Talking Points

  • Legislation has been proposed in the Indiana General Assembly to update our state’s energy policy to correct inequities in the system, support the viability and growth of clean energy options – including renewables – and protect the reliability of the electric grid that almost everyone uses. This legislation is titled, Generation of electricity by distributed generation, or House Bill (H.B.) 1320.
  • Under Indiana’s current energy policy, the average residential electric customer can pay as much as seven times more to support the electric grid as a customer who generates their own electricity using wind turbines, solar panels and other types of renewable energy. Obviously that is not fair.
  • Currently, consumers who install solar panels, wind turbines or other customer-owned generation may be compensated through a policy called “net metering.” This policy requires our state’s utilities to credit these customers at the retail rate, or the same price customers pay to buy electricity from a utility. But that retail rate includes not only the cost of the electricity itself, but also the cost of delivery it to customers through the distribution grid.
  • As a result of this net metering policy, consumers with their own generation systems do not pay the full portion of the costs of the infrastructure that serves them. That means traditional customers who buy all their power from one of the state’s utilities must pick up the extra cost.  
  • In addition to being unfair, outdated regulations will not sustain the growth in renewable energy. Unchecked, the inequity in the system will grow. As more Hoosiers move to solar, wind and other customer-owned generation (COG) systems, regular customers will have to pick up even more of the cost to support the electric grid that serves everyone.
  • There is an easy and fair fix to correct the inequities in the system that will support the growth of renewable energy options for consumers in Indiana. H.B. 1320 creates a regulatory model in which consumers with their own generation capabilities pay for their share of the grid by setting rates to ensure that fixed costs are paid by the customer who creates the cost.
  • This bill will correct the system moving forward, and existing utility customers who installed their COG equipment and signed their interconnection agreement with their respective utility on or prior to December 31, 2014, will be grandfathered from any future rate design or fixed cost charges that result directly from this legislation should it pass. The grandfathering period will be for the life of the COG unit; if the customer significantly modifies or replaces said COG unit, the grandfathering provision will be at risk. Rate design or fixed cost charges that may result from regulatory actions unrelated to this legislation may still occur and affect all customers, including existing and future COG customers.
  • B. 1320 offers new options and protections for consumers. It updates Indiana law to permit leasing of expensive residential renewable energy equipment, making the consumer-owned generation affordable for more people.   In response to problems that have emerged in other states, measures are included in the legislation to ensure the customer is fully informed regarding the sale, ownership, lease, installation, operation and costs and expected benefits of a customer-owned renewable energy system, which will help to protect consumers from potential fraud. The legislation also outlines provisions that ensure the electrical interconnections between the customer-owned generation system and the utility grid meet standards for safety and reliability.  This will afford protection of consumers and of utility employees who work on the electric grid.

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