Lessons From the Making of the Massachusetts Solar Compromise Bill
- Jul 6, 2014 6:00 pm GMT
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The Massachusetts legislature could serve as an example of how to resolve the net energy metering policy debate between the solar industry and utilities — if the continuing debate over the bill can be brought to a mutually amenable conclusion.
Recently introduced bill H.4185 was a compromise brokered by the Massachusetts Department of Energy Resources between the Solar Energy Industries Association, the New England Clean Energy Council, National Grid, and Northeast Utilities.
It makes five changes to existing solar policies:
- Net metering would be unaltered, but its cap would be eliminated.
- Virtual net metering customers would be reimbursed at a lower rate to cover their use of the distribution system.
- The solar renewable energy credit incentive system would be replaced by a performance-based, declining tariff incentive.
- All utility customers would be subject to a minimum bill.
- Governor Deval Patrick’s aspirational 1,600-megawatt installed solar capacity target would become legally binding.
Not everyone is convinced, however.
“Four points in the bill must be amended before the Solar Energy Business Association of New England will endorse it,” President Tom Thompson wrote to Massachusetts legislators, citing the following issues:
- The distribution portion of the credit should not be eliminated for virtually net metered systems, as that would “limit access to solar.”
- The minimum bill is not the right solution for addressing fair compensation to the distribution companies, as it does not address solar’s benefits, and leaving its determination to regulators “creates deep uncertainty in the solar market.”
- Solar system sizing should not be limited by arbitrary guidelines. The legislation institutes “a load matching requirement…that could have a chilling effect on energy efficiency, demand response, and other load reduction measures” and could “drive the solar market toward smaller projects.”
- A pathway to participation should be provided for customers within municipally owned utility territories.
“It is fair for the Solar Energy Business Association of New England to be concerned,” responded Dan Berwick, Borrego Solar business development VP and Solar Energy Industries Association of Massachusetts Chair. “There are positives and negatives, but on balance this moves us in a positive direction.”
“For the first couple of weeks, it was an argument over principles,” Berwick said. “Then [Department of Energy Resources Commissioner Mark Sylvia] stepped in and said, ‘You now have a pretty clear understanding of each other’s objectives. Let’s find solutions everyone can live with.’ That was the key moment. Mark made us realize that if we tried to find the correct cost-benefit calculation, we weren’t setting ourselves up for success. Instead we needed to try to understand the relative importance of the issues to each other.”
Some solar installers also think it will create problems.
“The renewables representatives realized the importance of getting to uncapped net metering, predictable incentives, and keeping both kinds of net metering, and were willing to stay at the table to get them,” Sylvia said. “The utilities representatives recognized the minimum bill was what they needed, the reduced virtual net metering reimbursement was acceptable, and making the 1,600-megawatt target statutory was important.”
“The bill recognizes that the intent of net metering is to encourage customers to install their own generation to meet their own energy needs,” explained Janet Gail Besser, New England Clean Energy Council Policy and Government Affairs VP, in response to SEBANE. Given that intent, she added, requiring them to size their systems to their needs is not “arbitrary.”
“The big ask from the utilities was that net metering customers, and especially virtual net metering customers, pay something for the costs they impose on the distribution system,” Berwick said. “We didn’t try to resolve that question. It just became clear that was essential to the utilities.” The virtual net metering remuneration reduction…to $0.04 per kilowatt-hour, or about 20 percent to 30 percent, along with the minimum bill, are, Berwick added, “a tolerable price to pay for uncapping net metering, establishing the 1,600-megawatt goal in statute, and reforming the incentive program.”
The minimum bill will be set in a public rate review proceeding and all stakeholders will be able to participate, Besser noted. “Decades of precedent show that Department of Public Utilities rate decisions have to be just, reasonable and non-discriminatory, and that rates can’t change dramatically from year to year.
Berwick said. “The solar industry is maturing and we are going to have to learn that a walk or a base hit is good. This is not a home run, but it is a solid base hit.”
“Once everything is on the table, including the bigger vision, let the parties talk,” Sylvia advised. “And be willing to set things aside instead of debating without a resolution. The whole is important, not single issues. Sometimes a compromise emerges. Sometimes, by talking, the parties become familiar enough with each other’s perspectives to formulate alternatives.”
The bill has been “reported favorably by committee and referred to the committee on House Ways and Means.”
“I don’t know how long this compromise will last,” Berwick said. “It does not put to rest the cost-benefit question. But, for the moment, instead of all the uncertainties that would involve, we have a compromise everyone can live with.”
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