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Indiana regulators slash net metering rate, advise solar owners to buy batteries

A new ruling in Indiana could extend payback periods to as long as 25 years and effectively dry up new business in the southwestern part of the US state, according to one installer.

From pv magazine USA

A coalition of solar, environmental, and consumer advocates have condemned a recent regulatory decision that they claim will “considerably set back” the rooftop solar market in southwestern Indiana.

The Indiana Utility Regulatory Commission (IURC) delivered a final order (Cause No. 45378) that reduces the credit received by future solar owners served by CenterPoint Energy unit Vectren South. The decision also changed the period for earning credits, so that more customer-owned solar generation is credited at the new lower rate.

In its decision, the commission ruled that instantaneous netting would “reasonably result” in new distributed generation customers paying for the energy they are supplied by Vectren South, “no more and no less.” The green energy groups called the ruling “a dramatic setback” for customer-owned solar in the utility’s service territory. They said it would solidify the utility’s “monopoly stranglehold on captive consumers.”

One solar installer told regulators that Vectren South’s proposal would cut the net metering rate of 14.3 cents for residential and 9.3 cents per kWh for commercial customers to about 3.1 cents per kWh. He said that the utility’s proposed instantaneous netting methodology would “drastically reduce or dry up” his company’s business, and he said the proposal would more than triple the expected customer payback period from seven to 10 years to about 25 years.

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The utility based its net metering rate on the average marginal price of electricity that Vectren South paid during 2019. It averaged that price at Vectren South’s SIGE.SIGW load node, which it said represents the marginal price the utility paid for energy. That price of $25.47/MWh was used in a formula to yield $31.83/MWh.

In its ruling, the commission said that it found no support for continuing what it said was subsidization by non-solar customers of solar customers’ system payback periods. The utility testified that the cost to manage distributed generation customers – from interconnection evaluation to billing – are greater than those for other customers. Similarly, the utility’s witness testified that outflow produced by customer-owned resources does not reduce power plant, distribution, or transmission system costs.

The commission said that distributed generation customers could install a commercially available battery to make greater use of their solar system’s production. It acknowledged that such technology is expensive and may lengthen a solar system’s payback period. However, it rules that a longer payback period does not require Vectren South to continue allowing customers that own distributed generation resources to “use Petitioner’s electric system as their battery.”

It said that the fact that solar customers are generating behind the meter and, it said, buying less electricity, “will generate value and return on their private investment.”

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Source: pv magazine