Sunshine Tax Casts Shadow Over Iowa’s Growing Solar Industry

Change often comes with growing pains. This is especially true in the renewable energy industry. While many embrace alternative power options and their financial and environmental benefits, others do not. The biggest opposition often comes from those who stand to lose money.

Iowa’s solar industry is expanding. While the state remains a leader in wind power, solar is an up-and-comer. According to the Solar Energy Industries Association, Iowa invested $204.05 million total in solar energy, producing enough power to run 11,000 homes.

This is good news for anyone who wants to save money, protect the environment, and see job growth in the region. For others, it’s a reason to push legislation that will cast a shadow over the financial benefits of a growing solar industry.

What Is the Sunshine Tax?

Representative Gary Carlson sponsored the Sunshine Tax, or House File 669 (HF 669). Senator Jake Chapman added the companion bill Senate File 583 (SF 583). SF 583 passed the Senate in March with a vote of 28-19.

The stated purpose of the legislation was to prevent people who use solar from increasing the cost of energy for everyone else, especially customers who fall into the low-income category. At least, that is how it is presented by supporters even though no provisions were included to keep costs down for lower-income households.

The bill imposes fees on customers who use solar. Property owners who install small-scale arrays and sell energy back to the grid can expect to pay an additional $300+ each year. The funds collected are intended to cover the cost of utilizing the power grid and to support energy infrastructure throughout Iowa.

Effects of the Sunshine Tax on Iowans

The Sunshine Tax would discourage individuals from investing in new home solar systems. Most customers earn back the initial cost of installation within the first 10 years of renewable energy savings. If they must tack on the annual $300+ fee, then that could increase the pay-off period to nearly 20 years. Considering that many systems last an average of 25 years, that significantly lowers the financial benefits of going solar.

MidAmerican Energy is the main driver behind the Sunshine Tax, pointing to the new law as a way to level the playing field. They feel it is an issue of fairness, even though the financial benefits will go straight to the power company and not the people they are claiming to protect from increased energy rates.

There’s also the matter of approximately 800 solar jobs that could wind up in jeopardy if the industry takes a hit.

Changes like the Sunshine Tax should come after the real social and financial effects of solar power have been studied. That doesn’t appear to be the case here. The Iowa Utilities Board is still working on its three-year study on the impacts of net metering. The bill has pushed ahead without the results or any oversight.

According to Environmental Law & Policy Center Lawyer Josh Mandelbaum, the changes in Iowa could “decimate the future of distributed solar.” That means that net metering could become a thing of the past. All of this comes approximately one year after lawmakers in Iowa voted to limit utility investments in energy conservation programs.

Money, Not People, Backing Sunshine Tax

The backing for the Sunshine Tax isn’t coming from Iowans. It is coming from influential organizations with cash. MidAmerican Energy has dozens of lobbyists and contributes tens of thousands of dollars to back their preferred candidates during election seasons.

Misleading TV commercials have also aired, paid for by funds from a group known as The REAL Coalition. The organization is considered a “dark money group” because it was formed as a 501(c)(4) non-profit business entity, which is not required to disclose a list of members or funding sources. MidAmerican Energy would not confirm nor deny their role in The REAL Coalition.

The advertisements claimed that solar customers don’t pay for the use of power lines or the safety measures needed to keep them running. They emphasize the effects of cost-shifting, stating that if solar customers don’t contribute to these expenses, then everyone else will have to pay more.

In response to the commercials, MOXIE Market President Julian Vandervelde stated that “Misleading is an understatement. It’s lying. It’s just blatant, outright lies.” He explained that solar energy takes pressure off the grid during times of peak usage.

Several states agree with Vandervelde. While the Iowa study continues, other states have already completed the same research and found no evidence that cost-shifting occurs. A study conducted in Maine found that the opposite was true. Solar customers saved other ratepayers approximately $750 million over two decades.

Evidence exists that solar usage does not increase costs for non-solar customers. So why do utility companies care? More people switching to on-site solar systems means fewer customers are paying utilities what they used to. That means investors’ dividends go down, and companies lose some of their monopoly hold on the community.

The legislation would be understandable if utility companies were struggling financially. That’s not the case in Iowa. MidAmerican Energy, who helped draft the bill, saw a net income of $682 million in 2018, which was 13% more than 2017. Some of those funds could have been used to keep costs down for lower-income families, but the company chose to use legislation to get money out of solar customers instead.

“I have yet to meet anyone – we have yet to meet anyone who is actually supportive of the bill,” Vandervelde stated. “So, it’s not really people behind this. Its money pushing it forwards. So, when you track that money backwards to see who’s going to benefit from this, it’s not the people of Iowa. The people who benefit from this are those large utility companies that already have their monopoly in place and want to maintain that.”

Anyone concerned about the negative impact of the Sunshine Tax should learn more about what it is and who supports it. Writing letters to the editor of state and regional newspapers can help counter public misinformation.

MOXIE will continue supporting communities with solar panel installations and donations to local charities. Together, we can help spread the truth and introduce more families to the benefits of renewable energy.