2.4   What Are Some Recent Major Issues Being Discussed by Regulators?

2.4.3 What Tariff-Related Questions Are Raised by Different States?

Under the Section 1251 of the Energy Policy Act of 2005, net metering is defined as a service to an electric consumer where electric energy generated by a customer DER system is used to off-set the electric energy provided by the utility to the customer at the customer’s rate during the equivalent billing period (see 3.10.4).

In response to the growing concerns regarding the fairness of net metering pricing with respect to DER owners and non-DER owners, several states are starting to review different policies and rules that might be used to address these concerns.  Some examples include:

• Citing one example of this reform, the Arizona Corporation Commission imposed a $0.70 per kilowatt fee for future customers using net metering.  According to Business Wire , this means an average increase of $4.90 per month for a typical customer using solar to supplement their services.

• Another example is California’s AB327 that allows the CPUC to consider a monthly fixed charge of up to $10 on all residential customers (whether or not they have DER systems) and permits the Commission to flatten the tiered pricing scheme so that there is less distinction between high and low energy usage.  This helps to level the pricing differences between DER owners and non-DER owners.  However, until the Commission accepts a rate, it is unclear to what extent it may impact customer-owned DER systems.

• Recently, Minnesota PUC developed a Value of Solar (VOS) tariff that would allow utilities to take into account certain aspects of solar energy that are not found in traditional generation sources including delivery, capacity, line losses, and its environmental value.  As of October 2014, no utilities had applied to the Minnesota PUC for a VOS tariff but it is expected that Xcel Energy’s Community Solar Garden will file for its VOS tariff in early March 2015 .

• Hawaiian Electric Companies (HECO) is investigating ending the net metering program and replacing it with a different type of tariff. HECO says the change is needed to prevent distributed solar from overwhelming grid stability, burdening non-solar customers with extra costs, and crowding out other, less expensive forms of renewable energy. In particular, it will permit more customers to benefit from installing solar systems. This tariff would be replaced within a couple of years by a new distributed generation program “DG 2.0.” that would allow customers to make money from self-generated power that also supports the grid, by including smart inverters, energy storage, demand response and other advanced DER functions.

• West Virginia, who recently became the first state to repeal its renewable portfolio standard, is reviewing a legislative bill that would require their PUC to set new rules for net metering that would prohibit cross-subsidization, defined as “the practice of charging costs directly incurred by the electric utility in accommodating a net metering system to electric retail customers to electric retails customers who are not customer generators.” This would mean that utilities could charge customers who are installing DER systems for any upgrades needed to accommodate the DER, but might also be used to charge them for any routine grid maintenance.