Indiana Office of Utility Consumer Counselor, Citizens Action Coalition of Indiana, Inc., Vote Solar, Environmental Law & Policy Center, Solarize Indiana, Inc., Solar United Neighbors, Indiana Distributed Energy Alliance v. Southern Indiana Gas and Electric Company, Indiana Utility Regulatory Commission
Court of Appeals Case No. 21A-EX-821
Court of Appeals of Indiana
January 28, 2022
Bailey, Judge.
Appeal from the Indiana Utility Regulatory Commission. The Honorable James F. Huston, Chairman; The Honorable David L. Ober, Commissioner; The Honorable Sarah E. Freeman, Commissioner; The Honorable Stefanie N. Krevda, Commissioner; The Honorable David E. Ziegner, Commissioner; The Honorable Carol Sparks Drake, Senior Administrative Law Judge. Cause No. 45378
William I. Fine
Randall C. Helmen
Thomas J. Haas
Indiana Office of Utility Consumer Counselor
Indianapolis, Indiana
Jennifer Washburn
Citizens Action Coalition of Indiana, Inc.
Indianapolis, Indiana
Bradley Klein
Environmental Law & Policy Center
Chicago, Illinois
Joseph P. Rompala
Lewis & Kappes, P.C.
Indianapolis, Indiana
Robert M. Glennon
Robert Glennon & Assoc., P.C.
Danville, Indiana
ATTORNEYS FOR APPELLEES
Beth E Heline
Jeremy Comeau
Steve Davies
Indiana Utility Regulatory Commission
Indianapolis, Indiana
Heather Watts
Justin Hage
Centerpoint Energy
Evansville, Indiana
Steven W. Krohne
Jenny R. Buchheit
Ice Miller LLP
Indianapolis, Indiana
Aaron T. Craft
Deputy Attorney General
Indianapolis, Indiana
Benjamin M.L. Jones
Deputy Attorney General
Indianapolis, Indiana
[1] Effective July 1, 2017, the Indiana Legislature enacted the Distributed Generation Statutes,
Facts and Procedural History
electricity produced by a generator or other device that is located on the customer‘s premises; owned by the customer; sized at a nameplate capacity of the lesser of: not more than one megawatt or the customer‘s average annual consumption of electricity on the premises; and interconnected and operated in parallel with the electricity supplier‘s facilities[.]3
Ind. Code § 8-1-40-3 .
When the customer produces excess distributed generation, or EDG, an electricity supplier shall procure the [EDG] at a rate approved by the commission and these amounts credited to a customer shall be recognized in the electricity supplier‘s fuel adjustment proceedings.
[3] EDG customers before July 1, 2017, were subject to a net metering tariff. See
[A] net metering tariff of an electricity supplier must remain available to the electricity supplier‘s customers until the earlier of the following:
(1) January 1 of the first calendar year after the calendar year in which the aggregate amount of net metering facility nameplate capacity under the electricity supplier‘s net metering tariff equals at least one and one-half percent (1.5%) of the most recent summer peak load of the electricity supplier.
(2) July 1, 2022.
Before July 1, 2022, if an electricity supplier reasonably anticipates, at any point in a calendar year, that the aggregate amount of net metering facility nameplate capacity under the electricity supplier‘s net metering tariff will equal at least one and one-half percent (1.5%) of the most recent summer peak load of the electricity supplier, the electricity supplier shall, in accordance with section 16 of this chapter, petition the commission for approval of a rate for the procurement of excess distributed generation.
(a) Except as provided in sections 12 and 21(b) of this chapter, before July 1, 2047:
(1) an electricity supplier may not seek to change the terms and conditions of the electricity supplier‘s net metering tariff; and
(2) the commission may not approve changes to an electricity supplier‘s net metering tariff.
(b) Except as provided in sections 13 and 14 of this chapter, after June 30, 2022:
(1) an electricity supplier may not make a net metering tariff available to customers; and
(2) the terms and conditions of a net metering tariff offered by an electricity supplier before July 1, 2022, expire and are unenforceable.
[4] Customer credit is provided in accordance with
An electricity supplier shall compensate a customer from whom the electricity supplier procures [EDG] (at the rate approved by
the commission under section 17 of this chapter) through a credit on the customer‘s monthly bill. Any excess credit shall be carried forward and applied against future charges to the customer for as long as the customer receives retail electric service from the electricity supplier at the premises.
[5] Vectren timely filed, on May 8, 2020, a petition seeking Commission approval of Rider EDG. Vectren pre-filed direct testimony setting forth its contentions: in the sunset of the net metering tariff, the Indiana Legislature intended to completely replace – as to new customers – net metering regulations; the Legislature eliminated EDG credit at a retail rate and thus reduced subsidies to EDG producing customers at the expense of other customers; retaining a comparison of inflow and outflow on a monthly billing basis to calculate credit would essentially allow EDG customers to continue to bank credit at a retail rate contrary to legislative intent; Vectren would credit an amount equal to market wholesale cost plus 25% for EDG; and Vectren could fulfill its obligation to determine the EDG base by using its smart meters to instantaneously net competing energies meeting behind the [DG customer] meter. (Tr. Vol. II, pg. 31.)
[6] Various petitions to intervene were granted, and pre-filed testimony was submitted on behalf of the intervenors. On September 17, 2020, the intervenors filed a motion for summary judgment, together with a supporting brief. They contended that instantaneous netting did not calculate the difference in outflow and inflow supplied, as required by
[7] On November 17, 2020, the Commission conducted a public hearing and provided the opportunity for cross-examination of witnesses upon the pre-filed testimony. The intervenors challenged Rider EDG on various grounds. On April 7, 2021, the Commission issued its order. Relevant to this appeal, the Commission found Vectren South‘s meters register at any given moment in time the difference between: (1) the electricity that is supplied by an electricity supplier to a customer that produces DG; and (2) the electricity that is supplied back to the electricity supplier by the customer and that instantaneous netting is permissible under Section 5 [of the Distributed Generation Statutes]. Appealed Order at 37. The Commission conceptualized electricity supplied by Vectren and a customer‘s distributed generation meet[ing] at the meter as opposing forces, with the stronger force determining the direction of the flow. (Id. at 36.)
[8] In response to policy arguments, the Commission stated:
We do not believe the General Assembly enacted the Distributed Generation Statutes to sunset net metering and replace it with a construct that achieves a similar outcome. Our conclusion is buttressed by the legislature having capped the amount of net metering capacity on electricity suppliers’ systems but placing no comparable cap on EDG.
Discussion and Decision
Standard of Review
[9] Appellants do not disagree with the factual findings of the Commission or challenge the rate of EDG credit in Rider EDG. Rather, appellants argue that Rider EDG rests upon an EDG calculation that is not in accordance with
[10] Ordinarily, we review an agency‘s legal conclusions de novo. Moriarity v. Ind. Dep‘t of Nat. Res., 113 N.E.3d 614, 619 (Ind. 2019). Although we are not bound by an agency‘s conclusions, an interpretation of a statute by an agency charged with the duty of enforcing it is entitled to great weight, unless this interpretation would be inconsistent with the statute itself. Id. (quoting Chrysler Grp., LLC v. Review Bd. of Ind. Dep‘t of Workforce Dev., 960 N.E.2d 118, 123 (Ind. 2012)). In fact, if the agency‘s interpretation is reasonable, we stop our analysis and need not move forward with any other proposed interpretation. Id. (quoting Jay Classroom Teachers Ass‘n v. Jay Sch. Corp., 55 N.E.3d 813, 816 (Ind. 2016)).
[11] Our first task when interpreting a statute is to give its words their plain meaning and consider the structure of the statute as a whole. ESPN, Inc. v. Univ. of Notre Dame Police Dep‘t, 62 N.E.3d 1192, 1195 (Ind. 2016). Often, this is
[12]
As used in this chapter, [EDG] means the difference between:
(1) the electricity that is supplied by an electricity supplier to a customer that produces distributed generation; and
(2) the electricity that is supplied back to the electricity supplier by the customer.
The parties agree that subsection (1) describes what is commonly referred to in the electrical industry as inflow and that subsection (2) describes what is commonly referred to as outflow. Appellants ask that we accord the words difference between and supplied their common and ordinary meaning. In the context of a mathematical calculation, the difference between two values is the degree or amount by which things differ in quantity or measure. Webster‘s Third New Int‘l Dictionary 629 (2002). Supply in the context of goods is to satisfy a need or desire for, provide or furnish with. Id. at 2297.
[13] The Commission was persuaded by Vectren‘s argument that treating outflow as EDG is statutorily compliant because Vectren meters can compare competing
Analysis
[14] A DG customer will typically have some daily time – likely after sunset – when energy needs are not being met without inflow from the electrical supplier. When a statutory scheme provides for EDG credits to offset retail purchases, it is beneficial to the DG customer to have a longer period in which to compare supplied inflow with supplied outflow in calculating EDG and beneficial to the utility (and ultimately, non-DG customers) to have a shorter comparison period for offset.
[15] Under the net metering tariff, the offset period was equivalent to the billing period, pursuant to
The investor-owned electric utility shall measure the difference between the amount of electricity delivered by the investor-owned electric utility to the net metering customer and the amount of electricity generated by the net metering customer and
delivered to the investor-owned electric utility during the billing period, in accordance with normal metering practices.
This regulation also provided for credits to be carried forward into the next billing cycle. Credits could be rolled over indefinitely.
[16] Under the Distributed Generation Statutes, the electrical supplier credits EDG at wholesale plus 25% and the customer is charged for inflow at retail cost. Although
[17] Vectren‘s Director of Indiana Electrical Regulatory Rates, Matthew Rice (Rice), offered uncontroverted testimony as to how Vectren‘s Advanced Metering Infrastructure (AMI) operates. Vectren propose[d] to charge DG customers their normal retail rate for every [kilowatt] hour of inflow during the billing period. (Tr. Vol. II, pg. 29.) Vectren also proposed to credit DG customers at the proposed EDG rate for every [kilowatt] hour of outflow. (Id. at 30.) Rice described the dynamics of instantaneous netting. A meter registers inflow or outflow or nothing. (Id.) The AMI device could not record both inflow and outflow simultaneously, because electrical energy flows one direction, and when there‘s inflow, there‘s zero outflow and when
[18] During his rebuttal testimony, Rice explained that the meter registered as outflow the net of two components. But the components involved in his scenario are competing energies behind the meter, and the dominant force is subject to one allocation. Reconciliation of competing energies in order to determine which direction energy will flow is not a measure of energy supplied from or to the electrical supplier. It is a predicate step. Neither component can be energy supplied when it is yet to be determined which direction energy will flow.
[19] Vectren only proposes to measure inflow and outflow separately and compensate only for outflow. The interjection of behind the meter competing forces as a comparison value is outside the two values delineated by
[20] The Commission deviated from the comparison of inflow and outflow to arrive at EDG:
it is useful to conceptualize the difference at each instant of time, where the electricity supplied by the supplier and the customer‘s distributed generation meet at the meter as opposing forces, with the stronger force determining the direction of the flow. If the customer needs less electricity than its distributed generation is supplying, the statute terms the excess or difference between what is being supplied at that instant by Vectren South and what is flowing from behind the customer‘s meter as EDG.
Appealed Order at 36. What a DG customer produces can be for his own needs or excess for the electrical grid. His production is not within the statutory definition until it is supplied back to the electricity supplier.
[21] The parties and amicus have argued at some length about policy considerations, such as favoring one class of customers at the expense of others. But we reject any suggestion that the Commission could change a definition or supply a statutory term based upon policy considerations or exercise of discretion. The Commission is a creature of statute. See
Conclusion
[23] The determination of whether an electrical energy is inflow or outflow (accomplished in a process denominated as instantaneous netting) does not satisfy the statutory criteria that the difference between inflow and outflow be determined to calculate EDG. Because the calculation of EDG in Rider EDG assigns a monetary credit solely to outflow, it is contrary to law. We reverse the adoption of Rider EDG as to the particular provision based upon instantaneous netting, and remand for further proceedings.
[24] Reversed and remanded.
Mathias, J., and Altice, J., concur.