Customer-sited solar makes it increasingly difficult for utilities to integrate excess generation and ensure all ratepayers benefit
Phillip Cross is legal editor, Public Utilities Fortnightly, and serves on the editorial staff of Utility Regulatory News, published by Public Utilities Reports, Inc. (our publisher), which reports weekly on ratemaking and regulatory decisions issued by state public utility commissions.
As more and more retail customers install self-generation systems, using mostly rooftop solar applications, electric utilities around the country have petitioned their respective regulatory agencies for revisions to existing net metering requirements, under which self-generating customers are credited for any output that exceeds their own usage needs. The utilities have complained that with the proliferation of customer-sited solar systems, it is increasingly difficult for them to integrate that excess generation and properly bill such customers under current net metering practices while ensuring that all ratepayers benefit. Some state commissions have been receptive to the utilities' concerns and have acted to reexamine or modify existing net metering protocols, in some instances replacing retail rates as a measure of appropriate compensation for excess power delivered to the grid and instead base the payments/credits with a rate based on an avoided cost; i.e. the amount the utility would incur to generate or procure the power itself.
The debate will surely continue through the coming year. Here is a recap of several of the most recent orders by state regulators.