NEM Around the Nation — Diverging Approaches to State-Level Solar Policy

NEM Around the Nation — Diverging Approaches to State-Level Solar Policy

Last month, the NC Clean Energy Technology Center of North Carolina State University published its most recent update of “The 50 States of Solar: A Quarterly Look at America’s Fast-evolving Distributed Solar Policy & Regulatory Conversation.” This in-depth look at state-level policy changes from October through December 2015 also summed up a very busy 2015 that saw forty-six U.S. states taking action on distributed solar policies and NEM (Net Energy Metering, the mechanism that enables customers generating solar to receive a financial credit for power generated by their onsite system and fed back to the utility).

Followers of the solar industry (and readers of this blog) will be unsurprised to learn that these debates have continued to generate headlines in 2016. And, if anything, news from the past month has made it clear that states are responding to the question of how to value residential solar generation in often divergent ways.

  • In Pennsylvania, regulators narrowly approved a new plan to establish a NEM policy that would compensate solar customers (as well as producers of electricity from farm biogas installations) at full retail rates for their power generation. The ruling, which attempts to resolve years of conflicts stemming from a 2004 bill mandating regulators create a retail bill credit for solar generation, also limits the size of eligible solar installations to 50 kW and total electricity generated under the NEM rate to no more than 200% of annual electricity consumption. Some solar policy advocates have criticized the decision, claiming that these limits will unnecessarily stifle the market.
  • In Maine, pro-solar policymakers and advocates have introduced a new bill that would replace the state’s existing net metering policy, which is nearing a previously-approved 1 MW cap on installations, with a complex but potentially more durable market-based incentive program. Under the proposed legislation, which is opposed by Maine’s Republican Governor Paul LePage, solar homeowners would enter into 20-year contracts with utility aggregators for their solar generation, set at competitively-determined but regulated rates designed to cover their costs of going solar. While many solar policy advocates cheered the plan — which requires utilities to procure 114 MW of residential solar by 2022 — The Alliance for Solar Choice (TASC) cautioned that NEM should also be kept as an option for solar customers until the new incentive design is proven to work.
  • In Montana, an agreement between solar advocates and Montana-Dakota Utilities (MDU) has been reached to avoid the imposition of a new charge on solar homeowners. A previous proposal for new rates for MDU’s 384,000 customers had also included a demand charge for net metering customers, which The Alliance for Solar Choice (TASC) claimed would have made going solar uneconomic. After receiving overwhelmingly negative comments from the public on the proposal, MDU agreed to remove the solar fee from its revised filing with the Montana Public Service Commission.
  • Arizona, a sunshine-rich state where net metering battles first began heating up last year, may be embarking on another precedent-setting case. UniSource Energy Services, a rural utility with over 90,000 customers, has proposed a new solar regime that would add $31 in monthly fees to solar homeowners’ utility bills, including both increased solar service fees as well as a new demand charge that would not be required for nonsolar residential customers.

The proposal to the Arizona Corporation Commission (ACC) also includes a new net metering rate that would be tied to wholesale solar prices from utility-scale installations — much lower than residential retail prices. Given the potential precedent the case could set in advance of rate cases for larger utilities Tuscon Electric Power and Arizona Public Service coming down the pipeline later this year, the UniSource proposal is expected to be fought vigorously by solar advocates.

  • And, in Nevada, the Public Utilities Commission (PUCN) largely refused to alter new NEM rules that have gravely undermined the state’s previously-flourishing solar industry. As covered previously on this blog, major reductions to rates paid to NEM customers are expected to eliminate the economic benefits of going solar for new customers — and PUCN’s unprecedented decision to make these rate cuts applicable to existing customers that had already signed up under previous NEM rates will effectively penalize those that have already installed solar panels.

A wide range of stakeholders and policymakers weighed in in opposition to the plan, including not only solar customers and advocates but the state’s governor Brian Sandoval (a Republican) and Democratic presidential candidates Hillary Clinton and Bernie Sanders. Moreover, utility NV Energy submitted a new proposal for ‘grandfathering’ that would have allowed existing NEM customers to keep their current rates for 20 years.

However, PUCN’s only concession to these critics will be to phase in the new rates for both new and existing customers more gradually over a 12-year period instead of the original 4 years — or, in the words of conservative activist Debbie Dooley of the Green Tea Coalition, “instead of a quick death for solar, they’re making it bleed to death.” Prominent solar installer Sunrun, who shut down operations in the state immediately following the previous decision, announced its intention to sue PUCN.

John Atkinson is the director of regulatory affairs for an alternative fuels startup and previously worked as a senior associate focused on energy issues at a DC-based consultancy. He has provided analysis at the intersection of energy, technology, and policy for clients ranging from Fortune 100 companies to startups, covering energy sources ranging from oil and gas to solar and other renewables. He currently lives in Los Angeles in a solar-roofed house, and composes electronic music for live performance and film when not geeking out on energy (or basketball)

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