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Newsletter - April, 2015

In this Edition:

2014 Solar Tax Credits

Next week, members who have installed solar systems can subtract 30% of the cost from the send this amount to the IRS line of your 1040. Well, there is a little more paperwork than that:

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

Solar-electric property
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
  • The home served by the system does not have to be the taxpayer's principal residence.
  • Solar water-heating property
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
  • Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
  • At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible.
  • The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
  • The home served by the system does not have to be the taxpayer's principal residence.

Attached is the Residential Energy Tax Credit, IRS Form 5695. These will continue through December 31, 2016. There appears to be bipartisan support for extending these credits but modified to what. There is speculation that it could be reduced to a 10% credit. (?)

FHREEC UFM Classes:

This next Saturday, Apr. 18, at Wamego High School we will be discussing the hardware and installation of solar systems with an emphasis of how this new technology will help rural electrics. This is the flyer:

Then this summer:
Sat. May 30th, 9:30 to Noon: Guided Solar Home Tour
Meeting in the UFM Parking lot

Sat. June 6th, 9:30 to Noon: Simple Solar Water & Space Heating
Meeting in the UFM Solar Addition

Sat. June 20th, 9:30 to Noon: Photovoltaics 101 & Fossil Fuels Meets Renewable Renewable Energy (Godzilla meets Mothra)
Meeting in the UFM Solar Addition

Register for these free classes through UFM at www.tryufm.org

Left alone, solar electricity will hold its own against utility power. But in Topeka this year there are two proposed laws and a rate hearing that might have a profound effect on renewable energy in Kansas.

Proposed Kansas Anti-Renewable Energy Laws

The first is a law rescinding the property tax abatement now given to the value solar hardware. This might tax every solar family in Kansas, though rural people might be able to justify a portion or more as "agricultural equipment" that is exempt. Today, it is difficult to make an appraisal of solar hardware's worth in that property value is based on a set of characteristics, i.e number of bathrooms, or finished basement. We don't know of a set of values for the various types of solar hardware. A house's value is determined by what a comparable house sold for. For solar electric systems, there are few of us in town, and none have been up for sale. Where are the comparables?

The second law, as it stands imposes an excise tax on systems that are big enough to export more than 500 kWh/day onto the powerlines. Oddly enough, these are the classes of customers who will benefit Westar the most. Their power-use peaks very closely to that naturally produced by the sun.

These are taxes would be self-reported to the Kansas Dept of Revenue and it seems to me there would be limits to enforcement. And while laws can be amended on the fly in committee, I think it will be difficult to apply this tax to smaller systems.

Awh, oOH, yuck, the Westar's Rate Case

The rate case illustrates how this all is coming together for Westar. In last year's legislature, the net metering law grandfathered customers who installed systems before July 1, 2014. This rate case as proposed is to apply only to solar "self-generators" who go solar after the Oct 28th deadline. So, when under these rate hearings all Westar customers' base rate is raised to $27/month, will ours be locked in at $12 for the next 15 years?
And all new solar customers who install after July 1, 2014 and before the deadline of Oct. 28th, will they be "grandfathered" in ... under the conditions the legislature defined last year ... with net metering at no additional cost but with the compensation of only the cost of fuel (~3.4 cents/kWh) in excess of what they consume month to month?
Then there will be the future batch of solar customers who will have a choice between two different, but much higher base rates. This is so patched together that we should not be surprised if this whole thing is thrown back before the legislature and to the KCC, to make it more uniform.

Solar grid parity describes the moment when electricity from solar power is less costly than electricity from the existing grid. It's a tipping point, when democratization of the electricity system not only makes political and economic sense, but becomes more competitive than using utility-delivered electricity. This interactive map will surprise you: http://ilsr.org/projects/solarparitymap/

Solar for Rural Electric Cooperatives

Whatever the outcome for Westar solar customers (new after Oct. 28), it will have little if any impact on our Bluestem Rural Electric members. Westar as a typical urban utility, has somewhere in the range of 60 to 70 customers/mile of line. The average for Kansas Electric Cooperatives (KEC) is 2.3 customers/mile. Bluestem's assets are almost totally in distributing power to its members.

If Westar's distribution system accounts for $0.019/kWh, then Blue Stem's distribution system is a huge part of our members' bill. Rooftop solar offers great savings. For the same reasons REC's were the last to be brought central electricity, they will be the first to gain from Distributed Generation. Kansas Rural Electric Cooperatives (and municipal utilities) should already buy their base load wholesale and encourage/finance their members to generate their own peaks. It would add reliability, provide voltage support and will save all our members on the cost of shortened transformer and other hardware life. Powerlines will not spend as much time sagging into tree branches.
If we can generate our summer afternoon peak loads on rural homes and outbuildings, we gain independence from monopoly control of our most expensive electricity.

Next Scheduled Bulk Purchase Order:

We are getting calls regularly from Blue Stem members and others across the state, who want to get on our next buy. It makes every sense for them to get into this without the seven month wait it will take for the KCC to announce its decision in October. We are offering a free Solar Electricity 101 presentation, 9:00 to Noon, Saturday morning, Apr. 18 at the Wamego High School. Bring a friend. We'll try to leave time to answer questions as we go along.

We can count on attacks from Investor Owned Utilities (IOU's) for a very long time. They have an interest in maintaining their monopoly. Even waiting for these hearings will cause us to lose seven months of the time we have to install systems with the certain 30% IRS tax credits. The other groups who are most likely safe investing in solar electric systems will be those Westar customers 1. who have already installed systems and want to expand and 2. probably those who will get theirs in before the KCC makes its decision in October. Let's get on with ordering.

Board Meeting Results, 3/12/2015

We had our first board meeting. Safety was a big topic. We decided that we would buy new safety equipment for people passing panels onto, and mounting them on roofs. We also agreed that General Liability and Directors & Officers insurance was important for us to have. And because insurance requires us to define who are "members" and who are bystanders, we needed to arrive at a definition. We concluded that an approved application with annual membership fee of $15 and participation in our activities will make you a member. We are putting together a website on which our application will be posted. You can find our preliminary website at: www.fhreec.org. Since the Kansas legislature has been in our face these last couple years, we decided that we needed a Governmental Concerns Committee to keep track of their shenanigans. And because changes in solar energy and energy storage are happening so fast, we began a Technical Review Committee (for more: http://blog.rmi.org/blog_2015_04_07_report_release_the_economics_of_load_defection ). If you wish a copy of the board minutes, they will be posted on the website as well.

Our board members are Eva Zurek, Jim Sherow, Robert Rosenberg, John Selfridge, Bruce Snead, Madonna Stallmann, Jacque Gibbons, Cherri Harper and Bill Dorsett. Members are invited to attend meetings. The next one is May 7, 6:00 PM to 8:00PM. Location to be announced.