New bill is "clear attempt by MidAmerican to monopolize the sun in Iowa"

A new bill backed by MidAmerican Energy would devastate the ability of Iowans to install solar panels for their homes or businesses. House Study Bill 185 would undo a longstanding policy of net metering, which “allows residential and commercial customers who generate their own electricity from solar power to feed electricity they do not use back into the grid.”

Iowans served by monopoly providers MidAmerican or Alliant Energy have been able to use net metering since the 1980s, under rules adopted by the Iowa Utilities Board.

In recent years, MidAmerican has periodically sought to subvert net metering in various ways. Environmental advocates have been concerned the policy would become the next target for Republican lawmakers who destroyed Iowa’s decades-old, successful energy-efficiency programs last year at the behest of utility companies.

State Representative Gary Carlson introduced House Study Bill 185 this morning in his capacity as leader of the Iowa House Commerce Committee. MidAmerican’s lobbyist immediately registered in favor–often a sign that an interest group or company had a hand in writing legislation. The utility’s media relations staff did not respond to an inquiry about why the company is pushing this bill.

I also sought comment from the Iowa Environmental Council’s energy program director Kerri Johannsen, who told Bleeding Heartland,

HSB 185 is a clear attempt by MidAmerican to monopolize the sun in Iowa. This bill undermines net metering, a policy that allows homeowners and businesses to invest in and use their own solar energy at their own home or business. Iowa has over 800 jobs in the solar industry at small businesses across the state. A recent jobs analysis by the Solar Foundation showed that 86 percent of solar jobs nationally are in the residential and business market while only 14 percent are in utility-scale solar. This bill threatens the solar industry in Iowa as we know it.

Once again, the monopoly utilities are attempting to squash customer choice and sell as many kilowatt hours of electricity as possible while misleading policymakers about the reality of what solar contributes to the grid. Analyses in other states, such as Minnesota, have found that distributed solar more than pays for the infrastructure necessary to support it with the high-value electricity it provides to the grid. This bill is a solving a problem that simply does not exist.

Carlson assigned the new bill to a subcommittee including himself, fellow House Republican Gary Mohr, and Democratic State Representative John Forbes. At this writing, no subcommittee meeting has been scheduled.

I enclose below the full text of the bill and more background on solar power and net metering in Iowa.

UPDATE: Geoff Greenwood responded to my inquiry on behalf of MidAmerican. He acknowledged the company “worked with legislators” to draft House Study Bill 185.

The utility is framing this bill as a bid for “customer fairness,” claiming that solar users force other customers to pay more than their fair share for the electric grid. (This line echoes last year’s false Republican claims that energy efficiency programs were a “hidden tax” on ratepayers.) Greenwood wrote,

Today, not all electric grid users pay for the costs that support the electric grid that serves all customers. Think of the grid like our highway system – drivers who use the roads pay to ensure they are safe and secure, ready to use at all hours and always available, whether they are coming or going. The electric grid system is not different – a traditional customer uses the grid system in one direction when they receive power, while private generators use the grid system in two directions as they send the excess energy they produce to the grid and they take energy from it when they can’t generate enough of their own.

Under current state policy, private generators don’t always pay grid costs, which creates the cost shift. The SOLAR Act would address the customer fairness issue by eliminating the shifting of costs from one customer onto another, while maintaining the affordable and predictable energy that Iowans expect and deserve. With the passage of the SOLAR Act, Iowa can capitalize on a policy that will encourage solar growth through community solar, subscription-based solar and utility-scale solar, while also advancing private generation in a responsible and fair way.

Whereas solar advocates point to research showing small-scale projects (known as “distributed solar”) pay for the infrastructure supporting it, MidAmerican asserts,

Iowa’s current policy creates a subsidy that forces customers who don’t have private generation to pay for those who do. We support customers having private generation, but not the cost shift that’s created when they don’t pay for their use of the grid. Customers who have not chosen to install private solar or who can’t afford to do so subsidize customers who do, to the tune of nearly $7,000 over the life of a typical solar installation.

Greenwood denied that the policy was an attack on net metering. He spun the bill as a policy to “set the stage for more solar development and provide consumers choices by allowing them to select the best way to pay for their use of the grid.”

The SOLAR bill does not change net metering policies. Customers can still “net” their bill with the energy they produce. They can also still “sell back” or “bank” any excess energy they produce to the utility, receiving monthly energy credits that can be cashed out annually. The rates paid for that energy generated by a private generation customer don’t change. The only difference is that they have to pay their share of the fixed costs to use the grid.

In reality, as MidAmerican’s analysts surely understand, solar will not be economical for homeowners or small businesses once huge additional fees are levied on Iowans who want to install solar panels.

SECOND UPDATE: The Iowa Environmental Council’s Johannsen responded to MidAmerican’s comments.

MidAmerican’s statement about this bill contains a lot of misinformation, beginning with their claim that HSB 185 does not affect net metering. Under Iowa’s current policy, solar customers pay a fixed charge every month, the same as all other utility customers. They can use the solar that they produce and receive credit for electricity that they put back on the grid. These credits off-set their use at times when solar is not producing. This policy, typically referred to as “net metering,” has helped grow customer-owned solar in Iowa and this approach has been upheld through multiple challenges by MidAmerican. The “options” presented to customers in HSB 185 are all fundamental departures from Iowa’s current policy and undercut the economics of customer-owned solar.

MidAmerican’s characterization of the costs of solar to the grid and, in particular, the idea that solar customers are “super-users” is alarming and seems to rely on average Iowans not understanding how the grid works. In fact, the poles and wires that deliver power to our homes are the same ones that deliver power to the grid. Solar customers are not given special or different wires and using the grid in both directions does not put added stress on that equipment. That’s just not how it works. Solar customers also pay for interconnection costs, including any necessary upgrades to the system, up front.

It is very hard to understand how MidAmerican believes it can justify increasing rates for solar customers by over $300 per year when these customers are already contributing their fair share of costs through the high-value electricity they are delivering to their neighbors. Electricity flows from where it is produced to where it is needed, taking the shortest possible path to get there. When solar customers produce more energy than they need, they are supplying power to their neighbors, power that would have otherwise been supplied by the utilities with all the associated generation and transmission costs. And they are providing that energy when it is needed most, during expensive peak hours. In fact, MidAmerican charges residential customers on a time-of-use rate 21 cents per kWh during their peak summer hours. Most solar customers “cash in” those credits for off-peak energy valued at 10.5 cents per kWh. That is a big difference in value with the utility coming out ahead.

Finally, this bill is not necessary to allow for utility solar development as MidAmerican claims. They have the ability to file with the Iowa Utilities Board at any time a request for advanced ratemaking principals for a solar project and, in fact, we would welcome that. We think more solar is better. However, we are certain that this bill is not about expanding solar. We encourage Iowans to take MidAmerican’s talking points with a grain of salt. At the end of the day, MidAmerican is a monopoly, interested in protecting its monopoly status. We cannot allow MidAmerican a monopoly on the sun.

THIRD UPDATE: Reader and longtime environmental activist Matt Ohloff, who represents Iowa Citizens for Community Improvement Action Fund, correctly notes, “The bill would also harm people who have DG [distributed generation], non-utility owned wind. The bill would hurt the solar industry more than the wind industry, but the bill is not exclusive to net metering for solar.”

As of February 21, MidAmerican and the Iowa Association of Municipal Utilities are the only entities registered in favor of the bill. Groups lobbying against it so far: Iowa Environmental Council, Environmental Law & Policy Center, Iowa Solar Energy Trade Association, and Iowa CCI Action Fund.

FEBRUARY 25 UPDATE: Carlson scheduled a subcommittee hearing on HSB185 for 8:00 am on February 26. The room should be packed; lobbyist declarations show many more groups have weighed in for or against the bill.

Appendix 1: Full text of House Study Bill 185

Appendix 2: Net Metering fact sheet from the Iowa Environmental Council (click here for a pdf version)

NET METERING
Driving solar energy investments and bringing value to the grid

Net metering is a policy that credits solar energy system owners for the electricity they add to the grid. Solar customers are only billed for their “net” energy use.

During daylight hours, solar systems typically produce more electricity than a customer uses. Net metering allows solar customers to credit excess production against the electricity consumed at night or when electricity use exceeds solar system output.

With net metering, solar customers add electricity to the grid during daylight hours, when electricity is in most demand and most expensive for utilities to produce.

Net Metering Brings Value to the Grid
Distributed generation (DG) is electricity that is produced at or near the point of use. When a customer’s solar system produces excess electricity, it goes back onto the grid, serving the needs of nearby customers. Iowa homeowners and businesses in all 99 counties bring value to the grid through their private investments in solar.

Due to the high demand for electricity during daytime hours, or peak demand, the electricity produced by solar systems comes onto the grid when it’s needed most. Not only do distributed solar systems provide electricity at a vital time, utilities like MidAmerican Energy make a profit off of the electricity that their solar customers add to the grid. MidAmerican Energy charges customers peak demand rates of 21 cents per kilowatt hour in the summer season when both solar production and electricity demand is highest but only credits solar customers only 10.5 cents per kilowatt hour for what they add to the grid during these peak times.

Analysis shows that solar customers more than pay for infrastructure costs with the high-value energy they provide to the system.

Net Metering Encourages Private Investment and Job Growth
Net metering is a driver of solar sales. When an individual or business considers purchasing a solar system, net metering is essential to a reasonable payback period for their investment.

Net metering increases demand for solar energy systems; creating jobs for the installers, electricians, and equipment suppliers in Iowa’s growing solar industry. Iowa’s solar industry supports over 800 jobs in communities across the state. An estimated 86% of solar jobs in the U.S. are for homes and businesses with only 14% in the utility sector. Net metering is critical for these Iowa jobs.

Net Metering in Iowa and Elsewhere
Net metering gives Iowa homeowners and businesses an option to take control of their energy costs. Iowa’s major utilities, MidAmerican and Alliant, offer net metering policies regulated by the Iowa Utilities Board.

Illinois, Minnesota, Missouri, and Kansas have pro-solar policies that are leading to job growth in those states. Iowa can continue to see those benefits as well with good policy.

In states that have moved to undermine or undo net metering policies there has been a serious decline in the number of new solar installations

Appendix 3: Iowa Solar Energy Fact Sheet, produced by the Iowa Solar Energy Trade Association and the Iowa Environmental Council (click here for pdf version)

Iowa Solar Energy Fact Sheet

Solar energy in Iowa is growing

• As of November 2018, Iowa had at least 98 megawatts (MW) of total installed solar capacity. This is up from approximately 2 MW of solar installed in 2012.
• Annual solar installations in Iowa have averaged 15-20 MW per year in recent years. Iowa is on track to reach 100 MW once the remainder of 2018 installations are added.
• Central Iowa Power Cooperative (CIPCO) has announced Iowa’s largest solar project at 100 MW in Louisa County, scheduled to be complete by the end of 2020.
• Every one of Iowa’s 99 counties has solar projects installed that benefited from the Iowa upfront solar tax credit. This includes 3,395 projects and counting.
• Rural counties such as Washington County and Winneshiek County are solar hot spots with more solar installed than other counties. Farmers and rural businesses are leading the use of solar in such areas.
• As of November 2018, Iowa had more small-scale distributed solar than most Midwest and Plains states.

Solar energy strengthens Iowa’s economy

• There were nearly 850 jobs supported by the solar industry in Iowa in 2018. Nationally, 86% of solar jobs are serving homes and businesses while only 14% are in utility-scale solar.
• Renewable energy jobs are growing much faster than job growth in other sectors. Wind and solar jobs increased 14.5% between 2015 and 2016 in Iowa. Nationally, solar installers are the fastest growing occupation.
• There are nearly 100 Iowa businesses involved in the solar energy supply chain.
• Investment of over $209.5 million is associated with solar projects that benefited from the Iowa solar tax credit alone, meaning the total investment in solar is even higher.

Solar energy costs are declining

• Cost have come down significantly in recent years. Lazard recently reported that utility-scale solar’s levelized costs declined 88% between 2009-2018.
• According to data provided by the Iowa Department of Revenue, average residential solar costs per kilowatt in 2014 were $3,387, falling to $2,719 in 2018. Average business solar costs per kilowatt were $3,143 in 2014, falling to $2,226 in 2018.

Utility solar and community solar are part of Iowa’s solar success

• In addition to its 100 MW announcement, CIPCO recently completed a 5.5 MW solar project that is sited at multiple locations of its member cooperatives around Iowa.
• Cedar Falls Utilities has built the largest community solar project in Iowa at 1.5 MW.
• In 2017, Alliant Energy built the largest solar project at a single site in Iowa, at 5 MW, in Dubuque.
• Many consumer-owned utilities have developed solar projects supported by Iowa’s 476C production tax credit, including 3 municipal utilities (over 3.8 MW) and 10 electric coops (11 projects at over 3.1 MW).
• Farmers Electric Cooperative in Kalona has more solar per customer than any other utility in Iowa and one of the highest amounts of solar per customer of any utility in the U.S.

Iowa has the potential to be a solar leader

• Iowa ranks 16th among U.S. states in the technical potential for solar energy production. This puts Iowa ahead of states such as Florida, Georgia, Missouri, North Carolina and South Carolina.
• Iowa has the potential to add enough solar PV to meet annual electric needs more than 150 times over.
• Alliant Energy recently filed testimony regarding resource planning that shows significant additions of solar, including 100-200 MW by 2024 and as much as 900 MW over the 20 year planning horizon.
• There are over 1,500 MW of potential solar projects in Iowa that are being studied for connection to the grid by the regional grid operator MISO.
• SEIA projects nearly 300 MW of solar capacity growth in the next 5 years.

  • Go Solar while you still can!

    I hired a solar installer in 2013. He did an excellent job sizing our system. It produces nearly exactly as much juice as we need over the course of a year. But we still pay for the grid every month when our bill for basic service arrives in the mail. If Alliant can make the case that we pay too little, they should ask the IUB to raise the monthly service rate, not try to kill off net metering.

    Last week I was in New Jersey I was impressed by the many solar panels on houses–many more than I see in my part of NW Iowa. Iowa has more sunshine but NJ ranks 2nd in solar policy while Iowa ranks 19th according to https://www.solarpowerrocks.com/state-solar-power-rankings/.

    Regardless of whether I pay my share of the grid, I am doing something to stop carbon emissions. The world will soon wish I had installed far more panels than I did. Grid cost share will be the least of our worries.

  • Thank you to the lobbyists and volunteers working at the Statehouse to protect natural resources

    It was challenging enough to work at the Iowa Statehouse on behalf of conservation many years ago. I cannot imagine how hellish it must be now.

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