The Joplin Globe, Joplin, MO

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March 24, 2013

Empire draws criticism on solar rebate issue

Company says customers, stockholders well served

JOPLIN, Mo. — An electrical storm could be brewing over whether Empire District Electric Co., based in Joplin, is complying with Proposition C, which became law in November 2008 with the support of 66 percent of voters statewide.

The law requires that investor-owned utilities produce or buy no less than 15 percent of their electricity from renewable resources like wind, biomass and solar by 2021 — 2 percent of which must come from solar photovoltaics.

Empire says it’s not only complying with the law but exceeding it through its pioneering investments in two wind farms in Kansas. By doing that, Empire was exempted from the $2 per watt solar rebate portion of Proposition C.

“Our customers are getting the benefit of renewable energy at a higher level than any other group of utility customers in the states that we serve,’’ said Amy Bass, spokeswoman for Empire.

“Solar rebates benefit a very small portion of customers that have the means to take advantage of the program and the costs of the rebates are born by all customers,’’ she said.

Since Empire does not offer the rebate, there has been no cost to the company or its customers. But calculations by Renew Missouri, which crafted Proposition C for the ballot, suggest that Empire, if it had offered the rebate, might have incurred estimated costs of $3.6 million for the installation of approximately 1,800 customer-installed solar systems from 2010 to 2012.

P.J. Wilson, a leader of Renew Missouri, said the estimate is based on what has happened with other utilities in Kansas City and St. Louis that have offered the rebate to comply with Proposition C.

That $3.6 million spread out over three years among Empire’s total customer base would have cost about 46 cents per month, said Wilson, who described Renew Missouri’s calculations as “grossly oversimplifed’’ for the sake of discussion.

“This does not take into account that residential customers would pay significantly less than commercial and industrial customers, and it does not take into account the significant savings in fuel that would be saved because of the solar output,’’ he said. “Any way you slice it, you are looking at a tiny amount of money compared with any of Empire’s most recent rate increases.’’

A recently approved rate increase for Empire of $5.60 per month for a typical residential customer will take effect on April 1.

COMPLIANCE CHALLENGE

Renew Missouri says Empire and two other Missouri utilities, Ameren Missouri and Kansas City Power & Light, are not complying with the law. Like Empire, those companies say they are in compliance with the law.

Renew Missouri and seven other environmental organizations asked the Missouri Public Service Commission in late January to review the actions of the utilities. A procedural hearing is set for April 1.

Wilson, in a telephone interview with the Globe, said: “Empire is demonstrating an irrational hatred of solar energy. That’s the only way I can characterize it. Of all the investor-owned utilities in Missouri, Empire is the worst.’’

Empire declined to respond to Wilson’s characterization.

Said Wilson: “The companies have patently denied everything we accused them of. Our goal is to get the utilities to comply with the law. One issue where Empire is in complete violation is the solar rebate provision of the law. They are not giving the solar rebate. The company thinks it has an exemption to that part of the law.’’

The law says power companies must give a rebate of up to $2,000, or $2 per watt, to residential customers who install solar systems that will be on line for at least 10 years. It’s a credit they get upfront to help install the system. The utility companies and their customers are protected by cost limitations that are calculated under the law.

Wilson said the solar industry in Missouri is growing, but it is still so small that no utility in Missouri has come even close to reaching the cost limitation set by the law.

Wilson said the one-time rebates, coupled with a federal rebate of 30 percent, have made it cost-effective for property owners to install solar systems in Missouri where the one-time rebates are offered because the costs of solar systems, in recent years, have reached all-time lows.

The rebates, where they are offered, have contributed to the growth of the solar-installation industry in Missouri and the creation of jobs, according to the Missouri Solar Energy Industries Association. Where the rebates are not offered, the industry has not flourished.

When the association formed after passage of Proposition C, the association had six installer members. It now has 36 installer members and 16 associate members. Membership has grown rapidly over the past three years with the majority of the installers located in St. Louis and Kansas City, where the $2 per watt rebates are offered.

Heidi Schoen, executive director of MOSEIA, said, “There is a direct correlation with reduced market growth in the Empire territory and the $2 per watt rebate not offered in that area.’’

EMPIRE STRIKES FIRST

Bass said, “In 2008, the Missouri General Assembly passed a bill that became effective in August 2008 exempting Empire from the $2 per watt solar rebate portion of Proposition C due to our significant and voluntary early entry into the renewable energy arena.

“We are complying with the law in a manner that is best for our customers and our shareholders. Because Empire had already far surpassed what Missouri voters had asked electric utilities to do, adding additional renewable energy through solar rebates would have been an added burden for our customers.’’

Bass said Empire currently provides approximately 15 to 17 percent of its energy through its wind-purchased power agreements. She said Empire does not claim all of this energy as “renewable” as it sells a good portion of the renewable attributes, commonly called renewable energy certificates, or RECs, to third parties. The proceeds from those sales are passed directly on to Empire’s customers.

Bass said Empire has “purchased power agreements with Elk River Windfarm and Meridian Way Wind Farm. We chose to enter into these agreements because they are cost-effective and allow our customers to benefit from a balanced mix of generation options. Wind energy provides price stability, is environmentally friendly, and is economical for our customers.’’

Empire’s decision to support renewable wind energy has been lauded by environmental groups. But others say it might simply be a good business decision in that wind energy can be less expensive to generate when compared with that from a coal-fired power plant. The company disputes the accuracy of that claim.

NET METERING

One way to measure the impact of Proposition C in a given area is the number of customers that have taken advantage of net metering.

Net metering is a billing mechanism that credits solar system owners for the electricity they add to the grid. During the day, solar customers tend to produce more electricity than they consume. Net metering allows them to export that power to the grid to reduce their future electric bills.

In a net-metered home, the electricity meter will run backward to provide a credit against what electricity is consumed. On average, only 20 to 40 percent of a solar energy system’s output ever goes to the grid.

Empire offers net metering. The company has 149,500 electric customers in Southwest Missouri. Of those, only 29 use net metering.

That compares with Ameren with approximately 11,000 solar installations between 2010 and 2012, and Kansas City Power & Light with approximately 6,800 solar installations in that same period, according to Renew Missouri.

State Rep. Bill White, R-Joplin, has a net meter on his new retirement home in the Wildwood Ranch development, west of Joplin.

“It’s producing quite well,” he said. “In October and November, they (Empire) actually owed me 500 kilowatts. Of course, in December and January I ended up buying that back from them.’’

White believes there will be no energy costs to operate his home for at least four months of the years, other than paying $13 a month in required taxes.

White said he used the 30 percent federal rebate to install his system. Not having a $2 per watt rebate from Empire, he said, “just increases the payback period. Everything we are doing has a payback period. With a rebate from Empire, the payback time would have been quicker. I was happy to do it, regardless.

“I could see where an additional rebate could help put a smaller system on a house,’’ he said. “For us it was doable, but with a longer payback period.’’

MISSED OPPORTUNITY?

Critics of Empire say the company, by not offering that $2 per watt rebate, has effectively prevented the solar-energy industry from getting a foothold in Southwest Missouri, especially at a time when one-third of Joplin is being rebuilt after the May 22, 2011, tornado.

The absence of solar systems is most noticeable on the roofs of new houses that have been constructed in the tornado zone.

Catherine Hart, general manager of GreenTown Joplin, said there are very few homes with solar energy systems in the tornado zone — maybe a handful at most. Hundreds of homes have been constructed.

“Solar can be a complex problem in terms of assessing whether it’s a good investment,’’ she said. “I think it’s fair assessment to say that people do not have enough information about it.

“We hope to change that next fall when we complete our demonstration eco home. It will have solar capabilities. We will show them how to get a solar benefit with their home. It will have all sorts of technology. There will be something there for everybody.

“Keep in mind, even though you have built your house, you can retrofit for solar energy.’’

The house will be designed by architecture students at Drury University in Springfield. The design will be completed this spring and built next fall.

PRIMED FOR GROWTH

The solar system in White’s home was created by Art Boyt, with Solsource Greenbuild, one of the few solar companies doing business in Southwest Missouri.

“As our most recently completed project, this home features solar electricity, solar hot water, and passive solar heating and cooling — and a near-zero electric bill,’’ said Boyt, who was the longtime director of the solar program at Crowder College in Neosho.

“The $2 per watt rebate would have a profound impact on solar in our area,’’ Boyt said. “We can reassure a customer that we can install a system at $3.50 a watt. From that, there’s a 30 percent federal rebate. The $2 per watt rebate would take care of much of the rest of the cost of installing the system. It would be a tremendous financial incentive.’’

Boyt said the intent of Proposition C was to stimulate the solar industry in Missouri. Today, there are only a couple of solar companies in the region.

“You would think 10 to 20 companies should be doing it,’’ he said. “We want this to happen. That was what Proposition C was basically about. Not every Empire customer will be getting solar, but it’s a phenomenal opportunity.

“There’s a small niche market here now, but it’s just not cost-effective. The rebate changes that and it becomes cost-effective.’’

Susan Brown, with Brightergy, a solar energy company in Kansas City, said, “We would have a couple of people working in the Joplin area right now if we had the $2 per watt rebate there. It would really open up the market for us.

“But even without the incentive the prices have come down so much that you can get a payback on your investment that is less than 10 years. Five years ago, it was a 30-year payback. It has dropped dramatically. As the price of conventional electricity goes up and the price of these systems declines, well, we think the future is very bright for solar in Joplin.’’

Boyt also is the prime contractor for the solar system at Crowder College’s new Missouri Alternative Renewable Energy Technology Center. With 286 panels, it has one the largest solar arrays in Southwest Missouri.

Said Boyt: “This is preeminent training of the work force for solar and wind technicians. It’s a teaching laboratory and applied research center. It’s interesting that we have this one piece of the picture so well-developed. This center puts us in the right position to move forward. We now need to move on the economic part of it.’’

The $7 million-plus, 27,000-square-foot center offers students a cutting-edge education in the growing field of green technology. It also will be home to applied research and entrepreneurial development.

“We have had a full program of about 30 students per year the last several years,’’ said Russell Hopper, head of the center. “We are training the work force for the solar industry.’’

But right now, there are only a couple of solar companies doing business in the area, he said, noting there is correlation between the growth of the industry and how much support the industry has from government and utility companies in the form of tax rebates and incentives.

“We do find when there are incentives to install solar, there is more interest from the community and interest from employers,’’ he said.

Hopper said energy interests should be working together and not against each other.

“This is an energy security issue,” he said. “We need to look at it that way rather than square off against each other. The need for energy will continue to grow and the cost of energy will continue to grow as well, if we don’t figure out a way to work with whatever is available.’’

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