Iowa utility, solar installer at odds over fees paid by large power users

Although Alliant Energy earlier this summer agreed to remove one roadblock to solar arrays in Iowa, it has been holding fast to another one.

The utility is operating under a tariff approved early this year that makes it nearly impossible, according to one installer, for large power customers to install solar systems.

The tariff feature has changed the process by which customers like manufacturers and wastewater treatment plants move from a rate class with a large demand fee to a rate class without a demand fee. That is a huge factor in the distributed-generation arena because customers that pay a demand charge – which can be half of the monthly bill for those customers – typically find that generating their own power doesn’t work out financially.

Solar installer Barry Shear wants to liberate large Alliant customers from what he terms their “imprisonment” in the “large general service” category, thereby allowing them to explore the possibility of installing solar panels. Shear, president and owner of Eagle Point Solar, has a complaint about the matter pending before the Iowa Utilities Board.

Shear has challenged Alliant over solar policy in the past, most notably in a state Supreme Court case that allowed third-party ownership of solar systems.

The current case arises form a tariff that state regulators allowed Alliant to change in January. As a result, customers that use more than 20,000 kilowatt hours per month will continue to be charged a demand rate until their monthly use has fallen below 20,000 kwh for 12 consecutive months. Under the former tariff, that change was triggered after just one month of usage below 20,000 kilowatt hours.

Alliant spokesman Justin Foss said the company changed the tariff in response to complaints from some large customers who experienced sudden “bill shock” when they were shifted – due to a one-month drop in power use – from the large general service category, where the hefty demand charge is offset to some degree by a low energy cost per kilowatt hour, into the “general service” category. That rate class features no demand charge, but a higher cost per kilowatt hour.

“Customers were telling us they’d have a temporary change in usage, and that would force them to change from one rate class to the next. Customers didn’t like the instantaneous change. We worked with customers and regulators to put parameters around that switch to eliminate bill shock.”

Shear sees the change in a different light.

With the new threshold as of January, Shear said, “(Large general service) customers are imprisoned in that rate category for at least 12 months.”

Shear said he’s been talking about the potential of solar to one of Alliant’s large general service customers. This company, which manufactures rubber products used in electric ovens, uses about 23,000 kilowatt hours monthly – just high enough to prevent it from moving into the lower category.

This company must pay a large demand fee, but doesn’t use enough energy to reap a substantial benefit from the lower per-kilowatt-hour rate.

He’s also been talking to a grain operation in the large general service category that uses lots of power about three months a year, which imposes on them a demand charge 12 months a year.

As a result of the tariff change made in January, Shear said, both companies are “stuck in purgatory.”

Alliant has asked the board to dismiss Shear’s case, while the state’s Office of Consumer Advocate and a coalition of environmental organizations have intervened, urging the board to make a decision on the issues brought by Shear.

Shear also has asked the board to override Alliant’s policy that it does not allow customers in the large general service category to net meter.

In the section dealing with alternative energy production, Alliant’s tariff lists the customer classes that may net meter: residential, general service, agricultural. The “large general service” category is notably missing from the list.

“They didn’t mention it,” Shear said. “Why did they do that? I don’t know.”

Shear said he spoke to some former commissioners who were on the board when it approved the tariff, probably about eight years ago.

“They don’t know either,” he said. “It’s the way the tariff was approved and nobody complained about it at that time because they didn’t know what they were doing. It might have been as long ago as 2007. Nobody could contemplate what was going to happen with renewables.”

However, the net metering issue is mostly theoretical, Shear said, since solar production remains financially unattainable for most of Alliant’s customers that are large general service customers with a demand bill to pay for the foreseeable future.

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