The battle brewing over a potential federalization of net energy metering rates
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- Jul 27, 2020 10:56 am GMTJul 24, 2020 8:34 pm GMT
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Net energy metering is a generally encouraged load reduction strategy that allows energy consumers to install distributed generation devices, such as solar panels, under their energy meters and receive credit on utility bills for energy they create onsite. The practice has become further widespread as access to devices such as solar panels has improved.
Think about it—energy created by a utility customer, onsite, reduces the risks of overloaded powerlines, eases the burden on circuits and takes down the cost of transmission. Maintenence for utilities, often cost-prohibitive and deferred, becomes cheaper. Distributed generation, in its various forms, has been heralded as a way to reduce blackouts and damage.
How much credit customers receive depends on electricity rates, which are determined at a local level. However, that notion of local control is under attack by groups who want to federalize the regulation of net energy metering rates—a crucial piece of distributed energy resource policy.
Earlier this spring, a group known as the New England Ratepayers Association petitioned the Federal Energy Regulatory Commission to take control of net energy metering rates away from local utilities. A waterfall of stakeholder comments came in over the following months, showing an overwhelming rejection of the proposed federalization. Arguments in objection said a federalization would be inefficient—it would require the FERC to set a uniform, national rate for net energy metering, which would be a drastically different approach to locally fluctuating rates of today; or the federal government would have to set specific rates per-utility, a tedious task which would place a considerable burden on federal regulators.
The FERC rejected the NERA's petition but left an important door wide open.
FERC's rejection came on procedural grounds. It said the NERA's petition was too broad in scope to deliver relief and the group, which was not an electric utility, a power production facility or a generation facility, lacked legal standing to petition such a change in rates. However, the commission made no comment on the merits of the proposal. They did not reject the notion that the FERC could, or would in the future, federalize net metering rates. Rather, they just rejected the avenue taken by NERA.
According to international law firm Morgan Lewis & Bockius LLP, thanks to a recent court decision, the FERC does have the authority to regulate operations on a wide portion of the country's electricity grid—this includes facilities that are currently regulated by state governments.
The federalization of net energy metering rates and a piece of distributed energy resource policy has taken on a nuanced political tone. The federalization is supported by conservative groups, even though the proposal would pre-empt state rights. The American Legislative Exchange Council—among the country's most powerful conservative lobbying groups—wrote a resolution supporting state rights in this battle, saying that states are best positioned to answer the unique needs of their residents—not the federal government.
The ideological split, and the FERC's reluctance to comment on the merits of a proposed federalization ensures an interesting battle ahead.
How would the federalization of these rates impact your own operations? Would love to hear some local anecdotes in the comments.