Solar panel owners concerned a return on their investment may take longer than originally planned

A Supreme Court case will determine how much money solar panel owners get for producing energy.
Solar Panel
Posted at 10:11 PM, Jul 12, 2022
and last updated 2022-07-13 13:55:46-04

INDIANAPOLIS — If you are thinking of adding solar panels to your home to save money on your electric bill, the return on your investment may take longer.

It has to do with net metering.

Net metering is when a homeowner with solar panels produces more power than they need, and they get a credit from the power company. However, net metering is slowly being phased out.

For homeowners like Nick Brown in Evansville, net metering is not an option.

"During the day I get enough solar power to maintain my household and I actually have excess power,” Brown said. “The downfall to that is, without a battery backup system I sell the excess power back to Center Point for four cents and then they sell it back to me at night for 16 or 17 cents. "

That practice by CenterPoint is why litigation is currently pending with the Indiana Supreme court. They were the first power company in the state to get rid of net metering altogether thanks to a 2017 law passed by the Indiana general assembly.

The law requires the Indiana Utility Regulatory Commission set a lower credit rate for excess electricity generated by solar panel owners they don't use themselves. Net metering provides a one-to-one credit, which allowed solar panel owners to have a very low energy bill.

"Folks that put up solar before July 1st of this year get to participate in the old program Net metering,” Ben Inskeep the Program Director for Citizens Action Coalition one of the organizations involved in the lawsuit said. "Effective July 1st any new solar systems that are installed, this new policy is going to apply to them. "

The new policy is called Excess Distributed Generation or EDG, which essentially decreases the amount of money a solar owner is credited on their bill.

"With EDG instead of seeing a roughly 10–12-year payback period for the average residential solar installation we are looking at estimated payback periods that are out between 25 and even potentially 30 years,” Zach Schalk the Program Director for Indiana Solar United Neighbors said. “That makes it really unaffordable for far too many Hoosiers to be able to invest in rooftop solar. "

For homeowners like Brown, his solar installation cost around $35,000. While he doesn't regret installing solar panels, he hopes he can at least get a fair trade on his investment.

"If they want to take a couple of cents for storing, I get it but to buy it for four cents and sell it back at 17 cents I mean that just seems a little you know uneven," Brown said.

The Indiana Supreme Court will hear oral arguments on this case in September.

CenterPoint Energy sent us a statement. You can read it in full below.

“The legislature implemented the excess distributed generation rate (EDG) to replace the compensation for customers who provide energy to our system. Under net metering, customers who sent energy to our system were paid the full retail rate for the energy at a rate up to four times higher than the energy we can acquire from the wholesale market.

The EDG statute adopted a wholesale rate plus a 25% premium for customers with their own generation, thereby reducing the costs incurred by all other customers to purchase energy for their use. CenterPoint Energy’s customers—not the utility—incur the higher cost for the energy purchased from rooftop solar customers. This result isn’t fair to customers who have not installed their own generation. The Legislature’s EDG statute sought to minimize this cost shift to protect customers that (a) choose not to install (b) lack the means to install or (c) do not have space to install rooftop solar (or other qualifying customer-owned generation). Under monthly netting, customers that install large enough rooftop solar systems often pay minimal or no cost for their annual electric service from CenterPoint Energy, even though such customers depend on the utility to provide power when the sun isn’t generating enough electricity to meet their needs. This leaves all other customers paying for the costs of the transmission, distribution and generation that enable rooftop-solar customers to have a reliable supply of electricity.

By using instantaneous netting, it reflects the compensation change implemented by the legislature balances the interests of all CenterPoint Energy customers. Rooftop solar customers are paid for energy at a rate that is much closer to what CenterPoint Energy would otherwise pay for electricity. This ensures rooftop solar customers are being compensated for the energy they are being provided at a fair rate. Customers now evaluating rooftop solar can evaluate their investment decision based on the implementation of fairer compensation rates.

We are pleased that the Indiana Supreme Court has accepted transfer and is reviewing the Indiana Court of Appeals decision. We look forward to an outcome that treats all customers fairly. CenterPoint Energy is focused on compensation that balances the interests of all our customers. ”