Iowa co-op reconsidering its $85 monthly fee on solar customers

Amid an investigation by state officials, an Iowa electrical cooperative will decide at an Aug. 27 board meeting whether to proceed with imposing a hefty monthly fee on customers who choose to install solar panels.

In June, Pella Cooperative Electric informed its approximately 3,000 customers that it intended to increase the monthly fixed fee from $27.50 to $85 – only for customers installing solar panels or other distributed generation. The state’s Office of Consumer Advocate took notice of the proposed tariff that was filed with the Iowa Utilities Board.

Iowa law states that customers of electric companies may not be treated differently based on whether or not they have a renewable-energy system connected to the local utility’s grid.

The consumer advocate’s office asked the co-op’s management to provide it with documentation to justify the proposed rate hike, and has since granted two extensions, with the current deadline now Aug. 27. The consumer advocate has indicated that it intends to deliver a ruling on the matter to the Iowa Utilities Board no later than Sept. 9.

Two of Pella’s customers have joined with several environmental and solar-energy organizations to intervene in the matter now being debated before the Iowa Utilities Board. In light of the new fee, Mike Lubberden is reconsidering his plan to install a solar array at his home outside of Pella.

And Bryce Engbers, who has solar panels installed on his home and two hog barns in the Pella area, has said he likely will remove them in August 2020, when the higher monthly fee would take effect for his existing system.

The utility’s board of directors met with Lubberden and Engbers recently and “told them they’d take it under advisement, and at the next regularly scheduled meeting [the board] would determine what’s in the best interests of the membership as a whole,” said the utility’s chief executive officer, John Smith.

The utility decided to hike the fee for generating customers after it did a cost-of-service study that lead the management and board to conclude that, as a result of purchasing less power, generating customers would not be paying their share of the utility’s fixed costs. Those include the costs of maintaining the power distribution system, the administrative and billing system and other ongoing company infrastructure.

The utility has refused requests from Midwest Energy News and others to share the cost-of-service study. It has taken the position that the study is available only to members, and then only to members who have made an application to review the books.

Josh Mandelbaum, a lawyer with the Environmental Law & Policy Center in Des Moines, said that “Pella will not let a customer examine the study without signing an agreement that the study is for personal use only and that they will not share it with others.”

The new tariff would not apply very broadly, at least for now. Only about a dozen of Pella’s customers now generate some of their own power, but Smith said he anticipates the number will grow. He said that reduced purchases of power will shift costs onto other customers because even though there is a piece of the bill designed to cover fixed costs, the variable part of the bill in fact also covers a large chunk of the utility’s fixed costs.

Whatever the board decides on Aug. 27, Smith promised that “We will be….doing whatever is in the best interest of all of our members.”

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