Legislative update: New Solar Policy for Iowa

We’re pleased to share an important legislative update for Iowa. The Net Metering Transition to Value of Solar Bill is a new policy that systematizes net metering while creating a new, optional inflow-outflow system. This legislation provides certainty for solar customers on policy for both net metering and the inflow-outflow method going forward. This bill would apply to investor-owned utilities in Iowa, including customers of MidAmerican and Alliant Energy.

Last week, the bill (SF 583) passed both the House and Senate by a unanimous vote. The bill will soon be sent to the Governor for final consideration. If signed into law by the Governor, the bill will go into effect July 1, 2020.

Key Points

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Solar customers taking service under both net metering and the new inflow-outflow system would be able to supply their own energy needs.
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Each utility chooses whether to bill its solar customers based on net metering or an inflow-outflow rate.
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Any kWh imported from the utility by the customer (inflow) would be paid for by the customer at the retail rate.
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Any kWh exported to the grid (outflow) would be credited to the customer at the outflow rate.
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Outflow credits would be credited monthly as dollar amounts to offset the customer’s monthly bill.
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Credit balances could be carried forward for up to 12 months.
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The utility would be permitted to recover the outflow amounts credited to customers through the Energy Adjustment Clause or other rider mechanism, similar to other energy purchases. This mechanism is also used to implement Value of Solar rates in other states.
Policy Details

VALUE OF SOLAR

Value of Solar (VOS) is a methodology for determining the monetary value of electricity produced by renewable energy systems. VOS considers the unique features of solar energy production to determine an acceptable market value that benefits both electric consumers who wish to own and operate their own solar energy systems (home owners, businesses, schools, etc) as well as utilities. The VOS methodology would be created through a stakeholder process overseen by the Iowa Utilities Board and utilizing an independent third party consultant. The inputs for the VOS Study are based on those included in the Minnesota VOS. The VOS rate will be unique to each utility based on their specific inputs. The tariff will be updated annually and the methodology updated every three years.

The Iowa VOS rate will not fluctuate by more than 5% annually.

OUTFLOW RATE

The outflow rate will initially be set at the applicable retail rate for the rate class, and therefore would be economically equivalent to net metering from a customer perspective.A VOS study would be triggered when distributed solar penetration in the Alliant and MidAmerican service territories combined reaches 5% of total peak demand for the two utilities (determined annually by the Iowa Utilities Board) or after 7 years if the utilities petition the IUB to begin the VOS process, whichever is sooner.Customers would receive a locked-in outflow rate for 20 years that would be set:• Equal to the applicable retail rate prior to VOS implementation; and• At the current VOS rate after VOS implementation.After 12 months, any excess credits revert to the utility to be used to offset collections under the rider mechanism.

NET METERING

This new policy will codify net metering while creating a new, optional inflow-outflow system. It would provide certainty for customers on policy for both net metering and the inflow-outflow method going forward including prohibitions on:• Using customer demand instead of energy use to limit system size• Charging solar customers fees that are not charged to other customers• Placing solar customers in a separate rate class. (This protection expires upon adoption of a VOS or 7 years, whichever comes sooner. At that time it will be the purview of the IUB to decide whether separate rate classes are appropriate if a utility makes such a request in as part of a rate case.)The bill also specifies that both the net metering credit and outflow rate cover all volumetric charges including any riders charges on a kWh basis. Existing net metering customers will have the option to remain on the current net metering tariff for the remaining duration of their contract.

UTILITY’S USE OF GREEN ENERGY PURCHASE FUNDS

The utilities will be able to use their own clean energy fund (comprised of voluntary customer contributions) to cover the costs of outflow payments to solar customers and avoid collection of these costs through the rider.

The proposed bill, Senate File 583 can be found online at the Iowa Legislator here.

Summary

This bill is the result of nearly a year of negotiations between MidAmerican Energy, the Iowa Environmental Council (IEC), Iowa Solar Energy Trade Association (ISETA), and other key stakeholders in the state. Iowa’s legislature has seen many years of arguments over net metering rules and the financial impact of customer-owned solar on the utility grid and other non-solar customers. This legislation will finally give common ground to both Iowa’s solar advocates and the large utilities through utilizing a third-party Value of Solar study, helping to ensure viability for customer-owned solar projects going forward.

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