While the General Assembly seems unlikely to require Indiana utilities to generate a specific amount of electricity from renewable energy sources, it may expand the state's so-called net-metering policy.
That rule allows some customers of investor-owned utilities to send excess electricity produced by wind turbines, solar panels and other renewable sources back into the electric grid and to be charged only for the net amount of power they actually use.
Because those customers get credit on future bills for excess power they produce, it can help offset the cost of installing renewable energy systems and make doing so more attractive.
State Sen. James Merritt, R-Indianapolis, said he's optimistic lawmakers will increase the amount of power that can be sent back into the grid and extend that option to businesses, industries and municipalities.
The state's current net-metering policy applies only to homeowners and schools and sets a limit of 10 kilowatts per customer.
Indiana lags well behind neighboring states in its net-metering policy, according to "Freeing the Grid," a report released in November by the renewable energy advocacy group Network for New Energy Choices.
Illinois, Michigan, Ohio and Kentucky received grades of "B" in that report, but Indiana got an "F."
"They've been making changes and they've improved, but we've remained the same," said Laura Arnold, president of the Indiana Renewable Energy Association's board of the directors.
An expansion of Indiana's metering rules would make investing in wind turbines, solar panels, hydroelectric systems or biomass energy generators more attractive, she said.
Merritt, who chairs the Senate Utilities and Technology Committee, said net metering should be his panel's main issue during the legislative session that starts January 5.
The sticking point in negotiations is expected to be what power limit to set under a revised policy.
That issue scuttled an agreement last session, when Merritt sponsored a bill that would have boosted the net-metering limit to 100 kilowatts and expanded the policy to include businesses and municipalities.
State Rep. Ryan Dvorak, D-South Bend, sponsored a House bill that would have raised the limit to 1,000 kilowatts about the amount produced by a large wind turbine.
Although those bills passed both chambers, the legislation died in conference committee.
"It really just came down to the numbers," Dvorak said. "The Senate didn't want to budge up from 100 kilowatt and we hit an impasse."
He hasn't decided what power level he will propose this season, but Dvorak said he's optimistic about passage because power utilities that once fought net-metering now seem willing to accept its expansion and at least a 100-kilowatt cutoff.
"We're a lot closer and that's why I'm hopeful this year we're going to get an actual meaningful bill through that's comparable to the rest of the country," Dvorak said.
The Indianapolis-based Hoosier Environmental Council favors boosting the state's net-metering limit to 1,000 kilowatts, a level that Jesse Kharbanda, the group's executive director, said would help bring new jobs and development to the state.
A 1,000 kilowatt level also would help the state respond to federal climate change legislation expected to lead to higher energy costs in states like Indiana that get most of their power from coal-fired power plants, he said.
"Net metering helps lay the foundation for a different energy economy for Indiana," Kharbanda said. "It helps Indiana better prepare for climate legislation and can provide new income for struggling corporations."
While moving it the policy's power limit to 100 kilowatts might help individual homeowners and small retail stores install small-scale wind or solar power systems, he said that's well below the level needed to help industries and large businesses with far larger energy demands.