Anchorage Daily News

WASILLA -- A number of Matanuska-Susitna Borough residents say the Matanuska Electric Association erects more hurdles than it removes for the type of small-scale renewable energy encouraged elsewhere.

They say the co-op utility requires potentially costly insurance and equipment, doesn't allow customers to sell surplus renewable energy on the grid at retail rates and requires businesses to pay workers' compensation -- all hurdles that make producing renewable energy that much harder.

Earle Ausman, an engineer who built a small hydroelectric project on McRoberts Creek about 15 years ago, figures he pays $2,500 a year toward workers' comp, as well as liability insurance. He doesn't get retail prices for his energy, as he could under a widely used practice known as "net metering."

"If you're interested in encouraging renewables, these are the kind of things you do," Ausman said. "You do net metering, and do away with insurance policies."

Ausman and a group of engineers hope to build larger hydro projects on Fishhook Creek and South Fork Eagle River. To do so will take a new arrangement with MEA and Chugach Electric Association.

Officials at MEA, however, say they get few calls from small-scale producers. Right now, the only small-scale project on the grid is Ausman's, which churns out enough electricity for about 100 homes.

Interested customers may sell MEA surplus power from small-scale sources, just not at retail rates, MEA spokesman Tuckerman Babcock said. Customers need to pay the cost of getting the power they generate back to MEA via the utility's distribution network, plus other fixed costs.

Liability insurance for most homeowners isn't that expensive, plus the cost of requisite interconnections to hook up to the grid is in the hundreds, not thousands, said Jim Walker, MEA senior counsel.

Bottom line, both men said: If household customers want to sell renewable energy on the grid, they can.

"Yes, there's a little bit of administrative effort, but it's not significant," Walker said. "It's in our tariff. The forms are there."

The issue of encouraging small-scale renewables gains speed as co-op officials seek new ways to supply electricity to more than 52,000 customers. MEA is proposing to build a coal-fired plant, as well as a gas plant, to supply power now supplied exclusively by Chugach under a contract that expires in 2014.

Critics say the utility didn't adequately consider renewable energy options such as geothermal and tidal power.

Nobody is saying a bunch of backyard solar panels will substitute for a new power plant, but some say MEA could build a smaller plant if it did a better job encouraging small-scale renewables.

The utility does not make it simple for small producers who want to sell it power, said Harvey Bowers, who with his wife runs the Agate Inn off the Palmer-Wasilla Highway.

On the grid, the couple installed a bank of solar panels in part to guard against power fluctuations. The panels power half their home and could power much more except that health problems delayed work rewiring the rest, Bowers said.

Yet he cannot "bank" any of that surplus solar power on the MEA grid because the utility doesn't allow net metering, he said.

Under the practice, in place in more than 35 states, customers receive retail prices for excess electricity instead of lower rates that utilities like MEA pay, according to a renewable energy Web site produced by the U.S. Department of Energy.

Net metering here would encourage more people to invest in renewables, so maybe MEA could build a smaller coal plant, Bowers said: "If they had 1,000 of us doing this, MEA could drop back their investment."

Alaska has no net metering law similar to other states', so each utility determines its own policy, said Chris Rose, executive director of the Renewable Energy Alaska Project.

Golden Valley Electric Association is really the only progressive utility in Alaska on the issue of renewables, Rose said. If customers hook up renewable energy projects, the Fairbanks co-op pays the "avoided fuel costs," what they save not having to generate energy for that customer, and also pays renewable producers a bonus every year out of a pool of customer donations, he said.

"The utilities can be as helpful or not as they want to be," Rose said.

Then again, net metering is problematic in rural Alaska, where local utilities are stretched thin. His board has yet to reach consensus on the issue because of that. Instead, the group's focus is on legislation that would create a renewable energy fund.

Small backyard projects probably aren't the answer on a large scale, Rose said.

"It's not the answer unless you have a broader vision."

Nonetheless, people with backyard projects remain a bit baffled that they aren't getting more encouragement as they do what they consider the right thing with energy.

Mimi and Willy Peabody live on Lazy Mountain in a concrete home he built. Eight solar panels power the place with help from a diesel generator out back. In winter, the couple cut back on power use by keeping most of the house dark.

Despite their self-reliance, Peabody said, she had hoped to live on the grid, partly for the security and partly to make use of the same storage function that Harvey Bowers liked.

It didn't work out. MEA estimated it would cost $80,000 to connect the Peabody place with existing power lines a half mile away, she said.

It would cost $10,000 or more to convert their power for use on the grid, and MEA would sell their power "at our loss," she said.

"My husband said if we're going to invest a lot of money, we should invest it in renewables," Peabody said.

The couple hope to install a wind generator this summer.

Contact Daily News reporter Zaz Hollander at 352-6711 or zhollander@adn.com.