New proposals from Iowa utilities raise red flags for solar advocates

As instructed by the Iowa Utilities Board, Iowa’s two largest electricity providers have submitted new rate structures for customers with solar panels. But the new rules don’t appear consistently to carry out the regulator’s directive to encourage more distributed generation.

MidAmerican Energy proposed one change that would do so: it would allow net metering for solar installations financed through a third party. Non-taxable entities such as governments, churches and schools tend to install solar arrays using a third party to take advantage of tax credits, but have been unable to get credit for electricity sent back to the grid.

“We appreciate what MidAmerican did,” said Josh Mandelbaum, a staff attorney with the Environmental Law & Policy Center who met with the utilities to discuss their new tariffs. “We think those changes accomplish the board’s order.”

On the other hand, he added, “We have more questions about (Alliant’s) approach,” in particular how the utility proposes to establish the maximum size for a net-metered system.

In July, as part of a nearly three-year study of the state’s policy toward distributed generation, state regulators directed MidAmerican and Alliant to file new distributed-generation tariffs, to be tried on a pilot basis for three years.

The utilities had filed pilots earlier in the year, but since they appeared to burden self-generating customers with additional costs, regulators rejected them and told the utilities to start over. Among other provisions, the commissions said that revised tariffs would need to increase the cap on net metering from 500 kilowatts to one megawatt (up to 100 percent of a customer’s load).

Alliant – but not MidAmerican – defined the term “load” to mean the maximum demand on the system at any given point in time.

The definition matters, according to Nathaniel Baer, because it effectively could reduce the amount of consumption that could be offset by solar panels. Baer is the energy program director for the Iowa Environmental Council, and also negotiated with the utilities about their new tariffs.

Limiting net metering based on peak demand, rather than on total yearly usage, “is a departure from how net metering works,” Baer said. “And I think that could lead to smaller systems and less renewable distributed generation, so I think that’s a red flag we’ll need to look at in more detail. It’s not an encouraging sign.”

Furthermore, said Mandelbaum, while a customer’s yearly electricity consumption is clear cut and documented on the bill each month, no one knows the demand. The customer doesn’t know it, and neither does Alliant, according to spokesman Justin Foss.

Foss said under the proposed scenario, Alliant would estimate a customer’s demand – or “load” – by calculating an average for all members of a given class of customers, such as the residential class.

Mandelbaum characterized Alliant’s approach as “a non-transparent, very complex way of calculating load that isn’t specific to that customer. We have a lot of concerns about that approach, and we have larger concerns about whether it’s consistent with what the board is trying to accomplish.”

Foss countered that “widely across the industry, load is defined as demand. It’s the amount of toll you put on system at any one time. Power systems are designed to (handle) demand. By designing it to match how grids are built, it makes it work better with the system.”

While the issue of what constitutes “load” is the main issue so far identified in the tariffs, it may not be the last. Mandelbaum said that clean-energy advocates have only just begun to study the tariffs, and will continue to scrutinize them.

“This is the type of thing,” he said, “where details matter.”

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