Residents powering homes face insurance problems

Saturday, January 3, 2009 | 4:27 p.m. CST

 KANSAS CITY — Problems have arisen with a new Missouri law that was supposed to make it easy for residents powering their own homes to put in wind turbines or solar panels.

The idea was for the homeowners to be able to send any excess power back to utilities.

But the Missouri Public Service Commission, which oversees the utilities, is requiring homeowners to buy insurance before they start feeding electricity to the grid. And it appears that no Missouri insurance companies sell the insurance.

Henry Robertson, an attorney for St. Louis-based Great Rivers Environmental Law Center, says he's contacted renewable energy installers who've told him the insurance isn't available.

"You can't get it," Robertson said.

Under the new rule, homeowners who produce 10 kilowatts or less of energy must carry $100,000 worth of liability insurance. Those who generate more than 10 kilowatts of electricity must have a $1 million liability insurance policy.

Robertson thinks the rule violates the Net Metering and Easy Connection Act, which was passed by the General Assembly in 2007.

That law says homeowners don't have to buy insurance if they generate less than 10 kilowatts of electricity, and it doesn't address homeowners who produce more than that, Robertson said.

Robertson's firm filed a lawsuit against the Public Service Commission last month on behalf of Renew Missouri, which lobbied for the law.

Commission Chairman Jeff Davis said the commission felt the law was vague.

Davis said that although the risk for linemen to be electrocuted and property destroyed is slight, "if someone does get electrocuted, that is going to be a very serious accident for that person and his family."

The program is known in many states as "net metering." Customers can install renewable energy sources such as wind and solar generators and an inverter that converts the direct current coming into the house to an alternating current.

The inverter, which is near the meter, detects excess electricity and that allows the meter to run backward.

Kansas has a type of net metering called parallel generation, said Ray Hammarlund, director of the Kansas Corporation Commission's energy program division. Liability insurance isn't required.

In more than 42 states, customers are allowed to receive a credit for feeding excess energy back into the power grid.

A U.S. Department of Energy-funded Web site that summarizes net metering in more than 30 states shows Indiana and several communities in Florida and Utah as requiring liability insurance.

At least 10 states waived the insurance, while others didn't address it.

When asked about insurance for net metering, American Family spokesman Ken Muth told The Kansas City Star, "You got me with a new one here."

Mark Schussel, a spokesman for Chubb Group of Insurance Companies, gave a similar response. "It is nothing I have heard of," he said.

Brent Butler, government affairs director for nonprofit watchdog group Missouri Insurance Coalition, believes someone will offer the insurance if the judge rules in favor of the Public Service Commission.

"The market will figure out how to get this coverage available," he said.


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Charles Dudley Jr January 3, 2009 | 5:11 p.m.

>>> But the Missouri Public Service Commission, which oversees the utilities, is requiring homeowners to buy insurance before they start feeding electricity to the grid. And it appears that no Missouri insurance companies sell the insurance. <<<

Obviously people did not do their homework before this initiative was passed and now those home owners are being forced to pay the price.

(Report Comment)
John Schultz January 3, 2009 | 8:59 p.m.

Chuck, I'm not sure that people haven't done their homework regarding the legislation assuming the article is accurate. Sounds more like the PSC requiring something that the legislation either forbid (insurance for those producing less than 10 kW) or did not specify (those producing over 10 kW). Either way, one would think plain old liability or homeowners insurance of the proper level would be adequate. For instance, I have an umbrella policy and think something like that should cover anything required by the PSC.

(Report Comment)
Mark Foecking January 4, 2009 | 3:54 a.m.

I faced this situation when I installed my first solar system about three years ago. My insurance company (Travelers) did not have such a rider available, and they said specifically that my policy would not cover such a liability. So I want with a separate, off-grid system.

Grid tie doesn't make sense here anyway. In California, excess power is sold back to the company at a much higher rate than usual, so it encourages people to install these systems. Here, it is simply sold back to the company at the same rate. It is easier, in terms of legal hassle, to install a separate system that replaces your grid usage on a watt-for-watt basis. That accomplishes the same thing without worrying about liability insurance, etc.


(Report Comment)
Brian S January 5, 2009 | 1:35 p.m.

Oh the irony..."we must get more renewable energy" yet the solar options are very expensive, so the government feels they should subsidize the cost. Then, the same government allows additional costs to be taxed onto those trying to go "green" by imposing insurance requirements, which just adds that much more onto the cost.

Frankly, I don't see the need for liability insurance for a homeowner in this case. If a qualified electrician is installing the system and the system malfunctions, that liability should go back onto the electrician, not the homeowner.

Regardless, once again, the government continues to screw up any progress by forcing overbearing requirements in legislation they author.

(Report Comment)
Mark Foecking January 5, 2009 | 1:49 p.m.


It's not liability insurance for the homeowner so much. It's liability for damage to city property, or a lineman injured by power being fed back into lines during a power failure.

This is why inverters designed for grid tie shut the system down if the power fails. Many people don't know this, and are surprised to find out that their expensive new solar power system does not work if the grid is down. Yet another reason to install a off-grid system instead.


(Report Comment)
Richard McDonald January 5, 2009 | 2:29 p.m.

If the position is that the installer is legally liable for a "backfeed" to the service line, and an employee is injured while an outage of the line occurred, the question becomes will that installer's liability coverage pay the claim, and does it have any subrogation rights if it does?

Hot lines are a problem, and it's not only the power company employees who are at risk, every day people who may come in contact with a downed line are equally at risk.

The only clear solution will be, provided the position is upheld, that a state based insurer be forced to provide coverage for this type of occurrence. And if so, at what rate? Who know's - it may turn into a very profitable piece of business that the industry needs to look at in these troubeld times.

(Report Comment)
Ayn Rand January 5, 2009 | 2:45 p.m.

How much money can a homeowner reasonably expect to make from selling solar power back to the city? If it's less than $500 annually, why bother with an on-grid system? Plus, as Mark notes, going off grid means you've still got at least some power when the grid goes down.

Pretty crappy reporting, BTW. The reporter didn't both to find out what the ballpark premiums would be for $100,000 and $1 million worth of liability insurance. He/she also didn't find out how much money can a homeowner reasonably expect to make from selling solar power back to a utility. All of that would have been helpful for readers to understand the costs and benefits.

(Report Comment)
Mark Foecking January 5, 2009 | 3:48 p.m.

Ayn ax'd:
>>>How much money can a homeowner reasonably expect to make from selling solar power back to the city?<<<

A small generator is defined as one that can generate up to 10 kw of electricity. They are the ones that can sell power back at the residential rate. Larger generators can only sell power back at the wholesale rate (2 cents/KWH)

So say a homeowner installs 10kw of solar. This will yield an average of about 45 KWH/day. The average house in Columbia uses about 30 KWH/day, so he can sell 15 KWH/day back to the city, for a whopping $1.20/day, or about $450/year. Even if he used an average of 6 KWH/day (my average usage) that's still only about $120/month or $1,440/year.

The requirement for grid-tied homeowner generators to have liability insurance is a Columbia city law also, and has been for a while.


(Report Comment)
Ayn Rand January 5, 2009 | 4:53 p.m.

Thanks, Mark. So that leaves the question of whether the cost of liability insurance cancels out the $450-$1,440 profit.

(Report Comment)

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