Unexpected Compromise on Net Metering in Iowa

Iowa utilities and clean energy groups both supported a new net metering law but now disagree on its interpretation.

Months after an unexpected compromise between Iowa utilities and clean energy groups to preserve net metering in the state, the sides are sparring again about how the new law should be interpreted by regulators.

The state’s two major utilities, Interstate Power and Light and MidAmerican Energy, in recent weeks filed revisions to their pricing structures, known as tariffs, that spell out details of the net metering law. Among the controversial points is a suggestion that retailers such as gas stations be prohibited from selling power to charge electric vehicles.

The state’s new law modified its net metering system by allowing the utilities to more accurately estimate the amount of power taken from or put onto the grid by measuring the flow more frequently. That new system is known as “inflow-outflow.” It will apply to all customers who begin operating solar arrays after the tariff takes effect. Current net metering customers may switch to inflow-outflow if they wish.

Clean energy proponents were sufficiently disturbed by the recent tariff proposals — especially Interstate’s — that they asked the Iowa Utilities Board to create a formal proceeding that would give opponents a chance to air their issues. The board agreed on Tuesday to do so, meaning the Aug. 1 effective date of the new tariffs has been postponed until commissioners make a decision.

The Iowa 80 Truckstop, which touts itself as the world’s largest truckstop, took issue in particular with language in Interstate’s tariff that it said appears to prohibit retailers from selling electric vehicle charging services.

The tariff, as drafted by Interstate, states:

“All electricity delivered by [Interstate] shall be for the exclusive use of the Customer and shall not be resold. If the generating capacity and associated energy of the Customer’s distributed generation facility is used to serve, or is intended to serve, an energy usage other than the on-site electric requirements of Customer, then Customer shall be removed from this Inflow-Outflow DG Billing tariff.”

State regulators last fall ruled that gas stations and other retailers may sell electric vehicle charging services and are not violating the monopoly rights of electric utilities by doing so.

In a document filed with state regulators, Mike Kuperman, Iowa 80’s lawyer, wrote that the standards proposed by Interstate “appear to be designed to circumvent” last October’s ruling. In making that ruling, the commissioners rejected IPL’s assertion that Iowa 80, by selling charging services, would be acting as a utility and violating Interstate’s state-granted monopoly on selling electricity in the region.

Josh Mandelbaum, a lawyer representing two environmental organizations in the matter, wrote that the tariff “sets up a direct conflict with the EV charging rule.”

Interstate spokesperson Mike Wagner responded: “[Interstate] supports its customers who drive electric vehicles and provides rebates to enable our customers to install electric vehicle charging stations.”

Other objections pertain to the treatment of renewable energy credits, also known as RECs. Currently, Interstate customers who produce power are allowed to keep the value of the credits that accompany the kilowatt-hours they use. For excess generation they return to the grid, they earn a much lower avoided cost rate “that does not include any value for the renewable attributes, and the RECs have not been transferred based on that,” Mandelbaum wrote in an analysis filed with state regulators.

He urged regulators to reject requests by Interstate and MidAmerican to obtain the value of the RECs. Mandelbaum urged regulators to postpone considering changes to the REC policies until a value of solar study is conducted. The utilities agreed to such a study when statewide solar penetration, now 1%, reaches 5% or upon request from a utility any time after July 1, 2027.

Interstate’s proposed method for calculating the maximum array size eligible for net metering has also been flagged by clean energy groups. The law passed this year allows customers with solar panels to net meter up to 110% of the energy they use in a year. Normally, the utility would simply count up the kilowatt-hours from the last 12 months and declare a cap based on that.

But if 12 months of data aren’t available, Interstate would like to determine the cap based on the average electricity used by all Interstate customers in that class, whether residential or commercial.

Accuracy would suffer, said Kerri Johannsen, who directs the energy program for the Iowa Environmental Council.

“This could result in an extremely inappropriate system size cap given the variation of energy use within classes and could result in either a customer being artificially limited in system size or building a system that is way too big and forfeiting a large amount of credits at the end of the year.”

The Iowa Utilities Board did not release details Thursday about when or how the proceeding over the law’s interpretation would take place.


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