Industry chief: Solar doesn’t now threaten utility profit

Indiana's power companies urged lawmakers on Wednesday to move forward with a bill that would curtail a financial incentive available to solar panel owners, even though it does not pose a current threat to their bottom line.

Indiana Energy Association President Mark Maassel told a House committee that phasing out a state program that helps homeowners, schools and churches harness the sun's bill-lowering potential would add a "level of certainty" to the industry.

Solar power provides only about 1 percent of the country's energy, and an even smaller percentage in Indiana. But the industry's recent rapid growth has traditional power utilities worried that it could eventually eat away at their business.

Maassel's group is pushing a proposal by Republican Sen. Brandt Hershman that would overhaul a process called net metering, which allows solar panel owners to feed surplus energy to the grid in exchange for credit on their bill.

Utilities say the current Indiana system of compensation is unfair because it requires them to pay solar panel owners for power at retail cost—which is more than it would cost the utilities to produce the same amount of energy. They also stress that they own the infrastructure the solar panel owners rely on to feed their excess power onto the grid and should be compensated for it.

Hershman's bill would establish a new net metering rate in five years, which would hew more closely to the wholesale cost of energy. The measure would allow people who purchase solar panels before that time to continue collecting the current rate for a decade. Those who buy solar panels before December would be grandfathered in for 30 years.

The cost and efficiency of solar technology has improved in recent years, but solar proponents contend the bill would reduce the return on surplus energy by nearly three-fold. They said that would likely kill the emerging industry by making it difficult, if not impossible, to break even on an expensive investment.

Maassel and Hershman said those concerns will be moot if the technology continues to improve.

"Technology is going to improve, or it will be disproved," Maassel said. "If the technology is wonderful, it is going to be able to compete on its own."

The measure also comes as utilities across the U.S. are increasingly turning to solar, building massive solar farms, including several in Indiana.

"We want the benefits of solar and we want it at the lowest cost possible. Those (large-scale projects) make more sense in today's world than the rooftop panels," said Maassel, whose group represents Duke Energy, Vectren and Indiana Michigan Power, among other utilities.

Without the bill, Maassel said a spike in net metering could tax grid infrastructure while eating into profit margins. That would eventually lead to higher costs for customers, he said.

"We're in a fairly advantageous spot. We have an issue, we don't have a crisis," Maassel said.

But there is reason to doubt a crisis would even develop.

Under current law, utilities can deny the benefit to new people once 1 percent of their energy portfolio comes from net metering.

Barry Goldwater Jr., a former U.S. congressman from California who testified against the bill Wednesday, said the proposal is an effort by utility companies' to cut down on consumer choice while preserving their stranglehold on the market.

"Competition is good, drives prices down and quality up—and it's the American way," said Goldwater, who is the son of former Arizona Republican Sen. Barry Goldwater. "Unfortunately the utilities have a monopoly. They don't like competition, they don't like choice."

The House committee did not vote on the bill Wednesday. Committee Chairman Rep. Dave Ober, R-Albion, said he expects to make significant changes to the measure before voting on it sometime next week.