Letter: Proposed fee makes electric bills equitable

Indian Municipal Power Agency (IMPA) appreciates the article, “Huntingburg Council: Solar Panels on Homes Could Face $50 Monthly Tariff”, written by Matthew Crane, as well as the online feedback from Huntingburg’s electric utility customers. As public power, we welcome a healthy and respectful dialogue with our member’s customers. There are a few points in the article we would like to clarify.

As noted in the article, IMPA is a non-profit wholesale electric provider to the City of Huntingburg whose primary goal is to provide a low cost, reliable and environmentally responsible power supply to its member communities. Similar to IMPA, the Huntingburg Electric Utility is also a non-profit utility that delivers reliable electricity to the citizens of Huntingburg at a low and fair price.

An evolving question in our industry is how to enable the safe installation of rooftop solar without placing an undue burden on fixed and low income customers who cannot afford rooftop solar. In strictly an advisory role, IMPA presented a net metering ordinance to the Huntingburg City Council for its consideration. The ordinance provides Huntingburg customers the opportunity to install renewable energy such as solar panels on their homes. In the absence of this ordinance, Huntingburg customers currently do not have an opportunity to take advantage of the benefits of net metering. The ordinance is designed to ensure the safety of customers and the utility employees, to establish guidelines for the utility and customers to follow, to allow net metering customers the ability to “bank” excess renewable generation to be credited against their future usage, and to provide a fair allocation of the costs of implementing such a program among Huntingburg’s customers.

Neither IMPA nor Huntingburg realize any financial benefits from the proposed interconnection agreement ordinance that Huntingburg’s City Council will consider.

Huntingburg’s Electric Utility is a non-profit, so all of the costs of delivering power to customers are accumulated. The electric utility develops rates for each of the Utility’s customer types – residential, commercial, industrial – based on what it costs the electric utility to deliver the power to the respective customer type. Many of those costs, such as substations, electric poles, electric lines and meters are costs that have to be incurred no matter how little power your home uses from the electric utility. We often refer to these costs as “fixed costs”. These fixed costs are shared by electric customers based on how much energy each customer uses. They are recovered through your electric rates.

Solar panels are not affordable by many classes of customers and can’t physically be installed by a customer at many locations, such as those that are not conducive to direct sunlight or apartment buildings. A primary group of people that will not have solar panels as an option are many of the elderly and lower income customers. With this in mind, if your neighbor installs solar panels on his or her roof, their power usage from the electric utility will decline and they get to “bank” any excess power with the electric utility to be credited against future usage. However, since the sun doesn’t shine twenty-four hours a day, they will need back-up power from the electric utility every evening, on cloudy days, and when their solar equipment encounters operating problems. This means that despite the fact that your neighbor is taking less power from the electric utility, the electric utility has to invest the same amount of money for fixed costs for your neighbor as they do for you because they have to be able to provide power to that customer, immediately, when it is needed. Since you are now taking more power than your neighbor, you are paying for your neighbor’s fixed costs. The proposed customer fee, to be applied only to customers with new residential solar systems as discussed at the meeting, would ensure that you do not have to pay for your neighbor’s fixed costs. In particular, this protects the fixed income and low income customers who cannot afford solar panels from having to subsidize their neighbors.

The $50 fee presented at the meeting is just a typical example of what other communities in Indiana have implemented for rooftop solar installations. The Huntingburg Utility Board will decide if a customer fee will be necessary, and if so, what that fee amount should be. In any case, the fee will NOT result in additional income for Huntingburg’s Electric Utility or IMPA.

IMPA believes in solar power, as is demonstrated by our proposed solar park in Huntingburg. Our recommendation that the City Council consider introducing the proposed interconnection agreement ordinance was not for the financial gain of IMPA or the City of Huntingburg, but rather to protect all of the community’s electric customers by ensuring everyone pays their fair share of the fixed costs.

Ultimately, it is up to the Huntingburg community, customers, and City Council to decide on one of the following paths:
1. Either, leave the rates as they are in which fixed and low income customers provide a subsidy to rooftop solar customers;
2. Or, adopt a net metering customer charge which collects a fair share of the fixed utility expenses from rooftop solar customers to avoid the subsidization from fixed and low income customers.

We welcome further conversation and your suggestions in ways to encourage rooftop solar panels and at the same time protect fixed and low income customers from subsidizing the net metering customers.

Thank you.

Doug Buresh
Sr. Vice President, Planning & Operations
Indiana Municipal Power Agency