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Sheila Suess Kennedy: Ford bill would reverse 2017 law’s harm to clean energy

February 1, 2019

kennedy-sheila-takingissue-2018An important bill has been sent to the Senate Utilities Committee, chaired by Sen. Jim Merritt. Senate Bill 430, introduced by Sen. J.D. Ford, would repeal the provisions of last year’s controversial measure phasing out net metering.

Before your eyes glaze over, let me explain.

Net metering is the term used for a billing arrangement between a customer who has a renewable energy system—typically solar panels—and the customer’s electric utility. When the system generates more electricity than the customer uses, the excess gets added to the grid and the customer gets credited at the same rate the utility charges when the customer is purchasing energy from the grid. Even though it’s an even swap, however, the customer also pays the utility an amount sufficient to cover its overhead costs: billing, meter reading, etc. Fair enough.

This arrangement benefits utilities, customers and the general public by increasing grid resiliency and security, and reducing carbon and toxic air emissions.

Senate Bill 309, passed in 2017, phased net metering out. Instead, customers would have to sell all the electricity they generate to the utility at a much lower price than the utility charges its customers, then buy back what they need at the “retail” price. As I calculated it at the time, utilities would pay customers somewhere between 2.5 cents and 4.5 cents per kilowatt hour, but customers would have to buy the energy back at retail rates between 11 cents and 16 cents per kilowatt hour.

SB 309 effectively priced rooftop solar and small-scale wind generation out of the market.

As Indiana University School of Public and Environmental Affairs professors Sanya Carley and David Konisky summarized in an op-ed column in the The (Columbus) Republic:

“Indiana Senate Bill 309, introduced by Sen. Brandt Hershman, proposes to fundamentally change Indiana’s solar energy policy. The proposed modifications to the state’s net energy metering program are based on a lack of evidence and faulty logic, and would severely undermine the future of solar power in the state. Indiana legislators should oppose this bill.”

The writers analyzed the bill, and ended with a plea: “The General Assembly should be looking for ways to hasten the development of solar, wind and other sources of renewable energy, rather than considering policies that impede the state’s transition to a cleaner energy future. Indiana Senate Bill 309 is clearly a step in the wrong direction.”

A number of legislators opposed the measure. Rep. Carey Hamilton—one of the most environmentally knowledgeable members of the Legislature—argued that the task of determining rates should be left to the Indiana Utility Regulatory Commission rather than the Legislature. (During the committee hearing, Hershman admitted he had “come up with” the rate in the bill himself.)

Rep. Matt Pierce pointed out the bill creates uncertainty for small businesses and Hoosiers investing in the solar industry.

“We had six hours of testimony, and the only people who were in favor of it were the utilities,” Pierce said.

Ford’s bill is a welcome effort to reverse what knowledgeable observers consider bad policy. If it gets a hearing and passes, Merritt (who is running for mayor of Indianapolis) will be able to tell voters he helped protect both ratepayers and the environment.•

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Kennedy is a professor of law and public policy at the School of Public and Environmental Affairs at IUPUI.

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