Net metering in Indiana sees exciting 50 percent growth

Michael Giberson

From the Indianapolis Star, “More Hoosiers reap benefits of generating their own electricity“:

[M]ore and more people around Indiana are starting to generate their own electricity, motivated by environmental concerns and feelings of energy independence.

The arrangement is known as “net metering,” allowing customers to offset part of their energy costs and feed the excess back to the utility for credit.

From 2010 to 2011, the number of Indiana customers taking part in net metering rose from 199 to 298 — a 50 percent increase, according to the Indiana Utility Regulatory Commission.

Sounds exciting, right? Okay, granted that in a state with about 2.6 million eligible retail electric customers, a move from  0.7 one-hundredths of one percent up to 1.2 one-hundredths of one percent of customers is not exactly a big deal.

The “big” jump in participation came mostly because the state allowed commercial and industrial customers to participate along with residential customers.

But at least a few customers are getting a great deal, right?

The system was expensive, about $30,000, or about as much as a new car. And so far, the savings are relatively modest, a few hundred dollars a year. So even with federal tax credits and a small grant from IPL, the system will take decades to pay for itself.

Decades to pay for itself, for a system with a projected lifespan of maybe two and a half  or three decades tops.

Applying Coase to wildlife preservation

Lynne Kiesling

I loved seeing pictures a couple of weeks ago of an endangered Bengal tiger and her cubs from a hidden camera. Large predator wildlife that roam and are territorial often face reductions in their territory when humans move in; in the Bengal tiger territory in India, both traditional farming and the construction of new vacation resorts increases the margin on which human uses of the land and tiger uses of the land conflict.

Note the way I said that: conflicting uses of a scarce resource, which for most resources we resolve peacefully and productively using property rights. But how do you do that when one use is territorial roaming and hunting by large predators? And how do you reconcile that with settled farming and tourism? This issue is the same as ranchers in Montana and Idaho faced with the reintroduction of the gray wolf, in a classic case in which Defenders of Wildlife members made voluntary contributions to compensate ranchers in the case of livestock killings.

This is an application of Coase’s framework for compensation for harms when there are conflicting uses of a resource — it recognizes wildlife territory as a valuable use of the resource, and compensates the other users for harms so that they don’t pursue the alternative of killing the wildlife.

I discussed one of my favorite examples of this in a class last quarter, as summarized in this NPR story: Namibia has instituted community ownership of wildlife, with village councils establishing “communal conservancies” and retaining the revenues associated with wildlife tourism … including wildlife hunting. Thus at the community level they earn revenues and have a pool for compensation in the case of livestock or crop damage. Both humans and wildlife are thriving and wildlife in Namibia are less prone to poaching, because the villages have property rights in the wildlife. They all prosper by cultivating wildlife in the way that we cultivate chickens.

The Wired article on the Bengal tiger case hints at a livestock compensation system funded by voluntary donations:

Although the tigers managed to kill a domestic cow, the WWF allegedly compensated the animal’s owner to prevent a retaliatory killing. While not an ideal arrangement, the organization asserts that the strategy works.

“The fact that the tigress survived and it was photographed later is an example of the cattle compensation scheme working when implemented in earnest,” the release stated.

The comparison of these cases suggests that perhaps the WWF should build on their cattle compensation strategy and act as an intermediary to work with the resorts in the Bengal forests to develop the potential for tiger tourism revenue at the resorts. If the resorts can profit from the free movement of tigers in their forest corridors, they are less likely to intrude on those corridors. Then farms and resorts and tigers can coexist and thrive.