IOWA - State Supreme Court
Orders Net Metering
Tuesday, August 10, 2004
By Chris Cook
On July 21, 2004, the Iowa Supreme Court issued an opinion
in the case of Windway v. Midland Power Cooperative, ordering Midland to
allow net metering to the owner of a 65-kilowatt wind turbine. The system owner
previously had sued Midland, requesting that the cooperative provide net
metering for his facility. The case had been before the Federal
Energy Regulatory Commission (FERC), the federal court system, the Iowa
Utilities Board and, finally, the Iowa state court system.
While FERC had previously ordered net metering for the system owner and had
admonished Midland for its recalcitrance, FERC's decision was of limited scope.
The issue of interaction between PURPA and net metering was still ripe for
decision by the Iowa Supreme Court. In ruling in favor of the generator, the
Court decided "[t]he problem with Midland's case for separate billing is
that it is inconsistent with the interpretation of PURPA and the federal
regulations by FERC and the Iowa Utilities Board...We think net metering is
appropriate for the additional reason that it maximizes the incentive for
cogeneration."
The Solar Energy Industries
Association (SEIA) filed an amicus brief in the case to dispel some
confusion created by Midland's arguments. Among these was Midland's convoluted
proposition that the terms "net metering" and "net billing"
had substantially different meanings. SEIA argued that these terms could, and in
fact are, used interchangeably.
On this issue the Court agreed, stating "It appears that the terms 'net
metering' and 'net billing' are used interchangeably to refer to the same method
of measuring the power used by a cogenerator over a specified period of
time." The Court explained the two meter approach requested by the
cooperative as follows: "A more appropriate description of Midland's
proposed billing system is separate or independent billing, which is the
terminology we will use in this opinion."
There was one dissenting justice who noted that "the Supreme Court...has
determined that the term 'full avoided costs' as used in the regulations is the
equivalent of the term 'incremental cost of alternative electric
energy'....There is no way that net metering which has been approved, and in
practical effect required, by the opinion of the court will produce a
reimbursement to the cogenerator that is reflective of the utility's full
avoided cost. What is accomplished by net metering is automatically reimbursing
the cogenerator on the basis of the utility's retail rate for electricity. This
is manifestly not the cost to the utility of the electric energy that, but for
the purchase from such cogenerator, the utility would generate or purchase from
another source."
This argument is well reasoned, but not the majority opinion. As a result, net
metering advocates will now have a precedent to cite when arguing that PURPA can
only be effectuated through net metering. The Iowa Supreme Court's decision
could make net metering universal.