A bill pushed by Indiana's investor-owned utilities that would eliminate much of the financial incentive available to those who install solar panels is headed to Gov. Eric Holcomb's desk after it was approved on Monday by the Legislature.
Republican State Sen. Brandt Hershman's bill was given final passage when the Senate voted 37-11 to approve changes made to the measure in the House. Holcomb spokeswoman Stephanie Wilson declined to say if he will sign the bill into law, but she added that the Republican "has been watching the bill all session and will consider it carefully."
Solar energy accounts for less than 1 percent of Indiana's power. But utilities worry the plunging cost of solar panels, as well as its growing popularity, could someday cut into their profits. Utilities say that will eventually lead to higher rates for customers.
The measure also comes as utilities across the U.S. are looking to carve out their own share of the solar market. They are promoting an alternative to installing home solar panels called "community solar" that involves customers agreeing to buy or lease panels from the utilities on large panel farms.
Critics say it all adds up to an effort by the utilities to muscle out small companies, threatening the 1,500 jobs the Solar Foundation estimated in 2015 that the industry had created in Indiana.
At issue is a practice called "net metering," which mandates that churches, businesses, schools and homeowners who install solar panels be compensated for any surplus energy they feed back onto the grid, unusually in the form of a credit on their power bill.
Hershman's bill would drastically curtail in five years the current "retail" rate of compensation, bringing it closer in line with the wholesale cost utilities pay for energy. The bill would allow those who install solar panels before 2018 to continue to collect the current rate for 30 years, while those who purchase panels after that, but before 2022, could collect the rate until 2032.
Solar proponents say the current rate is needed to break even on an expensive investment. But Hershman, of Lafayette, says the rate of compensation should come down as the technology improves and it becomes easier to recoup costs.
"This bill recognizes that solar is becoming an increasingly competitive means of generation and that's a great thing," said Hershman. "It's taking off on its own."
Opponents, however, question the need for the bill, since current state law caps net metering once 1 percent of a utilities energy comes from an alternative energy source, like wind or solar.
Kerwin Olson, of left-leaning utility watchdog group, Citizens Action Coalition, called the bill's passage "an all out affront on Hoosier consumers and relegates Indiana to the backwaters of innovation."
Democrats objected to a provision in the bill which sets the new rate of compensation that will eventually be put in place. Rate setting should be done by the Indiana Utility Regulatory Commission, said State Sen. Mark Stoops, of Bloomington, who noted that Hershman himself said the rate established by the bill was an "arbitrary" figure he picked.