by Bruce Graham
CEO of Indiana Statewide Association of RECs, Inc.People often say the sun and wind are free. But Americans are finding that harnessing these sources for electricity can be pricey.
This month’s cover story provides some of the dollars and cents info people need to know before embarking on a home wind project. Now’s a good time, too, to talk about how Indiana’s electric co-operatives approach these projects and compensate consumers.
What is ‘net metering?’The Indiana Utility Commission defines “net metering” as “the measurement of the difference between the electricity that is supplied by the utility to an eligible net metering customer and the electricity that is supplied back to the utility by an eligible net metering customer.”
Practically speaking, a customer with a generation resource such as a wind turbine or solar panels interconnects with a utility, and they trade kilowatts. If energy generated by the customer exceeds his or her power use, the excess energy flows back to the electrical system and turns the meter backwards. The net difference between how much flows back onto the utility system or flows to the meter from the utility is credited or billed to the consumer. Depending on how the rules are written, it is possible for the customer to take electricity during expensive peak times, offset that with net-metered generation in non-peak times, and end up with a zero bill at the end of the month or year.
What is the law in Indiana? Indiana regulations currently require investor-owned utilities to offer net metering up to 10 kilowatts to their residential consumers and K-12 schools.
In recent years, there has been a push to change the current rule, either in the legislature or through rulemaking. Net metering advocates would like to see an increase in the capacity that could be generated and sold back; an expansion of the categories and size of consumers who may net meter (for example businesses, universities, etc); and would like to have the REMCs included in the mandate. To date these attempts have failed, but the Indiana Utility Regulatory Commission is reviewing Indiana’s regulation to see if changes are needed.
What about the co-ops? As you may be aware, 35 out of the state’s 39 distribution co-ops are self-regulated. Each board sets policy decisions, determines rates, etc. One of the main reasons our co-op philosophy works so well is because members decide the best course of action for the membership.
The REMCs fully support a member’s option to invest in generation, safely interconnect with the utility system, and provide compensation at a rate determined to be fair to all of its consumers.
Each electric cooperative board decides whether to compensate at the retail rate or pay for excess generation at the wholesale rate. Cooperatives are non-profit utilities and most have determined that net metering compensation at the retail rate unfairly requires the rest of the cooperative members to subsidize an individual’s private decision to invest in generation.
There is roughly a 30 to 40 percent difference between the wholesale and retail rate which would have to be paid by fellow cooperative members. In addition, as mentioned earlier, net metering could also allow a customer to have no payment obligation at the end of a billing period but still enjoy the convenience of electricity when the sun isn’t shining or the wind isn’t blowing, as well as the benefits of system infrastructure and maintenance, billing and other services.
REMCs will gladly work with each consumer to help them make a sound investment choice and assist in their efforts to generate power from alternative energy sources.