Justices reinstate Vectren’s ‘instantaneous netting’ method for crediting excess energy production

The Indiana Supreme Court bench in the Indiana Statehouse (IL file photo)

The Indiana Supreme Court has ruled in favor of Vectren energy and against the Indiana Office of Utility Consumer Counselor, finding Vectren followed state law when it changed its method of determining the credit its customers receive when producing excess solar and wind energy.

In the Wednesday decision, the justices parted ways with a Court of Appeals of Indiana opinion that had reversed for the OUCC and other parties.

The case involves Southern Indiana Gas and Electric Company — also known as Vectren, now known as CenterPoint Energy — which petitioned the Indiana Utility Regulatory Commission for approval of a new “instantaneous netting method” that determines the amount of credit its customers receive for their excess distributed generation, or DG, of electricity.

In 2017, the Indiana General Assembly had offset the subsidizing cost placed upon the non-DG customers by enacting the Distributed Generation Statutes, Indiana Code § 8-1-40, et seq.

Under the new statutes, utilities compensate DG customers 125% of the wholesale price of their excess DG. Also, the new statutes sunset net metering, grandfather the use of net metering during the sunset period, and detail how and when utilities petition the IURC to implement the wholesale-based excess DG credit.

The net effect of the legislative reforms was that DG customers now get “a fraction of the credit they enjoyed under the old net metering rules,” according to the Supreme Court.

In May 2020, Vectren filed a petition with the commission seeking approval of a tariff rate, known as the “Rider EDG,” for the procurement of excess DG under I.C. 8-1-40. The Rider EDG measures the difference between the electricity supplied to Vectren by the customer and the electricity the customer supplies to Vectren within a fraction of a second.

The OUCC and intervenors challenged Vectren’s instantaneous calculations, alleging Vectren does not measure excess DG in compliance with I.C. 8-1-40-5. Section 5 defines “excess distributed generation” as the difference between the electricity supplied to a DG customer from a utility, or the inflow, and the electricity the DG customer supplies back to a utility, the outflow.

The IURC investigated whether Vectren’s Rider EDG satisfied the Distributed Generation Statutes, which involved a public evidentiary hearing, reviewing evidence and hearing testimony from Vectren and OUCC representatives. Ultimately, it found the instantaneous netting method was consistent with Indiana Code and approved the Rider EDG.

The OUCC and intervenors appealed, arguing the commission erred in holding Vectren’s instantaneous netting was in accordance with I.C. 8-1-40-5.

In January 2022, the Court of Appeals reversed the IURC’s finding, rejecting Vectren’s instantaneous netting method by finding it focuses and assigns credit based only on the outflow of electricity rather than the specified difference between inflow and outflow.

The Court of Appeals deferred to the monthly billing period, reasoning a longer period to find the difference between inflow and outflow was more beneficial to the customers.

Upon review by the Indiana Supreme Court, justices found two major errors by the Court of Appeals and reinstated the IURC’s ruling.

First, justices wrote that the COA viewed Vectren’s instantaneous netting method as “competing energies behind the meter, and the dominant force is subject to one allocation.”

“Yet, Vectren’s meters compute the difference of the inflow and outflow at an instant in time, thus providing the most accurate reading possible while complying with the plain language of the statute,” Justice Mark Massa wrote. “While the instantaneous meters can measure electricity in either direction, electricity only flows in one direction through the meter and is measured on an instantaneous basis. In other words, there is either an inflow of power to the DG customer or an outflow of power to the utility company, unless the meter measures at zero, which reflects a customer’s outflow matching its inflow of distributed generation.”

Second, the justices found the lower appellate court incorrectly deferred to the monthly billing period.

“… (T)he current Distributed Generation Statutes do not direct utilities on how often excess distributed generation must be measured,” Massa wrote. “The statute does not mandate a specific time when the difference between inflow and outflow must be measured. As a result, the Commission, acting within its legal authority and technical expertise, recognized technology has changed and so too can the timing of when the difference between inflow and outflow of energy be calculated.”

Chief Justice Loretta Rush and Justice Geoffrey Slaughter concurred while Justice Christopher Goff concurred in result but did not offer a separate opinion.

Justice Derek Molter did not participate, as he was originally an attorney working on the case with Ice Miller before ascending to the Court of Appeals of Indiana and, later, the Indiana Supreme Court.

The case is Indiana Office of Utility Consumer Counselor, Citizens Action Coalition of Indiana, Inc., Vote Solar, Environmental Law & Policy Center, Solarize Indiana, Inc., Solar United Neighbors, and Indiana Distributed Energy Alliance v. Southern Indiana Gas and Electric Company and Indiana Utility Regulatory Commission, 22S-EX-00166.

Editor’s note: This article has been corrected. 

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