SIOUX FALLS, S.D. (KELO) — A South Dakota power company’s efforts to get customers using alternative energy sources to “pay their fair share” has advocates of renewables saying it would end up darkening solar energy across the state.

Black Hills Energy has requested a new tariff from the South Dakota Public Utilities Commission, that would require homeowners and businesses with their own clean energy systems, to pay the company for what they generate.

KELOLAND Investigates looked into the potential consequences of this controversial proposal on the future of solar power in the state.

Jeremy Smith grows vegetables on Cycle Farm in Spearfish. A wind turbine was on the land when he bought the business and he also installed solar panels on the greenhouse.

“We’re trying to be deliberate about the actions we’re taking and the affect on the broader community and the planet as a whole. The power that we don’t use goes in to power our neighbors,” Jeremy Smith of Cycle Farm said.

Jeremy Smith uses both wind and solar power at Cycle Garden in Spearfish

It cost Smith $8,000 for the solar panels and he says it will take time in energy savings for him to recoup that expense.

“South Dakota’s got pretty poor rates without this tariff coming, just existing, so it’s a pretty long buy-back rate on the solar. We figure with this panel and doing the labor ourselves that it’s a 16 year payoff,” Smith said.

The “buy all, sell all” tariff that Smith is referring to being proposed by Black Hills Energy, means that any future solar or wind power customers would pay for 100 percent of their electricity, even what they produce through their own systems, plus an additional $10 a month meter charge. Black Hills Energy would reimburse them at a much lower rate, 2 cents per kilowatt, for excess solar and wind energy production used on the grid.

“We want to keep rates low for all customers and as part of that we believe that customers that incur costs on the system, are the customers who should pay for those costs, or services they receive, Marc Eyre of Black Hills Energy said.

Black Hills Energy says even when someone has their own power system, the utility must still supply the infrastructure to the grid and make electricity available to those customers.

“Obviously the sun doesn’t always shine and the wind doesn’t always blow; so at a moment’s notice, 24/7, 365–we have to have those lines available, safe and ready to provide their peak demand–if their system isn’t generating. And so that comes at a cost.”

“If this tariff passes, any sort of small scale renewable energy in South Dakota is dead; 100 percent dead,” Jared “Cappie” Capp said.

Jared Capp’s Black Hills Company, Pangea Design, specializes in sustainability in building.

His projects have been featured on The Discovery Channel’s program, Building off the Grid.

Jared “Cappie” Capp has been featured in episodes of The Discovery Channel’s, Building off the Grid. Video Courtesy: The Discovery Channel

He’s currently remodeling an 1887 farmhouse in Spearfish.

“As part of that remodel we’re putting solar on the roof. So this is one of our residential projects that would be impacted if this tariff is allowed to go through,” Capp said.

However, it’s a bigger project in the middle of town that has Capp more concerned. Construction is supposed to get underway next week on a $2 million dollar mixed-use commercial building.

“There is an $80,000 solar system going on this roof and if this tariff is passed, we are not going to put it on the roof and we’d have to restart the permitting process, which would halt the build,” Capp said.

“One of the aspects that got our approval passed was we were going to put solar on the roof because Spearfish as a city values renewable energy,” Headley said.

Research Scientist Rachel Headley plans to locate her consulting company in the new building. She also has solar power on her home and believes the proposed tariff could have a negative economic impact on the state.

“I think it will dissuade people from moving here. I think it will dissuade businesses from coming here,” Headley said.

Kennecke: Does it punish those who want renewable energy? Shouldn’t the utility company be rewarding those who want to put in solar panels and wind power.
Eyre: I don’t think anything in this punishes them, or discourages them. I think this is equitable for all customers and it reflects more closely what the value the connection to the grid brings and really the true costs.

In 2016, Nevada’s Public Utilities Commission agreed to phase out incentives for homeowners who install rooftop solar panels, after the state’s largest energy company argued the same things as Black Hills Energy: that when solar customers don’t pay to maintain the grid, non-solar customers are stuck with the bill. The Solar Energy Industry Association estimated that more than 2,600 jobs were lost when the large solar companies stopped doing business in Nevada because of the change. A year and half later, new legislation in Nevada modified the ruling and the solar companies returned.

Solar advocates say the same thing could happen in South Dakota with solar energy companies like GenPro in Rapid City, should the PUC approve the new tariff.

“There are entire companies in the Northern Black Hills that would essentially be rendered useless if this was; this is their business model to sell small scale solar,” Capp said.

While the tariff would currently only affect about 80 customers in the Black Hills, Solar advocates say renewables are the way of the future and believe utilities are only trying to protect the monopolies.

“Right now it’s a fairly minor percentage of customer base, but it’s still happening. So really as we look at this issue into the future we believe now is the best time to address it,” Eyre said.

Black Hills Energy’s request is making its way through the Public Utilities Commission process, which could result in some kind of agreement between parties, needing approval by the PUC. Or the case could be argued before the PUC. Public comment on the issue is being taken online.

If you wish to submit a comment on a PUC docket, send it to Do not send docket-related comments directly to commissioners. Please read the guidelines about what information must be submitted with your comment and other guidelines.