Updated: Dec 8, 2020
Mary M. Becerra Secretary to the Commission Indiana Utility Regulatory Commission PNC Center 101 W. Washington Street, Suite 1500 East Indianapolis, Indiana 46204 IE: Vectren 30-Day Rate Cause #50331 & #50332
Dear Ms. Becerra,
Please accept this letter as an objection and testimony for Vectren’s pending, 30-day rate filings #50331 and #50332 pertaining to the valuation of solar energy produced by residential, business and government customers (all customer classes) in Vectren service territory in SW Indiana. The EDG rate that Vectren has requested is much too low and does not represent the true value of solar energy from many different aspects. We are requesting an unbiased study and analysis of this value based upon several different factors which I will outline in this testimony.
Background – Morton Solar is one of the oldest solar energy contractors in Indiana and installed some of the first solar energy systems in the state. We are located in Evansville, Indiana, which is the heart of Indiana’s coal industry. We are a member/owner of Amicus Solar Cooperative and one of the first Certified B Corporations in Indiana. Our mission has always been to lower the cost of renewable energy to make it accessible to all and use our business as a force for good. One of our first project’s in 2008 was to install a small residential scale wind turbine at the Haubstadt Community School in Gibson County. The project was concepted by a 3rd grade class taught by Donya Bengert and funds were raised by students collecting pennies from donations across local area businesses. A grant was also obtained by the Toyota Motor Foundation. Even though the state net-metering law at the time required investor-owned utilities to net-meter with schools and residential customers, the application was denied by Vectren on the basis that the school had 3-phase service. Upon review of the Indiana Administrative Code and Indiana’s Net-Metering law, the type of service should not have been a condition to deny a net-metering application. Morton Solar’s only recourse was to file a complaint with the Indiana Utility Regulatory Commission, which we did, and fortunately the IURC ruled in our favor (see attached letter as Exhibit A from Dr. Bradley Borum, Director of Electricity IURC). As a result of this ruling, Vectren was forced to re-write their tariff to include 3-phase services for net-metering, and this project was permitted to move forward. As a result of this case, Morton Solar was granted an award from Senator Lugar’s office called the Senator Lugar Energy Patriot. This award gave us a strong conservative voice and platform for renewable energy in Indiana. We used that voice to get the attention of Dr. Sue Ellspermann who worked in the marketing department at University of Southern Indiana. With her help, we were able to get a library project near Rockport, Indiana documented as the 1st net-zero solar powered library in the United States, at a time when a majority of Hoosiers didn’t believe Indiana was suitable for solar energy. Later, Dr. Ellspermann was able to get the attention of Lt. Governor Becky Skillman with this project and it was given The Partner in Progress Award from Governor Daniels office. With this solar project, located only five miles where a new coal-to-gas plant was to be built in Rockport, Indiana, Morton Solar was able to open a channel of communication to the Governor’s office. Our message was: “Gov. Daniels, if you want to build another coal plant in our region and you are for an ‘all-of-the-above’ energy policy, you should also expand Indiana’s net-metering law to allow more use of solar energy. Net-metering will provide a tiny bit of competition in an energy market dominated by monopolies, which have no place in free-market capitalistic systems. Competition is a fundamental requirement in capitalism. Where monopolies exist, capitalism fails.” In July of 2011, Gov. Daniels issued an executive order to the IURC to expand this net-metering law to allow ALL customer classes of Investor-Owned Utilities the ability to net-meter with solar energy systems sized up to 1MW. Now looking back almost 10 years, we can see the tremendous success of this executive order, which built the foundation for an entire solar industry in Indiana. With over a thousand jobs and several businesses created, this policy may have been the most successful of Governor Daniel’s career and he deserves credit and recognition for this. It can be argued that another successful outcome of this net-metering law was the stabilization of electricity rates in SW Indiana. From the IURC’s own Residential Rate Survey’s, you can see that Vectren’s rates increased 109% from 2001-2011 (See attached 2011 Residential Rate Survey as Exhibit B). However, from 2010-2019, Vectren’s rate increase was only 15% (See attached 2019 Residential Rate Survey as Exhibit C). Is this just a coincidence, or is free-market capitalism with competition helping keep Vectren’s rates in check? The case is too strong to deny that the threat of Vectren’s customers being able to install solar energy systems on the load side of their meter is NOT an incentive for them to keep their rates lower. SB309 Passed on False Information – now that the IURC has been tasked with determining the value of solar energy due to Indiana’s legislature passing SB309.
Let us look at the false information that was distributed to the politicians and public about the use of solar energy. The utility lobbyists claimed that solar energy producers shift costs to non-solar energy consumers. You, the IURC, should know that this claim is categorically false, as you have never approved of any rate structure or tariff that would allow this to happen. You, the IURC, oversees and approves of each and every rate structure put in place by every Investor-Owned Utility in the state. And you, the IURC, knows that there is NO rate structure that would allow cost shifting. This is categorically false information based on that fact alone. The main objective of SB309 was maintaining monopoly status and eventually, be able to monopolize solar. The goal of SB309 was to eliminate ALL competition so that there is no other choice but to purchase solar energy from one source only, and that is the utility company. They will be able to increase their rates to whatever profit margin they see fit without the threat of customer generated solar energy systems. In reality, distributed solar generation benefits the power grid by lowering excessive loads on transformers and power lines resulting is less line loss. This is an inherent financial benefit to utility companies that has not been taken into consideration during the debate of SB309.
As an example of desire of utilities to achieve and maintain monopoly status, please reference IURC Cause #44344 as Exhibit D in your own records for this example. Morton’s proposal for calculation of value of distributed solar energy generation or EDG: EDG ($/kwh) = Avoided Cost to Utility (ACU) + (Avoided Cost of Line Losses (ACLL) x Climate Change Factor (CCF) x Free Market Factor (FMF)) EDG = ACU + (ACLL x CCF x FMF)
The definitions are as follows: Avoided Cost to Utility (ACU) – marginal cost calculated by Vectren to be $0.03631 per kwh Avoided Cost of Line Losses (ACLL) – this is the benefit of on-site, point of use, distributed generation systems in which energy produced is consumed almost instantaneously without the need to transport electricity over several hundreds of miles of electrical lines.
The result is a much higher efficiency of power generated vs. power consumed versus electricity generated from a centralized location. As a rule of thumb, electricity losses from a coal fired power plant can be as much as 50% from the time the energy reaches the point of use. Therefore, we calculate the value for ACLL to be 1.5. Climate Change Factor (CCF) – the dire situation that our planet is currently encountering from the burning of fossil fuels cannot be denied. The science that exists to prove that the lifesupporting ability of our planet is being destroyed is beyond argument. Yet, the fossil fuel and utility industries continue to fund propaganda campaigns to sow doubt and confuse the public. Although there is no price or dollar amount that could ever be paid for our planet, for the purposes of this formula, we are estimating this value to be 5.
Free Market Factor (FMF) – since Indiana’s economy claims to be in a free-market capitalistic state, the requirement for a competitive business environment is mandatory.
Without competition, you cannot have capitalism. Therefore, we estimate this value to be 2.
Therefore, our proposed value to Solar EDG to be as follows: Solar EDG = ACU + (ACLL x CCF x FMF) Solar EDG = 0.03631 + (1.5 x 5 x 2) Solar EDG = $.18631 per KWH
Maximum system capacity = 20% of peak summer load of the electricity provider Conclusion – The EDG rate that Vectren has proposed has not taken into consideration all the benefits of solar energy, from both economic and environmental perspectives. The production of solar energy benefits ALL of us, not just the individual customer that chooses to install a system on their home. That individual system offsets the burning of coal to the benefit of all of mankind. As our planet rapidly heats beyond temperatures that even coal-fired power plants will be able to operate in, the proliferated deployment and use of solar energy systems to run our air conditioners may provide a few extra years of life for humanity to find a solution for long-term survival. Right now, there is no solution other than to find another planet. The economic benefits of our proposed EDG to our ‘free-market’ economy are abundant. More jobs in the solar industry will be created vs. Vectren’s proposed EDG resulting in job losses at a time in history when we can least afford to lose jobs due to a pandemic, and Vectren will continue to make a healthy profit regardless of whatever EDG is approved. As the final authority over utilities in Indiana, it is the IURC’s duty to protect the citizens of Indiana. It is only the IURC that can do this, and it is your responsibility, as mandated by Indiana State Law. As a Certified B Corporation, Morton Solar has always used our business as a force for good and will continue to do so. We hope you and your organization will make the same choice.
Thank you, Brad D. Morton President of Morton Solar Senator Lugar Energy Patriot Founding Board Member of Indiana Renewable Energy Association