Written by Chris Sikich, Jul. 12, 2013 3:56 PM

http://www.indystar.com/article/20130712/BUSINESS/307120040/Renewable-energy-users-say-state-s-regulatory-climate-favors-big-utility-companies An on-line video is also available.

Third-grade teacher Donya Bengert and her students learned a real-life lesson when they undertook a yearlong project to build a wind turbine in 2010 at their small Southern Indiana school.

They raised $25,000 from business grants and penny-jar donations. They won governmental and school board approvals. But when they were ready to install the turbine, Vectren Energy charged a $12,000 fee for a new transformer it said was necessary to handle the additional energy load.

“I almost had a heart attack,” Bengert said. “Oh my gosh, we spent almost a year raising all this money, we’ve got it all and we’re ready to go.

“But Vectren didn’t want to do it.”

The project’s installer, Brad Morton of Evansville-based Morton Solar & Wind, has filed a complaint with the Indiana Utility Regulatory Commission. He alleges that Vectren has violated state code the past eight years to stop or slow a number of renewable energy projects on which he has worked.

[Download and read the Complaint filed by Morton Solar Against Vectren HERE: 44344 Verified Complaint Morton Solar_2013-06-21_13032-PLED-COMPLAINT - SIGNED ]

Vectren disputes the allegations, saying the utility follows state regulations and works to ensure renewable projects are safely and reliability added to the electrical grid.

[Download and read the Answer filed by Vectren HERE: 44344 Vectren Answer to Morton Solar Complaint_2013-07-12]

Renewable energy advocates and contractors are watching the case closely as they try to convince state policymakers and utilities that Indiana needs to further encourage cleaner alternatives to fossil fuels such as coal. They say the filing could have a wide effect on how much money utilities charge and how long they can take to process applications to fully connect solar and wind projects to the electrical grid.

Indiana ranks 39th lowest of the states in the percentage of renewable energy it generates. Only 3 percent of the power consumed in Indiana is from renewable energy, 9 percentage points behind the national average.

Kerwin Olson of Citizens Action Coalition, an advocacy group for energy policy and utility reform, said there is a clear resistance in Indiana to renewable energy.

“There are a lot of questions about the policy level at the Statehouse, at the regulatory commission and with utility business plans about whether they are really doing enough to enable renewable energy,” Olson said.

The complaint

Morton has been in the solar and wind power business since 2005. He has been butting heads, he says, with Vectren just as long.

He says Evansville-based Vectren, a gas an electric utility that serves more than 1.1 million customers in Indiana and Ohio, has impeded people from putting up solar and wind units. The complaint alleges the company failed to meet state deadlines on some projects, required unnecessary but expensive equipment upgrades on some projects, and in general, dragged its feet on projects beyond state deadlines.

He says Vectren is motivated to stall or stop the spread of renewable energy because projects cut into the utility’s profit margins.

“Vectren thinks everyone will want to do this (install solar or wind power), and they are trying to keep it hidden, out of sight and out of mind,” Morton said. “That’s their game plan.”

Vectren spokeswoman Chase Kelley disputes the utility has broken the law and denies allegations it has tried to protect profits.

Connecting renewable energy products to the grid, she said, is not as simple as “flipping a switch and turning it on.” The company, she said, must do on-site visits and conduct studies to ensure the projects are safely and reliably connected to the power grid. The utilities move as fast, she said, as each customer’s pace requires.

“We work one on one with customers ... and we follow all of the rules and regulations set forth by the IURC.”

Laura Arnold, president of the Indiana Distributed Energy Alliance, a nonprofit that promotes renewable energy, said Morton raises compelling issues about Indiana utilities’ roles in connecting projects to the grid. She said it’s difficult to determine whether other solar and wind contractors face resistance from the state’s five major electrical utilities and assortment of nonprofit co-ops. Many solar and wind providers, she said, will not complain formally out of fear of ruining their business relationships with the utilities.

Morton, she said, is risking the chance of further disintegrating his business relationship with Vectren by openly confronting the utility. In most instances, she said, solar and wind providers decide it’s easier to work with utilities to reduce installation costs or “just bite the bullet and pay.”

After reading Morton’s complaint, she has begun to contact providers to explore the issue.

Indiana's status

Utilities point out that Indiana has made strides with regulations governing renewable energy. The state updated its net-metering and interconnection policies two years ago, ensuring customers who install renewable energy systems receive billing credits for the excess energy they produce.

Ed Simcox of the Indiana Energy Association, a nonprofit that supports utilities, said such efforts are likely as much change as the utilities are ready to support now. Despite increased federal environmental regulations, he said traditional energy sources such as coal still are the best way to keep rates low and to produce large amounts of reliable power. Simply put, he said, it’s not sunny and windy all of the time.

“We have gone up the scale a bit in Indiana on the overall average cost, but we are still in the lower half when viewed from the 50 states, even with the cost of retrofitting (coal power plants) associated with EPA mandates,” he said.

But advocates say Indiana has been slow in fostering renewable energy.

■The state doesn’t require utilities to use renewable energy. Thirty states have standards for the amount of renewable energy utilities must use. An additional seven states, including Indiana, have legislated goals for renewable energy generation. Without enforcement, though, Indiana’s goal has meant little. No Indiana utility is participating in the state’s voluntary goal to generate 10 percent of power from renewable sources, according to state regulators.

■The state doesn’t allow a bidding process for new power plants that would draw renewable energy providers.

This year, the General Assembly opted against requiring a competitive open bidding process for the construction of power plants, opting instead to study the issue. Utilities choose who will build and operate new power plants, but some wind-energy companies believe they can win the opportunity to build power plants if given the chance in a neutral and open process.

■The state lacks regulations to promote renewable energy among utilities and financial incentives that would better encourage home owners and businesses to invest in alternative power and hook up to the power grid. Other states offer an assortment of incentives that include tax credits, installation rebates and payments.

Rep. Dan Forestal, D-Indianapolis, is building momentum to bring a program to Indiana currently offered in nearly 30 other states to offer government-backed loans to businesses that want to become more energy efficient. The loans would be paid back with savings from energy bills.

■Indiana law is too vague in addressing in which circumstances utilities can charge customers — and how much money they can charge — for equipment upgrades when installing renewable energy systems. And, advocates say, specific timelines written in Indiana regulations regarding the connection of renewable energy systems to the power grid are loosely enforced.

Morton and Vectren have a preliminary hearing scheduled July 25.

Morton is asking Vectren to pay him unspecified financial damages. The utility also faces state fines if the commission rules it has violated the law. But the main impetus in filing the complaint, he said, is to ensure Vectren adheres to state laws regulating approval of renewable energy projects.

Regulatory commission spokeswoman Danielle McGrath said such cases often raise questions that lead to broader discussion and policy changes. The commission, she said, would have no comment on the specific case because it’s under way.

Arnold said more clearly written state regulations would protect energy customers.

“If you are someone who is interested in purchasing and installing a renewable energy system yourself, these are more bureaucratic obstacles to face,” Arnold said,” and it’s a financial barrier.”

Challenges ahead

At Haubstadt Community School near Evansville, the $12,000 fee Vectren proposed for a transformer to handle electrical load from the wind turbine would have been a project killer. When Morton and the school of slightly more than 300 students protested to the state, regulators advised the fee was not legal.

Chase said Vectren and the commission agreed the school should not be charged under state regulations. “We quickly made the change,” Chase said, “and they were able to avoid that fee.”

Bengert said it took weeks to resolve and she worried the wind turbine, powerful enough to perhaps power her classroom on a windy day, never would be installed.

“It took us quite a while to get over that hump,” she said. “I even told them, it’s a school. It’s kids doing this. My God, give me a break.”

The school fought and got its project through.

But Morton’s complaint and the larger issue over the state’s regulatory climate persists.

Gov. Mike Pence and state lawmakers decided to study the state’s energy needs this summer. Office of Energy Development Director Tristan Vance said a committee will examine renewable power in Indiana. The group’s membership and specific agenda have not been set. The study could lead to legislation in 2014.

Vance is aware of Morton’s filing, though he said he has not examined it closely. The committee, he said, will examine the interaction of utilities and renewable energy providers.

“Grid integration for renewable energy is something that we want to look into more,” he said, “as we diversify our energy resources in the state.”

Follow Star reporter Chris Sikich at Twitter.com/ChrisSikich. Call him at (317) 444-6036.

Editor's Note: This story appeared on page E1 in my home delivered edition of the Indianapolis Star on Sunday, July 14, 2013.

Wind backers eye expanded bidding: Wind backers eye expanded bidding (by Chris Sikich and Stephen Beard/The Star)