Iowa utility reverses policy, will net meter third-party solar projects

After informing a few institutional customers and at least one solar installer over the past few months that it would not allow them to net meter their third-party funded projects, one of Iowa’s major power companies has reversed course.

After the Iowa Supreme Court one year ago upheld third-party funding of renewable-energy projects, Alliant Energy took the position that it would not agree to net meter those projects.

Under net metering, utilities compensate owners of distributed generation system for excess electricity fed to the grid. Alliant contended that the third party was essentially reselling power, impinging on the utility’s state-sanctioned monopoly within its service territory.

In an e-mail earlier this week, an Alliant employee told a member of the Cresco city council that the utility will allow the city to net meter some solar arrays that it is considering on three city-owned buildings.

“We have been reviewing your situation and others similar to it, and have determined that our Alternative Energy & Small Hydro Production (AEP) electric tariff allows net metering for third-party financed projects,” Nick Smith wrote to Amy Bouska on Aug. 6. He is Alliant’s product manager for renewables.

“Projects would still be subject to IPL’s (Alliant’s) AEP electric tariff, but would not be restricted by the form of ownership of the system.”

“I’m delighted,” said Amy Bouska, a member of the Cresco City Council, and the coordinator of the city’s energy action team, which has been investigating the feasibility of installing solar panels.

Barry Shear, president and owner of Eagle Point Solar, the Iowa solar installer that filed the legal action that led to the state Supreme Court ruling last summer, clearly was feeling vindicated.

“This is a major turnaround, a total turnaround from what they told me, my lawyer and numerous other people,” he said. The change in policy happens to have come just a few weeks after Shear filed a complaint with the Iowa Utilities Board on June 26 criticizing Alliant’s policy on net metering third-party projects. Shear felt he had to downsize a solar project for the city of Asbury in part because of the utility’s net metering policy.

The policy change on the part of Alliant could have major repercussions because institutions without a tax liability – schools, universities, hospitals, local governing entities and non-profit organizations, for example – have no way to collect the substantial tax benefits that, in Iowa, can in some cases cut the price of a solar installation in half.

Without access to a third party to provide upfront funding and to collect the tax benefits and then pass them through to the tax-exempt entity in the form of lower electricity prices, that meant that solar and other forms of distributed generation were not very financially feasible for non-taxable entities.

Justin Foss, a spokesman for Alliant Energy, said that the company had one policy – a no net-metering policy – when the third-party issue was strictly hypothetical. Once interconnection applications started to arrive at the company’s office this summer, Alliant looked at it differently, he said.

“The policy changed once we actually got something to review from our customers,” he said. “We reviewed what they presented. We looked it over, and found the most customer-focused options possible, and here we are.

“We have told everybody who has provided a formal application that, ‘Yes, we’re accepting formal applications.’ We want to work with our customers, and this is just further proof of that.”

Alliant no longer views third-party net metering as reselling of energy, Foss said.

Until very recently, Alliant’s institutional customers understood it to be hostile towards net metering third-party projects. One college in Alliant’s territory didn’t even even consider sizing a solar project big enough to generate the excess power that would need net metering: the administration didn’t think that net metering would be granted.

And Shear said he downsized several projects because of his understanding that Alliant would not grant net metering privileges.

In Cresco, Amy Bouska said that in light of Alliant’s initial refusal to net meter a project there, her energy team had begun to look for other ways to cover the cost of installing solar panels on City Hall, the fire station and the road maintenance garage. They thought about a leasing arrangement, or putting up a very small array as an experiment.

“I seriously doubt that we would have moved ahead without a (power-purchase agreement),” she said.

Alliant’s change-of-mind, she said, “reopens doors we thought were closed.”

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