Welcome to the July net metering round up. Last month we provided the first in what will be an ongoing series of overviews of what is going on in the world of net metering. Here we provide an update on the latest developments, policies, and controversies surrounding net metering.
Finding common ground in Hawaii
In August of last year, Hawaii regulators began a proceeding to develop a valuation scheme for distributed resources that utilities, solar installers, and consumer advocates could all agree on. However, this proceeding came to a halt when Hawaiian Electric Companies (HECO) and solar advocates clashed over net metering rules.
Utilities and solar advocates have each submitted a Final Statement of Position (FSOP), detailing their positions on solar policy, and their suggestions for the next step. HECO’s stance is that the high cost of electricity and the falling prices of solar result in net metering customers not paying their share for maintenance costs. HECO maintains that those costs are then shifted to non-net metering customers. They recommended a model that would provide two options: a Self-Supply option, and Grid-Supply option. With the Self-Supply option, customers will be interconnected to the grid without a lengthy review, as long as they meet certain standards. With the Grid-Supply option, distributed energy resource (DER) owners will be compensated for net-metered electricity at $0.18 per kWh, which lengthens the payback period. HECO says that once this model is in place, there will be no need for retail rate net metering.
Solar advocates submitted a joint FSOP, which warned that eliminating net metering would slow renewable energy growth because of the lowered compensation rate. They called for a cost-benefit analysis of net metering to be taken into account when deciding on a new net metering policy. They also proposed a new net metering credit to “account for the State’s uniquely high penetration level.”
One point of controversy was whether or not HECO’s proposal would not only create additional taxation for solar customers, but would also threaten their eligibility to receive the federal tax credit. HECO said that their proposal functions as an energy exchange very similar net metering, and is no more likely to create extra taxes than current net metering rules.
Michigan’s proposed Clean Energy Plan may not involve much clean energy
Republican Senators have proposed two bills that would make up Michigan’s Clean Energy Plan. The first would eliminate renewables and efficiency mandates so that the market could choose the lowest-cost energy resource available. The second would keep the current 10% energy choice rule, but suppliers of clean energy would have to show that they had the capacity to fulfill their contracts. It would also cap the number of new customers.
These proposals also include provisions that would impact net metering for distributed generation systems. Under the provisions, net metering customers would buy all of their electricity from the utility, and sell back excess energy at the wholesale price of solar. Critics including Mark Barteau, the director of the University of Michigan’s Energy Institute, do not even consider this to be a real net metering program. Hearings for the proposal started earlier this July, and are expected to continue into fall.
Uncertainty in Arizona
Tuscon Electric Power proposed a plan to expand their rooftop solar program and provide utility-owned community-scale solar arrays. Arizona’s Residential Utility Consumer Office (RUCO) was in favor of the proposal, but said that third-party solar companies should be included in bringing community-scale solar to customers. TEP is also planning to re-submit a request to change net metering rates, which has raised some concerns from RUCO.
Earlier this year, RUCO agreed to a program that ensured that third-party solar companies and utilities met a cost-parity requirement. A change to net metering could mean an uneven playing field between third party solar companies and utilities. Under the cost-parity requirement, utilities’ rooftop solar program has to cost as much or less than third party net metering systems. RUCO’s concern is that if TEP changed the net metering reimbursement rate to a wholesale rate, then the cost threshold for utilities’ solar program might fall as well.
The uncertainty of the future of net metering is already having a negative impact on the number of new solar customers. Without knowing what the reimbursement rate will be for excess power, solar installers are unable to give potential customers an accurate estimate for how long it will take for solar to pay off. So while the same number of people are asking for quotes fewer are signing contracts.
Maine almost ends net metering debate, but not quite
Net metering has been a topic of much debate in Maine, especially as the 1% peak load net metering cap approaches. But a new bill—or what is called a “Resolve” in Maine—may offer a solution that at least some can agree on. The Resolve, entitled “Resolve, to develop an alternative to net energy billing that fairly and transparently allocates costs and benefits of distributed generation to all customers,” was passed unanimously by the Legislature’s joint committee on energy, utilities, and technology. It was then vetoed by Republican Governor Paul LePage. The veto in turn was overridden by a strong bipartisan vote.
The new law is based on a framework laid out in a white paper entitled “A Ratepayer-Focused Strategy for Distributed Solar in Maine,” written by Lon Huber of Strategen Consulting and the Maine Office of the Public Advocate. The white paper identifies flaws in net metering and applies the findings of a Value of Solar (VOS) study that had been submitted to the Legislature earlier this year to provide a solution that will be fair for all ratepayers. The VOS had determined that the real value of solar was $0.33 per kWh, showing how underestimated the value of solar was at the current retail rate of $0.13 per kWh. Using this information, the white paper created a Multi-tiered Market-based Aggregation Credit Program. This program wouldn’t change Maine’s net metering policy, but would require stakeholders to build on a market-based policy solution.
Strategen believes that this would allow Maine to add 300 megawatts of new solar capacity by 2025—150 MW from the wholesale segment, 100 MW from the residential and commercial sectors, and 50 MW from industrial and community solar markets.
However, this may not be enough to end the debate entirely. Both Tell Utilities Solar won’t be Killed and The Alliance for Solar Choice argue that this Resolve would cause higher taxes and harm the free market, slowing solar growth in Maine. Other solar advocates and solar installers supported the Resolve, believing it will increase the benefits for residents and business with grid-tiered solar systems, and bring the compensation closer to the true value of solar as shown in the VOS.
California ratepayers will see some big changes on their energy bill
California Public Utilities Commission voted earlier this July to implement a new rate structure based on three main principles. The first is to switch from a four-tiered rate system to a two-tiered rate system. The second is to transition to a time of use (TOU) rate that would begin in November and be in full effect by 2019. Lastly, net metering customers would receive full compensation for the energy they supply to the grid.
Net metering would be left in place, and distributed generation owners would pay the appropriate price for the electricity they use based on a TOU rate. However, customers sending power back to the grid during high cost hours will receive higher bill credits.
Initially, California’s three big utilities had wanted a fixed monthly charge of $10 per household. This would significantly increase the price net metering customers pay. Fortunately, this was rejected. Instead the CPUC is allowing utilities to propose minimum bills of up to $10 per month, which would have less of an impact on net metering customers.
The net metering cap is quickly approaching in Nevada
Nevada will hit its 235 megawatt net metering cap sooner than expected, perhaps as early as next month, making the need for new net metering rules even more urgent. Solar advocates want net metering to be extended through the end of this year, or until new reimbursement rates are set, even if the cap is met, claiming the numbers were based on incomplete information from NV Energy. Among these advocates is The Alliance for Solar Choice, who filed an emergency potion with the Nevada Public Utilities, with the support of the Southern Nevada Homebuilders Association. State regulators have been drafting a new reimbursement rate for net metering, but they have until the end of the year to complete it.
Montana Dakota Utilities propose additional charges to net metering customers
Montana Dakota Utilities filed a rate increase of 21%, as well as an additional charge to net metering customers. One North Dakota based utility says the price increase is to cover the cost of complying with federal environmental regulations and to meet a growing demand from customers. Renewable energy advocates argue that this will stifle small-scale electricity generation. Although at this time the changes will impact around 26,000 customers, advocates argue that this number will rise as more people invest in small-scale renewables.
The Montana Public Service Commission is reviewing the proposal will make a final decision based on the most cost-effective approach next March.
Massachusetts Senate votes to raise the cap
Last week the Massachusetts senate adopted Amendment 18 to Bill S. 1973, a climate change action plan. This amendment, sponsored by Benjamin Downing (D), increases the state net metering cap to 1600 MW and places no limits on the amount of renewable energy credits homeowners can earn. It is intended to support the 2020 goal of 1600 MW of solar in the state, almost double what is currently available.
Additionally, the amendment would require regulators to develop a strategy for solar after the 1600 MW cap is reached. The regulators are charged with developing a plan that would ensure the problems the state is currently facing with the cap being reached in National Grid territory, but not in Eversource territory, will not be repeated.
The amendment did not include the minimum bill provision requested by utilities.
And finally, New York residents get some good news
Earlier this month Governor Andrew Cuomo announced that a package of policies that make up a Shared Renewables Program had been approved by the Public Service Commission. The program would allow any New York resident—including low-income residents who could otherwise not afford solar—to participate in community net metering. This makes solar accessible to just about anyone, giving people in different housing situations a variety of options to get the full benefits of solar.
Under the new rules, residents can subscribe to community solar gardens through a subscription contract, a lease, or a transferable solar purchase. Even though the energy is not being generated on the subscribers’ property, they will still get credit for the energy they supply to the grid. With community net metering, a subscriber won’t have to own their own homes, be able to afford solar panels, or have the credit and income to sign a long-term lease for solar panels to get energy credits. Condo-dwellers or even entire neighborhoods can share energy credits, as well as people who rent their homes or live in apartments.
This is great for New York residents, but it’s also a great example of how beneficial net metering can be when it is incentivized and used on a wider-scale. Along with the grid benefits mentioned in numerous studies, it encourages people to go solar by making it more affordable. It is programs like these that make solar more accessible, and help us move closer to a future of clean energy.