Are small changes eating away at net metering?

A new law expanding opportunities for commercial solar and wind has unexpected consequences for homeowners. Advocates worry it's one more attack on net metering in Virginia.

A new law expanding opportunities for commercial solar and wind has unexpected consequences for homeowners. Advocates worry it’s one more attack on net metering in Virginia.

Many owners of solar homes were surprised this spring to get letters in the mail from their utilities, informing them of pending changes in Virginia’s net metering rules. Virginia’s State Corporation Commission will be writing regulations to implement a law passed this year that was applauded for increasing the commercial net metering cap to 1 megawatt, from 500 kilowatts. (The SCC case is PUE-2015-00057.)

Unbeknownst to anyone not working on the bill, a late addition to the text restricts the capacity of net-metered projects to just what is needed to meet the customer’s “expected annual energy consumption based on the previous twelve months of billing history or an annualized calculation of billing history if twelve months of billing history is not available.” And while the bill is otherwise directed at commercial installations, the added language contains no such limitation—hence the unexpected letters to homeowners.

Although customers with existing systems aren’t affected by the changes, the letters have prompted concern among consumers and renewable energy advocates, especially those who are working on the various “solarize” programs around the state that use bulk purchasing to bring down costs and draw in new customers.

According to many installers, limiting a solar array to the size that just meets a customer’s electricity needs won’t matter to most homeowners, because their roofs generally won’t accommodate more solar panels than that anyway. In addition, over-producing isn’t financially rational because the utility doesn’t have to pay you the full retail value of any extra electricity you produce.

But a problem arises when it comes to new construction, or when solar is added as part of an addition or renovation that will increase electricity demand, making past use an inaccurate predictor of future demand. The same problem would arise if a homeowner decided to buy an electric car and wanted to power it with solar. The law makes no provision for these situations, so the State Corporation Commission will either have to decide how these should be handled, or leave it to the utilities.

Leaving it to the utilities seems like a bad idea to people who have witnessed the tendency of Dominion Virginia Power and Appalachian Power to interpret ambiguity in ways that further constrain the solar market. Environmental groups and MDV-SEIA, the solar industry trade association, are filing comments urging the SCC to include language in the implementing regulations to ensure that customers have the right to install a solar array big enough to cover their needs when past use alone isn’t an adequate measure.

But let’s take a step back to look at the broader policy implications of the legislation. This effort to control the size of net-metered facilities is not just a pain in the neck for potential new customers, but it also runs counter to Virginia’s stated goal of increasing the share of electricity from renewable energy. If customers aren’t going to be paid more than a few cents per kilowatt-hour for their excess electricity anyway, surely it would be in everyone’s interest to let them build surplus solar to their hearts’ content (assuming their infusions of electricity don’t create grid issues, a problem that is best addressed directly). The same holds true whether we are talking about residential or commercial, solar or wind. People who are willing to take on the cost of building clean, renewable energy should be encouraged to do so, period.

In addition to restricting the size of solar installations, the new law makes other changes. Customers now must notify their utility 30 days prior to installation of the solar facility, rather than 30 days prior to interconnection, a change some installers say may benefit customers by alerting them to problems before an installation goes forward. Additionally, the utility must approve the facility before installation; however, language in the existing law provides only a few narrow grounds for withholding approval.

Finally, the new law authorizes utilities to charge customers “all reasonable costs of equipment required for the interconnection to the supplier’s electric distribution system, including costs, if any, to (a) install additional controls, (b) perform or pay for additional tests, and (c) purchase additional liability insurance.” It also states that the reason for this is “to ensure public safety, power quality, and reliability of the supplier’s electric distribution system.” The existing law had required customers to “bear the reasonable cost, if any, as determined by the Commission, to (a) install additional controls, (b) perform or pay for additional tests, (c) purchase additional liability insurance.”

A lot of people have asked how this bill passed without any public discussion of the restrictive language and its effect on homeowners. A fair question, and one I asked, too, because when it was introduced back in January, the legislation merely provided for an increase in the commercial net metering limit. However, a look at the bill history shows that, as often happens, the added language first appeared in a committee substitute distributed to legislators at the same meeting where it was to be voted on.

It wasn’t a nefarious deal; an environmental lobbyist helped negotiate the bill, and the solar industry signed off on the changes, all under pressure to get a deal done that would improve the prospects for solar in the state. But they were also distracted. The first week of February is crunch time at the General Assembly, with dozens of other important bills in play simultaneously, many of them going through rapid-fire changes likely to either help or hurt (mostly hurt) Virginia’s energy future and its environment.

The General Assembly cannot be called a deliberative body. With thousands of bills to deal with in a 45-day session, only a few people know what is going on, and those are usually the paid lobbyists. In this contest, the person with the most paid lobbyists wins. And no one has more paid lobbyists than Dominion Power. So when pro-renewable energy bills get amended, the results favor the utility.

Progress on renewable energy in Virginia tends to run more sideways than forward, and this is no exception. Over the long run, though, the utilities face a losing battle to control and minimize their customers’ access to solar. In the next few years, battery technology will upend the top-down structure of the utility markets, and utilities will plead for access to their customers’ batteries to help meet the need for peak power and grid services.

Until then, we renewable energy advocates, customers and industry members have to keep on educating legislators about what good policy looks like. Wind and solar afford us huge opportunities in decarbonizing the electric grid, reducing pollution, and increasing business opportunities in the nation’s fastest-growing energy sector. If we open up the market instead of constraining it, everyone will benefit.

10 thoughts on “Are small changes eating away at net metering?

  1. Thank you for explaining the sheaf of paper I received from Dominion regarding the new law. As you state, it doesn’t affect current solar houses – but it took me a couple of reads to figure that out.

  2. I too appreciate Ivy’s writing this article. She was a bit generous in saying the notice about these rules came this spring; mine was dated June 17. The SCC didn’t issue its order until June 5, many months after the enacting legislation was passed. Given its effective date of July 1, the SCC’s delay in producing and publishing its proposed implementing regulations is suspect, especially since the draft rules don’t clarify much, if anything, about the statute’s changes. The obvious effect is to limit opportunity for public awareness and comment, not to mention leave those with new solar installs in process with a lot of uncertainty. I believe the environmental groups and solar industry lobbyists need to plan now on how these rules can be changed for the better on behalf of those who want to go solar or wind, if indeed that’s possible. I have my solar system already as Wayne says, and so am not affected, but he and I and other solar producers are small in number now. Many more Virginians are and will be hurt by this legislation.

  3. I believe these regulations are an attempt to discourage new solar installations by imposing a thicket of regulations which will have an intimidating effect on consumers. But if consumers were willing to forego the benefits of net metering an installation which still used solar power but had no connection with the grid would be beyond the reach of these regulations. An example of such an installation would be one which used an automatic A-B switch to alter a home’s power between solar panels and batteries (the ‘A’ position) and the grid (the ‘B’ position). When the circuitry detected that the battery – solar position was insufficient it would automatically switch to the grid.

  4. Any legislator, solar industry or environmental representative that signed -off on this flawed bill was asleep at the wheel or a utility shareholder. I am a net metering customer since 2009 with a Hybrid battery based system that can be “grid coupled” without involving the utility notice or approval. Solar City and Tesla are rolling out a Battery system utilizing the XW platform we chose. My notice states 60 day approval wait before beginning installation, meaning solar contractors like myself must wait 60 days before signing contract and starting permit process to stay within contractors regulations. The utility has no authority to decide when or what a property owner installs on private property – this is a matter solely for local Building Official and citizen / contractor. Grid interconnection is the utilities only dog in the race.
    It is clear the proposed amendments to net metering regs were written to limit and slow distributed solar and wind deployment and further weaken existing net metering benefits for ratepayers.
    The commissioners seem to have many comments to reveiw and I am personally hopeful the Amends will be denied.

  5. Comments to SCC
    Case Number: PUE-2015-00057
    These proposed new or revised rules for net metering will have the effect, intentional or not, of discouraging the installations producing electricity with renewable energy systems. Most, if not all, of the proposed changes increase cost and time uncertainty for the owner/installer of renewable energy systems while providing increased levels of arbitrary control by the electric utility. The standard of regulation for these intermittent renewable energy producing systems should be no more onerous than that governing the provision of customer service to similarly sized intermittent customer loads, since the coming on-line of renewable electricity produced is essentially indistinguishable from electrical load going off-line. The requirement that renewable energy producing systems to be no larger than to cover the projected use based on twelve months of billing history or calculated projected use for new customers is particularly troubling since its principal impact is to reduce the amount of renewable energy on the grid and to severely restrict customer choice. Residential renewable energy essentially means solar photovoltaic (PV) and its peak production is on sunny summer days when the air-conditioning load on the grid is sufficient to induce AEP in a separate program to offer an $8.00 monthly inducement for being allowed to install load management devices on customers central heat pump/AC units. The cost for managing this load management program would seem to be significantly more than accepting excess production from customers’ solar PV systems. Since residential customers are effectively limited to 10KW production, further limits on system size seem arbitrary and have the effect, if not the intent of enhancing the utility’s status as an energy sales monopoly, rather than recognizing any SCC and utility responsibility to the customer/consumer. There can be any number of reasons for a customer to install a renewable energy generating system larger than would cover only historical energy requirements. The homeowner may have an interest in meeting previous carbon-intensive fossil fuel energy demands from transportation and/or space heating with more efficient grid and solar PV electricity, or want to enable a future owner to exercise those options, thereby increasing the attractiveness of the house to a buyer. It’s a lot easier and more economical to provide additional capacity with initial design and installation rather than to add it on later. And it should be the customer/homeowner’s choice.

    • Restrictions to limit solar system size gives no consideration to ratepayers that may purchase an Electric Vehicle and increase electric consumption by “fueling” their EV. A typical EV requires about 14 kwh to fill er up, a significant increase for most ratepayers.

  6. Although the rules are not yet clear, the EPA Clean Power Plan will establish carbon reduction targets for each state. A component of the options for achieving compliance with these targets will be the amount of renewable energy produced in each state, including (presumably) distributed generation such as rooftop solar energy systems. Therefore, the more solar energy produced by individuals, the easier (and cheaper) it will be for a state to achieve compliance. This backdrop provides an additional reason why net metering rules should be modified to encourage more, not less, distributed generation.

  7. Pingback: Clean Power Plan could accelerate utility shifts | Southeast Energy News

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