatsoever. A single solar thermal panel and a 4.52 kW photovoltaic system produce all the energy the home needs — and then some.

Under the policy in place at the time Konkol built the home, that extra electricity flows back onto the grid, where it helps run his neighbors’ lights, televisions, and air conditioners. In return, the coop has reimbursed him for that power at the retail rate, the same rate he pays the utility for electricity. Depending on the time of year, it’s about 10 or 11 cents per kWh.

The concept is known as net metering, in which customers’ meters or bills run forward or backward depending on the electricity they use and produce. The past three years, Konkol has earned a credit on his bill during the summer months that paid for his wintertime usage, leaving just a $25 fixed monthly base charge.

That monthly base charge, which will increase to about $28 in January, doesn’t cover the cost of providing the service, which is closer to $40 on average, Pendergast said.

“If a member is not paying for any energy purchases, the other cooperative members must make up the revenue shortfall,” he wrote.

To address that problem, the cooperative’s board in May announced the utility will no longer pay solar owners the retail rate. Instead, it will buy customers’ surplus generation at what’s known as “avoided cost,” a rate based on what it would cost the utility to buy or produce an equivalent amount of electricity on its own.

That rate: between 2.75 and 3.75 cents per kWh.

With no grandfather clause in place, customers who bought systems based on the projected payback time could be waiting three to four times longer to break even.

Dispute over ‘value of solar’

Konkol’s original net-metering arrangement with the utility was “verbal and implied,” he said. No contract was signed. Even so, Konkol said the cooperative’s board of directors is acting unethically by not grandfathering in existing customers, as other Wisconsin utilities have done when changing their reimbursement policies.

Pendergast denied the existence of an implied guarantee and said because no contracts were in place the board decided to apply the new rules to all current and future installations.

Konkol also argues that the avoided-cost rate ignores the premium solar power deserves for generating power when it’s needed most. The avoided-cost rate is based on a 24-hour average, including overnight when electricity prices drop to low demand. The surplus power Konkol’s panels produce is delivered during sunny summer afternoons, when prices are high.

But the cooperative doesn’t have the data to back that up, according to Pendergast. He said the utility doesn’t meter customers’ energy production on an hourly basis, so it can’t say whether or not a customer is using all of their solar power in any given hour.

“Their energy production in excess of their purchases for a billing period may be on weekends when wholesale power rates are low, or in late morning hours,” Pendergast wrote. “On a hot, cloudy day, they aren’t producing a kWh.”

Solar policy expert John Farrell, a senior researcher at the Institute for Local Self Reliance in Minneapolis, said solar power does tend to have additional value over a generic power source such as coal, and the avoided-cost rate doesn’t recognize that value. (In Minnesota, regulators recently started a process to develop a “value of solar” rate that considers solar’s premium.)

The conflict between this small cooperative and a dozen members is “a microcosm of a huge war being waged between utilities and customer-generators of power over the utility’s future financial livelihood,” Farrell said. Customers are finding less expensive ways to get energy, and utilities are responding by adding fees, raising rates, and hiking fixed charges.

“They just don’t know how to deal with it,” said a frustrated Konkol. “The way we produce electricity is changing, and the old model doesn’t work.”

6 thoughts on “Wisconsin passive house at center of co-op solar dispute

  1. The Hypocrisy of the electric cooperatives. They have a monthly base charge of $28.00, then they claim that renewable energy owners are getting benefits that are not available to non-owners. They want to pay off-setting rates for energy that is sent to the grid, but they want members to voluntarily pay a small, additional charge each month to offset the additional cost it takes to support renewable energy generation. They call this the Evergreen Renewable Energy Program.

    They are supposed to be member owned, but they are just a crooked as the investor-owned utilities. Are all this money going to executive salaries and perks, because it is not going to the members.

  2. In all other business if the volume of business goes down a business has to make up for the loss in other ways. In a business I owned you worked and got more business. Competition keeps you from charging other customers more just because my poor business is loosing business. If I were the cooperative I would get in on generating my own solar. Build a big array and sell off it. You can get a payback in 15 to 20 years. I’m sorry but these cooperatives need to get inventive and make it work or do like all other businesses that don’t…..GO OUT OF BUSINESS. Someone else will take your customers who are actually stepping up into wind and Solar. Cities and individuals are doing it so too bad so sad St. Croix Electric Cooperative and others who are pulling this one over on their customers.

  3. The comment in the article that says “could be waiting three to four times longer to break even” is complete bullshit. There is no way that switching from retail rate to avoided-cost rate would cause tripling or quadrupling of the break even period. The reason I can make that statement confidently is that the article forgets about the electricity that the home produces and uses for itself at an offset cost of full retail price. So this change in rate might increase the break even point by double at worst, but most likely way less than double.

  4. I’m not surprised that this happened. The board of directors of electric cooperatives get trained by “the electric industry” which means they are trained to think like the board of directors of for-profit electric company. Most electric cooperatives don’t generate the electricity they use, they buy it from for-profit electric generation companies. This means they are trained to be happy with “cheaper, but dirty” electricity generated by coal plants and they yearn for the good old days of nuclear energy. They spend their time lobbying Congress to protect these dirty coal plants and to avoid any “green energy” legislation. They don’t look forward to a greener future.

  5. “That monthly base charge, which will increase to about $28 in January, doesn’t cover the cost of providing the service, which is closer to $40 on average, Pendergast said.

    “If a member is not paying for any energy purchases, the other cooperative members must make up the revenue shortfall,” he wrote.”

    The obvious solution seems to be: charge everyone $40 for the true cost of connections, cover that cost properly, and not make it up haphazardly from per-kWh rates – right? And then pay solar producers what their energy is worth.

  6. Haddo, you blame the coop here?? I, for one, am sick of subsidizing the few who can afford solar. You forget this solar customer is using the utility for his backup. The utility still has to maintain the lines at no additional cost to this customer. This is called cost shifting and every customer who is tied into the grid is guilty of shifting the cost onto the rest of us. In this case, you forgot the most important piece. It is a cooperative utility, not an IOU. Coops are member-owned, non-profit, which means they actually look our for their customers. Please educate yourself in the future before posting that of which you do not know!