Green Spark 7: Find Common Ground on Net Metering.

Don Kelley and his wife, Kim. Photo courtesy Dakota Rural Action.

Legislation Didn’t Pass This Year, But Supporters Will Look for Another Avenue to Help Renewable Energy Producers Get Paid for Excess Generation

By Lana Bandoim

The electricity that Don Kelley and his wife, Kim, use at their home in the Black Hills of South Dakota does not come from a distant power plant. Instead, it comes from the sun, through photovoltaic cells on their home.

As the vice-chair of the board of directors for Dakota Rural Action (DRA), he has been actively involved in the efforts to bring net metering to the state. Kelley’s own system doesn’t tie into the electrical grid and so wouldn’t be affected by net metering, but his experience with solar power and other forms of eco-friendly energy have convinced him that alternative energy can be viable in South Dakota—especially, Dakota Rural Action contends, if a net metering policy made it more worthwhile for consumers.

Net metering is a policy that allows consumers who generate their own electricity to have special billing arrangements with utility companies. If the consumer creates more energy than the household is able to use, the electricity goes back to the grid for other users. South Dakota is one of only four states in the U.S. that does not have some type of net metering policy. (The others are Alabama, Mississippi and Tennessee.)

Dakota Rural Action initiated the legislation to bring net metering to South Dakota by writing House Bill 1207.

“DRA’s Community Energy Development committee decided to investigate this issue in view of rapidly rising electricity rates for our members around the state,” Kelley said. “Much of the new revenue is scheduled to expand coal-fired generation of electricity. Our group believes that South Dakota should be taking greater advantage of renewable solar, wind and other alternative energy sources while giving those farmers and urban residents who generate electricity at home or at their businesses full credit for any excess electricity they send back to the grid. We feel that it’s time to join the 46 other states with such an energy policy in place.”

House Bill 1207 faced strong opposition from the Public Utilities Commission and the South Dakota Rural Electric Cooperatives. Sabrina King, the lobbyist for Dakota Rural Action, has been joined by other members of the organization to support the bill. However, the House Energy and Commerce committee deferred the bill and recommended that the DRA work with utilities to find common ground, so Dakota Rural Action plans to work on a new proposal for 2014.

A representative from the Public Utilities Commission said its opposition to the plan is based on concerns that net metering will lead to price increases. The utility company would be forced to purchase the excess energy created by consumers and pay the retail price for it. This would lead to higher expenses for the utility company and eventually create higher rates for all residents.

Don Kelley said DRA is willing to work with the utilities on a net metering policy that would be agreeable to them as well.

“We believe that there are those in the industry who feel as we do that renewable energy needs much more development and that small-to-medium-scale distributed generation has much to offer,” Kelley said. “One of the appeals is that new, distributed sources of energy can make use of existing transmission capacity, whereas large wind farms, for instance, would require establishing major new transmission lines.”

Kelley said concerns about increasing rates are unfounded based on the research.

“We have ample evidence from studies done in other states that a net metering system not only works well, but that it results in no significant rate increases for utility customers,” Kelley said. “In the rest of the country where net metering has been adopted, local business has been stimulated by the increased demand for renewable energy system installations.”

Kelley said utilities actually benefit from net metering in several ways: They can decrease the need to purchase more generating capacity, losses from lines from distant power plants are less, and peak demand is reduced.

“Some studies have actually shown a net economic benefit to utilities from the adoption of net metering,” he said.

Support from residents is growing as Dakota Rural Action shares more information about the benefits of renewable energy sources for communities, Kelley said. The organization plans to continue working with utilities to bring net metering to the state.