This blog post was written by AHC attorney Roland F. Hall.
Electric Cooperatives Face Increasing Scrutiny Over Net Metering Issues
Net metering is a billing mechanism that allows consumers to receive credit for electricity they generate from small-scale renewable energy resources and transfer onto the grid. The details of how net metering works, such as the value placed on energy produced and the handling of next exports, vary among the states and electric utilities that have net metering policies in place.
Clean energy advocates, renewable generation manufacturers, utilities and consumer groups often take very different views of certain aspects of net metering. One major issue is whether the cost savings enjoyed by net metering consumers are subsidized by traditional energy customers. This issue is coming to the forefront in those states such as California and Arizona where substantial numbers of consumers have installed net metering generation, primarily solar rooftop installations. Because most programs contain limits based on the number of participants or total output, solar advocates in those states are now seeking to expand those limits, while utilities are asking that any expansion be accompanied by measures to address under-payment of fixed costs.
Until now, electric cooperatives have largely avoided significant net metering issues because relatively few consumers have participated in their net metering programs. However, in light of the issues arising with investor owned utilities, some electric cooperatives are now proactively making changes to their policies and programs. For example, earlier this year, an electric cooperative in Wisconsin switched from paying the retail rate for surplus generation to paying avoided cost. Even though the cooperative has relatively few net metering customers, the cooperative applied the change to both future and current installations, stating that the base charge paid by net metering customers does not cover the cost of providing the service.
In Vermont, two electric cooperatives changed their net metering policies when the number of net metering installations in their territories went over the state threshold of 4 percent of peak demand. Vermont Electric Cooperative stopped accepting applications altogether, while Washington Electric Cooperative announced that it would accept only solar installations of 5 kW or less. Both cooperatives cited the growing cost impact of net metering installations on their other members as the basis for their policy changes. In its press release on the issue, Washington Electric Cooperative stated that it was not collecting the full cost of providing service to net metering members and that the increasing number of such members made the cost impact on other members a growing concern. The capacity of net metering installations had risen to 6 percent of the cooperative’s peak load.
Electric cooperatives around the country are already facing or will soon face similar issues regarding their net metering policies and programs. As the number of installations rise, cooperatives will have to make difficult (and at times unpopular) decisions regarding limits on the number or total capacity of installations, the amount paid for exported energy, and whether to require payment of demand charges or fixed fees. Some of these issues will be decided by the cooperatives themselves, while others will be resolved by state utility commissions. No matter how these issues are decided, in light of the heated nature of the net metering debate, any policy changes are likely to be scrutinized by industry groups and discussed in the press.