Homeowners say co-op hostile to renewable energy
St. Croix Electric Cooperative staff and directors claim the co-op’s new policy for compensating members who generate electricity is fairer to most consumers than the old policy was and is sustainable.
But members, who’ve built solar-produced energy systems at costs of roughly $70,000 apiece, argue the policy revision broke implied agreements, shows a hostility to renewable energy, is regressive and may prevent them from ever recouping their expense.
The cooperative has 9,160 members and provides electricity to 10,500 accounts, mostly in rural St. Croix County. It has 11 members who own solar generation systems and four with wind turbines, said CEO Mark Pendergast.
Starting with the June billing, members who have their own generating systems connected to the co-op’s system are being credited each month for the retail rate of power they generate during that billing period. Any electricity generated above the amount of power used will be credited to the owner at an “avoided cost” rate -- the cost to produce or buy the next kilowatt hour of energy (usually the cost of fuel).
SCEC had been crediting or paying its full retail rate of 9.8 cents and 11.2 cents per kilowatt hour in the winter and summer seasons respectively. The avoided cost rate, determined by the co-op’s electricity producer Dairyland Power Cooperative, is determined each billing period and generally ranges from 2.75 cents to 3.75 cents per kilowatt hour.
Members with their own solar panels say if they pay a certain rate for the electricity they use, they should be credited the same rate for the electricity they feed into the system.
Sized to break even
“We basically sized (our) system so we’d be close to breaking even over a year’s time,” said Carol Johnson, town of Forest. “So the energy produced in the high production months gives us credit toward the months when we are using more than we are generating.”
That was under the old policy. Johnson, whose 14 kilowatt photovoltaic system went online in August 2011, said she received a monthly statement showing what her home used versus what it produced and she let the credits roll over, “knowing we’d have months were we would need that credit.”
The change, she said, is “bad policy for the co-op and its members, for the future of renewable energy in the SCEC service area.”
John Collins’ system didn’t go online until July of this year. It involves two heavy poles each supporting a 15 ft. by 17 ft. panel. The cells convert 20 percent of solar energy to electric energy.
He expects the system to produce a little less than 15,000 kilowatt hours of electricity a year. Since his annual consumption is about 11,000 kilowatt hours, he expects to produce “a modest surplus.’
Collins has only had two bills since he started producing energy, but for August he paid $10. Under the old policy, he said, he would have earned $40.
“We do not have a contract (with the co-op) that specifies rates; they are subject to change by action of the board of directors,” said Collins, whose house is in the town of Hudson. “However, our evaluation of the financial feasibility of our investment assumed the policy that was in place in February.”
He said the policy change was made without telling co-op members, either before or after -- except for publishing it on the SCEC website.
No payback at all?
Collins’ system cost just under $70,000. He, like other alternative energy system owners, got a $1,000 rebate from the co-op and is eligible for a 30 percent federal tax credit.
He figured the payback period under the old system would have been under 10 years.
“The new policy will stretch that out quite a bit, quite possibly to the point where it won’t pay back at all,” said Collins, who said the system has a 25-year warranty.
“Clearly they (co-op managers) are not interested in encouraging their members to invest in renewable energy,” said Collins. “Some people I've talked with feel like the co-op is openly hostile to renewables, but I have not seen that myself.
“I suspect, without direct evidence, that it's more likely they are being pulled out of their comfort zone, which is where energy is produced in big power plants and sent out to members, and their job is just to make sure that keeps happening. We are making their world more complicated, and they may see it primarily in terms of risk and uncertainty.”
Currently SCEC charges its general-service member-customers a base monthly charge of $25.25. Next January, that will increase to $28.29, said Pendergast. But the most recent rate and cost of service study shows it costs $39.78 a month to simply have service available to each consumer. The total revenue difference between the actual cost and the billed cost is $1.4 million. To recover that, the co-op charges a 1.1 cent per kilowatt hour mark-up on the wholesale cost of energy it sells.
According to the SCEC website, if a member produces energy equal to his purchases, the co-op won’t collect enough to cover the actual cost of service.
“If the base monthly charge was increased to the fully allocated cost, a large percentage of our members would say this sends the wrong signal and is a financial disadvantage to conserving energy,” said Pendergast. He said consumers would see no advantage to save energy because their monthly base charge would increase.
A headache from the start
“These member-owned, small power-generating plants have been a headache for the co-op from the beginning,” said Gary Konkol, whose solar photovoltaic system went online in September 2010 -- three months after it was built. He said the delay was due to SCEC’s failure to provide a meter.
Konkol built a German Passive House in the town of Hudson. The house needs little energy, and he has incorporated energy-efficient strategies and uses solar systems to create “an energy positive house.”
“I thought it was an awesome achievement worth pursuing,” said Konkol.
He was encouraged when he was asked to present his project to the co-op membership at SCEC’s 2010 annual meeting.
He said at that time, while the board of directors and management were “very cool to the concepts I was incorporating,” consumers were receptive.
“I believe that SCEC changed their policy concerning solar PV reimbursement due to philosophy, fear and ignorance,” said Konkol.
He said general members are usually excluded from Board of Directors meetings where most policy decisions are made. While members are told they can have input through their elected representatives, those directors attend trainings that are “more of an indoctrination than an education,” said Konkol.
He claims the new solar reimbursement policy results in members with their own systems subsidizing the general cooperative.
“Clearly the decision-makers of this policy do not understand the marginal costs of peak power, which is when most surplus solar PV electricity is generated,” said Konkol. “Such ignorance and lack of curiosity to correct the policy suggest a political motive and spitefulness. I can only conclude that the directors and management of SCEC don't like solar PV and are doing what they can to discourage its proliferation.”
The cooperative exists to serve its members, and while not all members are alike, they should be treated equally, claims an online explanation of the billing change.
The explanation continues, “The amended distributed generation policies reduce and limit the financial subsidy now occurring between members, while preserving the option for members owning small distributed generation systems to qualify for net metering.”
Federal tax credits, co-op rebates and lower costs for systems still encourage small-scale, consumer-owned renewable energy systems, which are no longer the novelty they were, says the website.
Also, says the co-op, 12 percent of the power it buys annually comes from renewable generation sources and is more costly.
“Therefore every cooperative member already pays higher electric rates in support of power generated by renewable energy systems at the utility level. Asking members to also bear the financial subsidy associated with the individual member who installs a renewable system is not an equitable and long-term financially viable option,” concludes the explanation.