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Indiana Senate panel OKs bill to reduce solar incentives

WSBT 22

An Indiana Senate panel gave preliminary approval Thursday to a bill backed by the state's investor-owned power utilities that critics contend is an effort to muscle out smaller companies from the emerging solar energy market.

The measure by Republican state Sen. Brandt Hershman was approved by the Senate Utilities committee on an 8-2 vote.

Solar power provides only about 1 percent of the country's energy, and an even smaller percentage in Indiana. But it is growing rapidly, with U.S. Energy Department figures showing solar industry employment grew by 125 percent from 2010 through 2015.

The plunging cost of the technology, combined with the fact that it is far better for the environment than traditional sources of energy, has led homeowners, businesses, schools and even some churches to take advantage of taking its money-saving potential. That could eventually eat away at the business of the big utilities — in Indiana Duke Energy, Vectren and Indiana Michigan Power — which have a powerful voice and donate handsomely to political campaigns.

Currently, solar panel owners who feed surplus energy into the power grid are compensated at a retail market rate, which supporters say enables them to pay off the expensive investment in solar within its useful life.

Hershman's measure would drastically reduce that rate in five years, though it was amended Thursday after substantial opposition was voiced during a hearing last week.

"Rightfully so, I think the utilities are concerned about this," said Sen. Mike Delph, R-Carmel, who sponsored the amendment.

As the bill currently reads, it would create three tiers of solar panel owners. If signed into law, those who install solar panels by the end of June would be grandfathered in at the current rate of compensation for the next 30 years, which comes in the form of a credit on their power bill. Those who install solar panels after that date, but before 2022, would be able to collect the retail rate until 2032. Anyone who installs solar panels after 2022 would receive a much lower rate of compensation.

Utilities say the current Indiana compensation system is unfair because it requires them to compensate solar panel owners for power at retail cost — which is more than it would cost them to produce the energy.

But the measure comes as investor-owned utilities across the U.S. are also looking to carve out their own share of the solar market, following consumer trends that increasingly look toward alternative energy amid concerns about global warming. One option utilities are promoting as an alternative to installing home solar panels is called "community solar," which involves customers agreeing to buy or lease panels from the utilities on large panel farms.

That could give them a leg up, should the new rate called for under the bill prove to make solar panel installation a losing deal for property owners.

Hershman said that concern could be rendered moot as the cost and efficiency of solar technology improves. The bill, he said, is a measured approach toward balancing the interests of utilities, while still supporting alternative energy sources "which I don't think is a very radical change" from current policy.

But supporters say the idea is at odds with the stated priorities of Gov. Eric Holcomb, who has talked at length about the need to support innovation in the state. A spokeswoman for Holcomb did not immediately respond to a request for comment.

"Governor Eric Holcomb made innovation one of the central themes of his State of State Address. Gov. Holcomb has made fostering entrepreneurship a central priority of his new Administration," Jesse Kharbanda, executive director of the Hoosier Environmental Council said in a statement, adding that "those priorities are not reflected."

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