Another Decision in Net Metering Dispute - Iowa

July 18, 2008 | Roger McEowen

In 2007, Iowa Court of Appeals rendered an opinion in a legal battle over net metering that has been going on in Iowa for about 10 years. Now, the court has dismissed the plaintiffs' motion for a new trial in the most recent installment of the litigation.

Iowa’s net metering rule was a creation of the Iowa Utilities Board in 1983. The rule allows customers with alternative energy generation systems to sell electricity to their investor-owned utilities on a netted basis against their metered retail usage. The rule (Iowa Administrative Code §199-15.11(5)) applies to all customer classes. There is no mention of a limit on either the size of a net metering system or on total enrollment. The rule requires that utilities purchase customers’ net excess generation at avoided cost (that’s the utility’s incremental cost for capacity or energy (or both) that, but for the acquisition of energy or capacity from another source, the utility would have to incur).

In this case, the plaintiffs (Greg and Beverly Swecker) bought wind-powered generators from another plaintiff and tried to reduce their energy expenses by producing their own power and selling any excess energy to the defendant, a non-regulated utility. They wanted to use a single meter to measure inflow and outflow to and from the power grid. That way they could reduce their power costs based on full retail prices. But, the Iowa net metering rules do not apply to electric cooperatives (such as the defendant) because they are not regulated by the Iowa Utilities Board (IUB). So, the plaintiffs sued in federal court, but the case was dismissed for lack of jurisdiction. The plaintiffs then took the matter to the Federal Energy Regulatory Commission (FERC) on the basis that their wind energy system was a qualifying facility (QF) under the Public Utility Regulatory Policies Act (PURPA), and filed an action in state district court. In 2002, the state trial court ruled that net metering was consistent with PURPAs regulations and concluded that the defendant was required to offer net metering. The defendant sought an interlocutory (temporary/provisional decision on a particular issue or issues) appeal which the Iowa Supreme Court granted. However, before the Iowa Supreme Court rendered its decision, FERC ruled in the plaintiffs’ favor. The Iowa Supreme Court then ruled that the defendant had to utilize net metering - separate billing was inconsistent with PURPA and with FERC’s regulations.  

In 2005, the Iowa Supreme Court reversed its previous ruling and concluded that net metering was not required by either Iowa or federal law. The court noted that the issue of net metering carried with it great policy concerns, and that FERC was the appropriate tribunal to decide whether net metering fit within the requirements of PURPA. Specifically, the Court held that PURPA did not require net metering by non-regulated utilities. Shortly after the Iowa Supreme Court issued its ruling, FERC found that even though PURPA did not explicitly require net metering, the defendant had to offer net metering to the plaintiffs.

Later in 2005, the President signed into law the Energy Policy Act of 2005 (Act). While the Act does not mandate federal net metering and interconnection standards, it does direct non-regulated utilities to consider whether to adopt net metering within three years of enactment of the Act. In early 2006, upon reconsideration of its 2005 order, FERC reversed itself in light of the Act vesting discretion in the defendant to determine whether net metering should be offered to customers. The plaintiffs sought enforcement of FERC’s 2005 ruling, but the trial court refused.

On further review, the Iowa Court of Appeals affirmed. The court held that the trial court’s ruling was consistent with the Act which entrusted the decision to offer net metering to the defendant and not FERC. Windway Technologies, Inc., et al. v. Midland Power Cooperative, No. 6-836/06-0276, 2007 Iowa App. LEXIS 284 (Iowa Ct. App. Mar. 14, 2007).

Update: The Sweckers appealed the court's denial of their motion for a new trial and motion to recuse. The court noted that the appeal failed to comply with the Iowa Rules of Appellate Procedure and should be dismissed. The court stated that the fact that the Swecker's weren't represented by legal counsel did not excuse them from following the rules. In addition, the court stated that it would not perform the Swecker's research and advocacy for them (noting that this was the Swecker's latest attempt to force Midland Power Co-op to concede to the Swecker's wishes). However, the court declined to award attorney fees to Midland. Windway Technologies, Inc., et al. v. Midland Power Cooperative, No. 8-432 07-1222 (Iowa Ct. App. Jul. 16, 2008).