Publications | previous page
Electric Laws, Electric Vehicle Charging, Solar FAQ
Dec. 27, 2023
South Dakota Electric Service Laws
What are the laws governing electric utilities in South Dakota?
The laws governing electric utilities as regulated by the South Dakota Public Utilities Commission can be found in South Dakota Codified Law Chapter 49-34A.
Can you give a brief explanation of these laws?
These laws can be categorized as such: electric service territories for all electric utilities operation in South Dakota; the PUC’s - also referred to as the commission’s - authority and standards for rate-regulation of investor-owned utility companies, referenced here as IOUs; performance expectations of IOU companies; and other policy matters for electric utilities that the state legislature has chosen to enact.
How are the electric service territories in the state determined?
South Dakota law specifies that the PUC has the authority to approve of and be a repository of each electric utility’s service territory boundary, to include IOUs, cooperatives, and municipal systems - all electric providers in the state. These boundaries can be found on the PUC’s website at https://puc.sd.gov/energy/electricmaps/default.aspx.
What are the IOU companies and why does the commission regulate their rates?
There are six IOUs that provide electric service to specific geographic areas in South Dakota. Because these companies are regulated monopolies, owned by their investors and managed as private enterprises, state law provides the PUC with authority over rates and service requirements. These IOUs are Black Hills Energy, MidAmerican Energy Co., Montana-Dakota Utilities Co., NorthWestern Energy, Otter Tail Power Co., and Xcel Energy. Here is contact information for the IOUs, https://puc.sd.gov/energy/investorowned.aspx.
The South Dakota Legislature gave the PUC authority to ensure the IOUs provide safe and reliable service at fair and reasonable rates. For example, when considering a rate increase request filed by any one of these utilities, the commission must process such a case according to the law. This means the commission must balance the public’s need for adequate, efficient and reasonable service along with each utility’s need to collect revenues enabling it to meet its cost of furnishing such service and the opportunity to earn a fair, reasonable return. The commission determines these factors based on definitions, standards and references specified in South Dakota Codified Law.
Does the PUC regulate rural electric cooperatives and municipal electric systems?
The legislature has not delegated the PUC the same oversight by law when it comes to rural electric cooperatives or municipal electric systems. The reason for this is that the members of each co-op and municipality elect those that represent them and manage their system. Thus those customers have a voice in their service and its oversight, unlike in the case with customers of the six IOUs. The commission has authority to ensure every one of South Dakota’s electric utilities - whether IOU, co-op or municipal - provides adequate electric service, as provided by SDCL 49-34A-58.
Here is contact information for the rural electric cooperatives, https://puc.sd.gov/energy/electriccooperative.aspx, and municipal systems, https://puc.sd.gov/energy/municipal.aspx.
What is the definition of an electric service provider in South Dakota law?
The key is what is electric service and who is providing it, as defined in SDCL 49-34A-1(6) and (7). See excerpts:
(6) “Electric service,” furnished to a customer for ultimate consumption, but not including wholesale electric service furnished by an electric utility to another electric utility for resale;
(7) “Electric utility,” any person operating, maintaining, or controlling in this state, equipment or facilities for providing electric service to or for the public including facilities owned by a municipality.
Electric Vehicle Charging
Where can I find an electric vehicle charging station in South Dakota?
A map of all charging stations can be found at https://chargehub.com/en/Charging-Stations-Map.html. The PUC has no affiliation with those responsible for this website and cannot guarantee the site’s accuracy.
Does the PUC determine where electric charging stations are placed in the state?
The PUC has no authority by law to mandate or regulate the placement of charging stations. You may wish to contact the Department of Agriculture and Natural Resources for information on its electric vehicle charging grant program funded by the Volkswagen Mitigation Trust Fund, created by a diesel-mitigation $8 million settlement. Here is a link to information on this program: https://denr.sd.gov/des/aq/aaVW.aspx.
I own a business and am interested in installing an electric vehicle charging station for public use. What do I need to know prior to doing so?
It is important to understand that you may not charge a fee for electricity you are creating if you are not an electric utility, nor can you charge a fee for electricity you are purchasing from your electric service provider. In addition to the laws referenced here and in SDCL Chapter 49, ensure your plan complies with other state laws, your county and municipality as far as zoning laws and business licenses and permits.
If I install a charging station for public use, how may I lawfully charge customers a fee for using it?
South Dakota law prohibits anyone other than the incumbent electric utility from selling electricity to retail customers in the state. See SDCL 49-34A-42. Here are the electric providers by territory in South Dakota, https://puc.sd.gov/energy/electricmaps/default.aspx. State law further prevents anyone from marking up the price on any electric utility. See SDCL 49-34-14. In lieu of charging for the kilowatt-hours of electricity, a business may offer parking places for rent, similar to a parking meter or a campground slip, but if electric charging is provided, the fee charged cannot be for the electricity provided.
Solar Energy
The PUC’s role in solar development involves education and regulation. For utilities within the PUC’s jurisdiction, the PUC regulates generator interconnection practices and the price that solar generators get paid for excess generation. The PUC also has siting authority for solar farms with a capacity of 100 MWs or more.
How popular is solar power in the U.S.?
According to the U.S. Energy Information Administration, solar energy provided for about 3% of total U.S. electricity generation in 2020 with all renewable energy sources accounting for 20% overall. In 2020, solar photovoltaics or PVs made up approximately 40% of new U.S. electric generation capacity. Based on generator interconnection requests to the transmission system, solar energy is forecasted to make up a considerable portion of future generation connected to the electric grid.
How much solar generation is in South Dakota?
Relative to other states, South Dakota doesn’t have a large amount of solar generation, although it is increasing. In 2020, the state’s total generation was 17,038,876 MWh. Solar power accounted for 1,933 MWh, which makes up approximately 0.01% of South Dakota’s generation. Existing utility scale solar in South Dakota is a 1 MW facility near Pierre. Even though solar generation in South Dakota has yet to take off, the PUC has issued permits for the construction of two large-scale solar facilities in South Dakota. The Lookout Solar Project was granted a permit in February 2020 to construct a facility in Oglala Lakota County capable of generating up to 110 MW of energy. Wild Springs Solar Project was granted a permit in November 2020 to build a facility in Pennington County capable of generating up to 128 MW.
What are the main types of solar energy systems and what's the difference?
There are four main types of solar installations: residential, commercial, community solar farms and utility-scale solar farms. Residential refers to systems that serve single-family residences and may also include multi-family housing. Commercial includes non-residential roof-mounted systems regardless of size, and non-residential ground-mounted systems up to 5 MW.
Community solar farms are shared renewable energy arrangements that allow several energy customers to share the benefit of one local renewable energy power plant. This kind of installation pools investments from multiple members of the community and provides power and/or financial benefit in return. Shared renewable projects are often located on public or jointly-owned property and provide an option for those who can’t install solar on their property, like renters and condominium owners or homeowners with roofs that are improper for solar installation.
Utility-scale solar is distinguished from other installations by project size, utility-scale projects are generally large, and the fact that the electricity is sold to wholesale utility buyers, not end-use consumers.
What are the benefits of solar energy?
From an environmental perspective, solar energy systems have less of an impact on the environment when compared to other electricity generating resource types. While community and utility scale solar farms can go on for miles, residential and commercial solar energy systems can be placed on existing buildings and do not require major land allocations or infrastructure development. Further, solar energy uses the sun to produce electricity and thus, there are no adverse environmental emissions by solar energy systems. Finally, solar energy systems are not as loud as other resource types.
From a technical perspective, generation from solar energy systems aligns better with the typical daily pattern of electricity consumption than wind energy. This results in solar energy being able to generate more electricity during periods of higher electrical consumption than wind energy.
What challenges does solar energy face?
Many of the challenges solar energy faces are related to cost. While solar energy has become much more affordable in recent years, the low cost of other energy sources like natural gas have made solar energy less competitive. The uncertainty of the Solar Investment Tax Credit also presents a challenge. The ITC, created by the Energy Policy Act of 2005, established a 30% tax credit for both residential and commercial solar projects. In 2020, the ITC incentive amount began a stepdown schedule to lower the tax credit percentage and declined to the current rate of 26%. Congress passed legislation to continue this rate through 2022 with the rate scheduled to decline again to 22% in 2023 and 10% (utility/commercial) or 0% (residential) in 2024.
One of the biggest hurdles to solar is the intermittency of solar energy and the challenges it creates in terms of generation and integration. What does that mean? Intermittency refers to the variability of solar energy and it can be problematic because our grid is expected to be reliable every second of the day. Grid operators must plan ahead to ensure the right amount of electricity is produced at the right time to continuously meet electric demand. However, solar energy is less predictable than more traditional fossil-fueled or nuclear energy sources, making this task more difficult.
Solar is a non-dispatchable energy source, meaning it’s not under the control of the operator. Solar energy generates electricity only when the sun shines and energy production varies day to day and hour to hour depending on other factors like time of day, season, and local weather conditions. Because solar energy can’t be depended on alone, grid operators must ensure they have a contingency plan if expected solar production falls short. There are numerous possible solutions to this intermittency problem, like diversifying energy sources, establishing redundancies and building energy storage capabilities, but all come with an added cost.
Transmission capacity is also an obstacle for utility-scale solar development. When it comes to renewable energy in the U.S., the areas most ideal for renewable energy development are located far from the demand centers in need of that energy. As a result, project developers know that generated electricity will need to be transported long distances to reach customers. While these project developers typically pay for the interconnection lines needed to get their power to the grid, current long-distance, high-voltage interstate powers lines are too congested to serve new projects. In order to continue developing renewable energy projects, significant investment in new interstate transmission lines will be needed.
What does solar energy cost?
According to the U.S. Department of Energy, the amount of solar energy connected to the electric grid has increased more than 20-fold since 2008. Technology development, commercialization, and manufacturing scaling have contributed significantly to rapid reductions in solar hardware costs.
However, the non-hardware costs, often referred to as soft costs that include financing, customer acquisition, permitting, installation, labor, inspection and more, have not declined as rapidly. In 2019, soft costs account for 66% of the total installed price.
The installed costs of PV solar panels vary between residential and utility-scale solar farms, with the latter benefiting from economies of scale. In 2019, the median installed price for residential systems was approximately $2.89 per watt direct current or DC and the median installed price for utility scale systems was $1.34 per watt DC. Based on the median residential PV system price, it would cost a homeowner approximately $28,900 to install a 10 kW PV system.
SOLAR POWER FOR YOUR HOME
Steps to Going Solar
1. Get a home energy audit.
2. Complete cost-effective energy efficient home improvements.
3. Evaluate your home’s suitability for a solar system.
4. Understand your utility bills, local incentives (tax credits, rebates, etc.) and rules.
5. Reach out to your electric utility to learn about the interconnection process, interconnection cost, and the amount the utility will compensate you for any excess generation.
6. Research local building codes and permitting requirements.
7. Explore solar system types and your available solar access.
8. Get proposals from several reputable, established solar system providers.
9. Analyze costs, projected savings and contracts to make the best choice for you and your home.
10. Consider warranties, insurance, rebates and maintenance.
What do I need to know when considering or installing a solar energy system?
Going solar is a significant decision. You should understand the basics of solar energy, your options to go solar, and what questions to ask solar professionals.
Is my home suitable for solar panels?
Solar panels are built to work in all climates, but in some cases, rooftops may not be suitable for solar systems due to age or tree cover. If there are trees near your home that create excessive shade on your roof, rooftop panels may not be the most ideal option. The size, shape, and slope of your roof are also important factors to consider. Typically, solar panels perform best on south-facing roofs with a slope between 15 and 40 degrees, though other roofs may be suitable too. Consider the age of your roof and how long until it will need replacement.
How do residential solar systems work?
Most residential solar systems are PV systems. These generate electricity through two main components: panels (or modules) made up of PV cells that convert sunlight to electricity and inverters that convert DC to alternating current or AC for use in your home.
What are the components of a PV system?
Solar PV modules or solar panels are where electricity gets generated but are only one of the many parts in a complete PV system. A number of other technologies must be in place for the generated electricity to be useful in a home or business. PV arrays must be mounted on a stable, durable structure that can support the array and withstand wind, rain, hail, and corrosion over decades. These structures tilt the PV array at a fixed angle determined by the local latitude, orientation of the structure, and electrical load requirements.
Inverters are used to convert the DC electricity generated by solar PV modules into AC electricity, which is used for local transmission of electricity, as well as most appliances in our homes. PV systems either have one inverter that converts the electricity generated by all of the modules, or microinverters that are attached to each individual module. It is expected that inverters will need to be replaced at least once in the 25-year lifetime of a PV array.
Finally, batteries allow for the storage of solar PV energy, so it can provide power at night or when weather elements keep sunlight from reaching PV panels.
How much electricity can you generate with solar?
The National Renewable Energy Laboratory developed a tool called PVWatts for this purpose. It estimates the energy production and cost of energy of grid-connected PV energy systems for any address in the world. It allows homeowners, small building owners, installers, and manufacturers to easily develop estimates of the performance of potential PV installations, and can even compare solar’s cost to utility bills. These tools are great for getting started, but make sure to work with a solar installer for a custom estimate of how much power your solar energy system is likely to generate.
What are my ownership options?
If you can afford it, buying your solar panels outright will bring you the biggest return on your investment. If that is not an option, you could look into getting a solar loan.
How can I decide if a solar energy system is right for me?
Every situation is different so it’s important to do your homework and be an active participant in the process. Knowing your electricity usage and whether or not your roof is appropriate for solar are good first steps. Know your finances. Sunlight may be free, but solar energy systems are not. Research your solar company and get the best deal. Before entering into any agreement, thoroughly vet the company. Asking for references and proof of licensure and checking with South Dakota’s Secretary of State office to ensure the company is in good standing should all be a part of the process of selecting a reputable company. Getting multiple bids for your solar energy system should also be a part of your research process. The market can be competitive and having multiple solar companies competing for your business can save you money. Finally, when looking for deals, don’t forget about tax credits and incentives. These can save you money as well, but make sure you fully understand any potential tax implications of these money savers.
What incentives are currently offered for solar in South Dakota?
- Federal Tax Credit: A taxpayer may claim a credit of 30% of qualifying upfront capital costs for a solar energy system.
- This incentive applies to the installation of both solar water heaters and solar panels.
- South Dakota property tax credit: The first $50,000 or 70% of the assessed value of solar energy systems (less than 5 MWs), whichever is greater, is exempt from the real property tax. See SDCL §§ 10-4-42 to 10-4-45.
What will I get paid for my excess generation?
All electric utilities regulated by the PUC are obligated to interconnect with and purchase power from small solar facilities if the generator desires and agrees to the terms. The minimum rate paid is referred to as the avoided cost which is the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the solar facility, such utility would generate itself or purchase from another source. For solar facilities with a capacity less than 100 kW, the rates utilities pay for the power must be filed with the PUC. These rates must also be approved by the PUC for the IOUs. This transparency allows producers to compare rates and make informed decisions regarding the economics of a small renewable power facility. These filed rates can be accessed here, https://puc.sd.gov/energy/rrrates.aspx
SOLAR LEASE
I am looking to install a solar energy system for my home by entering into a lease agreement with a solar installation and maintenance company. What do I need to know about South Dakota laws to do so?
The most important consideration is a solar lease agreement must state that you, the lessee, hold all rights and abilities to operate, maintain and control the facility. If you as the lessee do not have those three elements, you are not in compliance with South Dakota law. Therefore, the company from which you lease or purchase your system, or the company you have operate and maintain your system, must agree to forfeit all rights to the system so they are not operating as an electric utility.
Can I generate or provide my own electricity for my own consumption in my home or business?
Yes, you can as long as you are using the electricity yourself and not selling it to any entity other than via a wholesale agreement with a public utility assigned to your electric service territory. If you are selling it via retail, then you are operating as a public utility and that is not allowed by law. You may have a wholesale agreement with your electric provider to purchase your excess generation. Every location in South Dakota is part of an existing electric service territory assigned to one electric service provider.
Here is a link to the applicable South Dakota law, SDCL 49-34A-42, and excerpts:
Each electric utility has the exclusive right to provide electric service at retail at each and every location where it is serving a customer... No electric utility shall render or extend electric service at retail within the assigned service area of another electric utility…
What other solar energy resources are available?
U.S. Department of Energy’s Homeowner’s Guide to Going Solar
National Renewable Energy Laboratory
Estimate Energy Production and Cost of PV Systems (NREL)
Solar Energy Industries Association
