December 19, 2011

EXCLUSIVE INTERVIEWS

Sierra Club, Galvin group,

Oak Park manager explain

An overlooked provision in an Illinois law enacted in October (RT, Oct-28) would raise the state's net metering cap to 5% from 1%, thus letting small businesses install more DG, Jack Darin, director of the Illinois Sierra Club, told us Friday in an exclusive interview.  The move coincides with the state's other renewable integration initiatives, such as a law that encouraged municipal aggregation and a carve-out in the state's renewable portfolio standard (RPS) that by 2016 will reserve 1% of total load for DG, he said.

          "We're really hoping this is going to be a new day in the way Illinois produces and consumes electricity," he added.

          The law green-lighted a 10-year, $2.6 billion project that will give smart meters to Commonwealth Edison and 62% of Ameren Services residential customers.  Those meters are needed to spur net metering in the state, which Darin said rests at 0.1% of overall load.

          Equally important for sparking net metering is the cap raise, Darin said.  Currently, the low ceiling has the effect of incentivizing only residential customers, he said.

          Changes to the law in the form of a so-called trailer bill that passed the Illinois House and Senate, would let even more people take part in net metering, Darin said.  The recently passed law disqualifies customers in real-time pricing programs from taking part in net metering, he said.  The trailer bill, HB 3036, rectifies that clause, he noted.

          Businesses will now view their empty rooftops as revenue sources, Darin predicted.  Envisioning solar panels or even small wind turbines sprouting from concrete and shingles across the state, the Sierra Club already is actively engaging with business groups about net metering, he added.

          Realizing up-front costs in a sluggish economy may deter businesses from buying solar panels.  Sierra Club courted firms like SunRun to inquire about their pricing schemes, Darin reported.  That firm and others lease roof space from homeowners and businesses in exchange for installing and operating solar panels, he said.

          SunRun installs home solar panels sometimes without an upfront charge -- in exchange for "low" monthly payments from homeowners, Susan Wise, the firm's spokesperson, told us in September, declining to be more specific.  Those systems typically cost $35,000 or more to buy.

          After collecting the 30% federal solar investment tax credit and individual state incentives, SunRun is able to generate revenue from homeowners' monthly payments and could produce energy savings, she added.

          Net metering could be the missing link between a confluence of other energy measures, including expansion of DR, DG and municipal aggregation, Darin said.

          The state's RPS, which calls for 25% of energy from renewables by 2025, fostered considerable growth in the Illinois energy industry, especially with wind farms, he said.  Net metering will encourage proliferation of smaller-scaled DG, he suggested. 

Customers can earn RECs

In turn, the state's 1% carve-out for DG-supplied load will push people and businesses to sell power back to the grid and earn renewable energy credits (RECs) they could then sell, he noted.  Now that DG may become more common, businesses in aggregated municipalities that still rely on real-time pricing can procure RECs through net metering and sell them back to their own communities, he added.

          That would generate revenue for the business and provide a consistent and reliable energy source for the municipality, all while cutting overall energy use, he noted.

          "It's an exciting partnership where people who are concerned about climate change can work with utilities and work with business owners in a way that is better for the bottom line," Darin said.

                Galvin's Kelly cites Oak Park

          Exemplifying this chain of events is the Village of Oak Park, the first Illinois municipality to engage in aggregation, John Kelly, executive director of the Galvin Electricity Initiative, told us recently in an exclusive interview.  Oak Park bought all its energy through RECs, he noted.

          An Illinois law that went into effect last year lets voters decide through referendum whether to let municipalities aggregate their power and shop on the market for a third-party supplier.  Billing is still handled through the transmission provider, so customers get one bill even though the energy supplier changes, Kelly said.  All residents are automatically opted into the program.

          "The law was very well written in Illinois," Kelly reported.  "The utility still does the billing, so that the revenue still flows through the utility books.  Some states, like California, wrote the law that required the city to set up the entity and the billing goes through the city.  Illinois was astute enough to realize it's better to run it through the utility and then the utility pays the supplier."

                Oak Park was out in front

          Preliminary estimates showed between 2-3% of residents voluntarily opted out of the Oak Park program, KC Poulos, the village sustainability manager, told us recently in an exclusive interview.

          Oak Park took the lead promoting municipal aggregation in Illinois, Poulos said.  Claiming 22,000 residents, Oak Park is the largest of about 20 Illinois municipalities with aggregation, she said.  With about 160 communities going to referendum in March, Poulos' phone has been ringing.

          "This is a brand new program for municipalities," Poulos said.  "It's not like we have years and years of experience with the energy market.  We certainly go out and get our own contracts for parking garages and pumping stations, but we haven't acted as a facilitator for a contract on behalf of our residents like this before."

          Educating other communities required much explanation, Poulos said.  Oak Park signed a two-year contract in October with supplier Integrys, using 100% RECs to buy the power, she said.  Between 92-94% of those RECs came from Illinois wind farms, she noted. 

How does 5.79¢/KWH sound?

Breaking the yoke of the Illinois Power Administration let Oak Park cut its base rate by 25% with Integrys Energy Services, so customers will start paying 5.79¢/KWH in January, she said.

          For those concerned that managing energy requires too much work to make a smart meter worth the trouble, Poulos recommended aggregation.  Rather than individuals tinkering with their power use to save a few dollars, the municipality can use its market power through volume to secure a lower rate for customers, she said.

          "If you want to take advantage of night-time pricing, then real-time pricing is for you," Poulos said.  "Aggregation takes advantage of the market and doesn't change behavior much."