Iowa utilities float new charges for customers with rooftop solar

Iowa’s two major electric utilities appear poised to seek a rate restructure that some solar supporters believe would undermine distributed generation in the state.

Over the past several weeks, both utilities made presentations to the Iowa Utilities Board outlining potential rate changes that would impose a demand fee on customers who generate some of their own power.

The demand charge, which is based on a customer’s peak demand for power, is common for industrial and commercial customers, and recently some utilities have begun exploring similar charges for residential customers.

“We’re concerned that Alliant and MidAmerican are trying to force the parties into a confrontation around very dramatic rate-design changes, and singling out solar customers in particular to bear the brunt of these new rates they want to charge,” said Brad Klein, an attorney with the Environmental Law & Policy Center. “We feel it is not appropriate and is not called for by any data that has been collected.”

Klein and other clean-energy advocates also are concerned that the utilities may try to push through a new rate without going through a rate case, the standard process for doing so.

Utilities cite fairness

MidAmerican and Alliant presented their preliminary outlines as part of an extensive exploration of the state’s distributed-generation policy known as a “notice of inquiry.”

In January 2014, the IUB began soliciting information on whether to change any aspect of its policy regarding distributed generation. Hundreds of people entered their thoughts into the docket, and last October, the board ruled that no change was needed at that point.

However, it did at the time also invite the utilities to present their thoughts on alternative rate design.

Although the rate presentations don’t spell out particulars, they make it clear that the utilities believe that customers who generate some of their own power solar impose substantial burdens on the system. One graphic in the Alliant presentation, for example, shows that DG customers on the whole actually have a higher peak demand than customers without solar panels. Delivering power at peak times tends to be especially costly.

And those costs, according to Alliant, are borne by those customers who don’t produce any solar energy – over 99 percent of the customers of both MidAmerican and Alliant.

Pointing out that MidAmerican has not sought a tariff change at this point, spokeswoman Ruth Comer said in an e-mail that the company seeks to treat customers fairly.

“As new technology makes it possible for more consumers to generate a portion of their power needs, a new price structure is needed to ensure affordable, reliable and safe energy is available for all customers, and that all customers pay for the services they use.

“Distributed generation is typically installed by those who have the means to afford it, and because of our current price structure, it’s subsidized by those who can’t afford it. We have to be able to tell all our customers that they are paying a fair and reasonable amount for the grid services they use.”

More details on both utilities’ visions for future rates likely will be forthcoming within the next week.

‘It doesn’t belong here’

By now launching a discussion of a rate change that would upend the economics of solar generation – the utilities are “going against what the board has been doing for the last couple years,” Klein said.

As part of the long-running distributed-generation docket, the utilities board last October instructed both utilities to offer up pilot projects “consistent with this order.” The overarching message of the order, however, was that the board saw no need to make any fundamental changes in its policies with regard to distributed generation.

Given that, Klein said, “I can’t imagine characterizing (a rate hike for solar customers) as a pilot. That certainly wasn’t what the board meant. They were encouraging the utilities to develop pilots to encourage distributed generation, not to penalize DG customers through discriminatory rate policies.”

Justin Foss, speaking for Alliant, said that the forthcoming pilot will “present the start of a framework for where we’re going, to do a pilot project for a temporary amount of time.”

Andy Johnson, a solar promoter and director of the Winneshiek Energy District, said he thinks the utilities are “trying to slip this (rate hike for solar customers) in and make it irreversible. It doesn’t belong here, because the board in this DG docket has already said, ‘We are not ready to do either of the two things that the two sides have pushed for.’

“The utilities have pushed for getting rid of net metering, and the solar advocates have said, ‘we really need a value-of-solar study.’ ”

At the IUB’s meeting earlier this month, energy consultant Karl Rabago presented a case for postponing any discussion of a rate restructure until more data has been gathered.

Although both Alliant and MidAmerican contend that solar customers take more from the system than they contribute, Rabago presented a chart demonstrating that the balance of value-of-solar studies – accounting for a broader range of benefits from rooftop solar – done to date do not bear that out.

Although three studies financed by utilities found that solar customers were getting a bit more than they were paying for, the other eight studies concluded that the value of solar exceeded the retail cost of power. A recently-completed analysis done in Maine found that while the average retail cost of power was about 13 cents per kilowatt hour, the 25-year levelized value of distributed solar was nearly 34 cents per kilowatt hour.

Although Alliant does not support a value-of-solar study at this point, Foss said that the utility does wish to continue studying the matter in a collaborative fashion. On that issue, there may be a very small patch of common ground.

In testimony he filed with the IUB, Rabago said, “The Board should also consider next steps in the docket or additional dockets to focus specifically on data needs and development of a value-of-solar methodology to be applied in the future. While it is premature to commission a value-of-solar study now, as the Board noted in its October order, the data collection can begin now.”

19 thoughts on “Iowa utilities float new charges for customers with rooftop solar

  1. So, getting rid of net metering means that any distributed power dumped onto the grid is free to the power companies who then sell it to everyone at a 100% profit. Nice work, if you can get it.

    I t

    • They just dont get it, I mean you are being given clean energy from 8 til 5 and its a lot cheaper than buying it from a coal or gas fired power station, no transmission losses and it means you dont have to rebuild your grid to cope with peak demand during the day
      These fools are only speeding their demise as battery storage solutions are here so in the end, who will need them? and they will go the way of the dinosaur

  2. If this is the case they should be paying the on and off peek rates for the electric that is supplied to them on the same ratio as the power providers.

  3. I would say they should require utilities to pay about 20% below whole sale. Also adjust monthly fee based on more realistic infrastructure and less based on usage.
    HOWEVER, they need to agree to cap executive compensation including stock option etc. at around $100/hour lol.

  4. For years the power companies sniveled and whined that customers needed to use less electricity so the power companies wouldn’t have to build new power generation plants. Now that people are doing just that by installing solar panels and wind generators the power companies cry “it’s unfair to the customers that don’t have self generating systems and solar panel customers should be charged extra. Same old BS, somebody is identified as having money and somebody else wants it.

    • They see the writing on the wall, solar in the home with a storage solution, Tesla is already available who needs them?
      The storage solution will get better in the next few years then they REALLY need to worry as the average solar owner will say Bye Bye, if they need more power, then add some more panels and up your inverter, I bought a 4.2Kwh Sunpower system we installed last July, makes me more power than I need, even in winter, it was a PITA to get it installed as the local power company blocked me every way they could.
      So for me to get a storage solution, Tesla is not my first choice but if I needed to Id get another 3 kwh up my inverter and add a storage solution but the monthly connection fee at this stage it isnt worthwhile but Im in NY so who knows

    • That is exactly correct. Having failed to get into roof top solar, utilities are crying foul.

      I installed solar four years ago. The bald fact is electric power generated by my panels goes into my home or my neighbor’s homes. I produce power at 5 volts above the grid voltage – typically 240VAC. Power produced by my panels doesn’t go into the grid more than a few meters.

      O.K. amortize the cost of 30 meters of 12g underground electric cable over the next 30 years (expected cable life). So a fair rate assessment for grid use by my panels is about $3.00/30 years is $.10/year. Utility commissions and the “rate assessments” are a joke.

  5. The utility is worried about fairness? That’s a funny way to spell profits; that’s what they’re really worried about. They are right about costs being shifted to those without solar. However, did they ever ask the non-solar customers if that was ok? I don’t have solar, but concern for the environment says I will pay the small charge to subsidize the grid.

    • Its funny the “They dont subsidize the grid” a funny argument and a lie as well, my monthly connection fee pays for subsidizing the grid, the clean energy I produce below retail rate which they sell for full retail subsidizes the grid, but the thing that really pisses me off is, if you look at the annual report of the power companies, they write off the “grid maintenance” on their taxes so basically they arent paying for it either so its just a lie they use to say “OH its not fair”
      Typical BS created by management to keep their monopoly in place

  6. If you can afford solar panels you should be able to afford the Tesla Power Wall and get off the grid completely. Buy one and now the power company can whine about fewer people buying power at all. Some money is better than no money at all.

  7. It’s all about money. Nothing about the benefits to the environment. With coal mining companies going broke, cheap electricity will no longer be the norm. We have to blame solar. Of course, utilities love buying solar and wind directly from the source. The life time costs is less than coal. The utilities better watch their back side. With fuel cells coming and advances in battery systems, the consumer will have the option to be completely off the grid. More small towns and rural electrics will convert to local distributed generation and the grid will be totally screwed. The days of the grid monopoly are numbered.

    • Correct they tried everything to stop me installing a 4.2kwh Sunpower system, all kinds of BS about zoning and system size and not doing net metering
      I like you am waiting for something better than the Powerwall from Tesla, I think the cost/charge/discharge cycles is still too high but if I needed to I could install one and then just up my panels and inverter and then they have one less customer who “is unfairly using the system, oh wait I pay a monthly connection fee, I provide the power company with my excess clean energy with no transmission losses they then charge full retail for, and then the ultimate insult “I dont pay for grid maintenance, if you look at their annual reports they write that maintenance off on tax so neither do they”
      But hey a good lie if you say it enough sounds like the truth doesnt it, ask Hilarious Crimton

  8. The utilities have to provide power 24-7. Customers utility bills typically have cost of producing electricity being less than 50 percent of the charge. The rest of the charge is cost of transmission, billing, and company profit. There is very real costs to utilities to be able to repair damages to their systems due to storms.

    Solar users cut down on the payments for transmission. billing, and profit which have to be met by the non-solar users.

    In addition, net metering is when utilities pay retail price for solar energy that is returned to the grid by the solar user. This price is more than double the cost of generation. Typically the cost of electricity generation is around 4 cents per kilowatt-hour. Net metering may have utilities paying back to customer 13 cents per kilowatt-hour.

    These extra expenses for utilities have to be paid by the non-solar users who typically are lower income than solar users.

    James H. Rust, professor of nuclear engineering

    • Dr Rust
      You do know that the utilities write off the “maintenance” on their annual taxes dont you, look at their annual reports
      As for the cost to low income users, again a lie because they get that subsidized by the government so the tax payer pays for it, so the tax payer is again paying to subsidize a monopoly that has no desire to change their business model, rather than embracing solar.
      Im in NY and I can assure you I dont get retail for the excess power my Sunpower system produces, I get wholesale
      I installed a solar system because with added “fees and taxes” I was paying 25C per KWH, even if wholesale rates is 6C someones screwing someone here dont you think?

    • 4 cents per kilo hour doesn’t include the full plan from the strip mining to the fly ash containment! When they have to monitor the waist and strip mines forever or indefinitely. I am a business owner and anything with terms that include forever in a business plan don’t work out economically and anyone who thinks its works out profitable is not thinking ahead more than a few years. Nuclear fits that failed mold as well.
      I am currently working with rural electrical co op’s on solar with storage that under cuts coal but, wait that can’t be done they say! To late we are doing it!

  9. let’s play devil’s advocate. If a non solar owner makes their house extremely efficient and starts using less energy like the solar panel owners, they should also be charged more as well.
    Electric companies will whine and moan no matter what the situation

    EFF em….

    • They’ve already figured out this scheme. If any electric customer in our “regulated” monopoly IOU territory takes any utility incentive or discount for low energy light bulbs, more efficient HVAC equipment, more attic insulation, etc., then the IOU is allowed to claim this energy reduction for themselves and raise everyones’ rates in the future to make up for reduced electricity demand! They also get to make 10% ROR on the energy advice “services” that are subcontracted to another company that goes door to door, sends mailers, etc.

      As we’re already super efficient, I declined the offer when they came knocking. A relative of mine had them come in and I saw the results of the written report. They gave her a box of CFLs and the report stated that every bulb was installed in the home with specific utility kWh reductions noted. The sad thing is that she only wanted a couple of the bulbs installed and the rest are now in her closet for future use! She was happy to get some “free” bulbs and a “free” inspection. I’m just waiting for the first fraud based class action lawsuit to be filed against the utility, assuming such negligence is widespread.

  10. It would be like the propeller airplane companies trying to keep the jets out of the sky…it’s inevitably coming. Silly for the dirty-producers to spend any more money/time trying to defeat solar/wind.