Huntingburg considering future renewable power programs for customers

The Huntingburg Common Council heard from its electrical supplier that the city should consider new ways to handle customers using solar panels or other renewable energy generators.

Frank Smardo, Executive Vice President, Energy Solutions with the Indiana Municipal Power Agency (IMPA), spoke to the council Tuesday about those recommendations. IMPA is a non-profit wholesale electric provider to the City of Huntingburg.

Smarna started off his time with the council stating IMPA has, “no skin in the game”.

“This is 100 percent you all’s choice,” he said. “I am not here to push one way or another. We will support you if you keep net metering and we’ll support you if you don’t.”

Currently, the city electrical utility allows customers using solar panels or other forms of electrical generation to take part in its net metering program. Net metering is a system in which customers are connected to a public utility power grid and any surplus power they generate is transferred onto the grid in effect, offsetting the cost of the power drawn from the utility.

According to Smardo, while advantageous for the customer, this causes the city to have to bear the burden of maintaining the infrastructure to that customer’s property — a cost that would likely be passed on to the rest of the customers on the city’s grid.

He then described IMPA’s customer generation program. Rather than offsetting the cost to the customer by essentially running their meter backwards (although meters don’t actually do that anymore) when the solar power production exceeds the amount needed in the home, IMPA will pay the customer for that additional production at the rate of 25 percent above wholesale cost per kilowatt hour. Currently, that rate is about 2.7 cents per kilowatt hour.

According to Smardo, whereas net metering costs the city the full retail cost of the electricity customers stock back, under customer generation, that loss in revenue would be reduced. Or, rather than the customer getting an equal exchange for the power they put back onto the grid, they will receive a payment at a reduced rate. Smardo did not make clear what that difference would be, but if the city charges about 12 cents a kilowatt-hour, currently, under IMPA’s current customer generation current pay rate, the customer’s power is being purchased for about a fifth of what he or she pays to the city.

Customers could use batteries to store the excess energy they produce rather than selling it back to IMPA. Smardo stated he knew of two commercial customers in IMPA’s footprint that have went that route but acknowledged that solution may be out of reach for the average consumer. “It’s really expensive but it is coming,” he said about batteries.

He pointed out that even under this situation, that customer would likely still have to use electricity from the power grid if there are long periods of low production by their renewable power generators. “They still aren’t paying for your fixed costs,” Smardo said.

Councilman Jeff Bounds said he didn’t want the city to appear to be in lockstep with the power companies leading to “discouraging homeowners by giving them less incentive”. He stated they needed to find a middle ground to still make solar a feasible option for customers.

On the flip side, Councilman Steve McPherron express that the customer generation program through IMPA would dissuade customers from creating systems larger than necessary. “It isn’t advantageous to produce extra,” he said about the program.

The impetus in considering these changes is the fact that regardless of a customer’s power usage, the city still incurs the fixed costs of the infrastructure to supply power to throughout the city. That includes the employees, the poles, the lines, the transformers, and the equipment necessary to maintain the system.

Bounds stated that when the city last considered a tariff for renewable power, he had inquired with a solar panel installation company about the impact. He was told that in a city the size of Huntingburg, less than 25 percent of the properties can actually install solar. This is due to the location, the tree coverage, the size of the property and other physical factors that limit the impact of the panels. “If you look at every home in Huntingburg, there will be a whole bunch of people that would just say their house isn’t conducive to the idea (of solar),” he said.

The city has two customers taking part in the net metering program with one potential customer considering it. If the city changed the renewable energy generator program, those customers would be grandfathered into the program for a period of time. As part of their program, they have a limit on the number of customers that can install renewable power generators. If they switched to the IMPA customer generation plan, that limit would likely be dropped.

“I think the important thing to think about is that our utility department remains solvent,” Mayor Steve Schwinghamer stated.

He recommended the council put the issue on an agenda for a future meeting and the council agreed.