NH net metering under review

New Hampshire utility regulators have paused their review of a utility’s proposed changes to rates for customers with solar and other distributed energy resources, pending a more holistic review of the state’s net metering policy. Interest now focuses on Docket DE 16-576, in which the Commission may develop new alternative net metering tariffs or other regulatory mechanisms applicable to customer-sited generation.

Under New Hampshire law, the net energy metering section of the Limited Electrical Energy Producers Act, each electric distribution utility must make standard tariffs providing for net energy metering available to eligible customer-generators in accordance Public Utilities Commission regulation.

On April 29, 2016, distribution company Unitil Energy Systems, Inc. (Unitil) filed a petition to the New Hampshire Public Utilities Commission seeking authority to, among other things, implement new permanent delivery rates for distribution service, beginning June 1, 2016. Among Unitil’s proposed changes was a new tariff schedule for Domestic Distributed Energy Resources, called Schedule DDER, applicable to certain residential customers with renewable distributed generation systems installed behind the retail meter. If adopted, it would change how Unitil’s customers may net meter solar panels and other eligible distributed generation.

Changes to net metering policy can be controversial.  Consumers and solar advocates typically support net metering as a key incentive for solar project development, even if it might undercompensate consumers relative to the value of solar.  But some utilities oppose net metering, arguing that it hurts their revenues or shifts costs to customers without solar panels.  Debate over the issue led the New Hampshire legislature to enact a net metering bill, House Bill 1116, earlier this year. Signed by Governor Hassan on May 2, 2016, House Bill 1116 amended several provisions of RSA 362-A:9.

Among the new statutory language is new paragraph XVI, requiring the Commission, within a ten month period, to initiate and conclude a proceeding to develop new alternative net metering tariffs, which may include other regulatory mechanisms and tariffs, taking into consideration a number of specified factors deemed relevant to such development. By Order of Notice issued on May 19, 2016, the Commission opened Docket DE 16-576 to conduct this holistic review of net metering.  That case remains ongoing.

Given the overlap between the holistic net metering case and Unitil’s proposed Schedule DDER, on June 9, the New Hampshire Public Utilities Commission issued an order suspending the investigation of, and staying any litigation regarding, Unitil’s proposed tariff schedule. In its June 9 order suspending the investigation, the Commission concluded that “it it would be inconsistent with the intent of HB 1116 and would represent an inefficient allocation of limited Staff, stakeholder, and Unitil ratepayer resources to address rate design proposals directly affecting net-metered customer-generators in this proceeding as well as in Docket DE 16-576.”

In the Commission’s words, it initiated Docket DE 16-576 based on the legislative mandate “to conduct a proceeding involving all regulated electric distribution utilities to develop new alternative net metering tariffs, which may include other regulatory mechanisms.” Noting that Schedule DDER is effectively a net metering tariff, the Commission found that separately reviewing, evaluating, and litigating Schedule DDER in both the Unitil docket and Docket DE 16-576 would impose additional burdens on the limited resources of Staff and its consultant, as well as on those of other parties and stakeholders, and “could result in conflicting schedules, redundant discovery, and potentially inconsistent results in the separate proceedings.”

The Commission noted that under the HB 1116 amendments to the net metering law, “net metering will continue indefinitely and without limit, unless and until otherwise determined by the Commission in the proceeding we have opened as Docket DE 16-576… In effect, customer -generators will continue to participate in net metering under RSA 362-A:9 even in excess of the 100 megawatt “cap,” but those above this statutory limit ultimately will be subject to the new alternative net metering tariffs approved by the Commission in Docket DE 16-576.”

Accordingly, the Commission placed the suspension and stay of the Unitil case in effect until the completion of Docket DE 16-576.  The net metering review in that case remains pending, with a schedule set through the coming winter.

NH net metering bills passed

The New Hampshire legislature is acting to expand that state's net metering programs.  Now the question is how much: a 50% expansion, or a doubling?

New Hampshire law requires electric distribution utilities to offer eligible customer-generators a standard tariff for net energy metering. Solar panels are the most commonly net metered type of generation, but other technologies are also used.  Net metering under these tariffs is available "on a first-come, first-served basis within each electric utility service area" until each utility hits its specific cap on net metered capacity.  Under existing law, each utility's cap is effectively its share of a statewide program cap of 50 megawatts.

On January 20, 2016, utility Eversource announced it had reached its cap, and that it would place new projects going forward on a wait list.  But New Hampshire is home to significant interest in expanding net metering.  In the same announcement, Eversource described its work with the state legislature "to enact an expansion to the net metering program."  As the utility said, "Such an expansion would alleviate much of the uncertainty being faced by customers and developers, and would provide time for stakeholders to investigate all of the various costs and benefits of distributed generation and to provide for a sustainable evolution of the net metering program."

Meanwhile, Eversource also indicated a request that state regulators "develop a more permanent solution to the challenge of fairly compensating developers of new distributed generation in a manner that does not shift costs to other customers."

In February, the New Hampshire Senate voted to increase the net metering cap from 50 megawatts to 75 megawatts.  That bill, S.B.333, also directed the New Hampshire Public Utilities Commission to develop a net metering tariff for all generation above the 75 megawatt cap.

This month the New Hampshire House passed H.B.1116, a bill that would double the cap, to 100 megawatts.

Under New Hampshire legislative process, these two bills must be reconciled before a proposal can be sent to Governor Maggie Hassan.  But she has expressed strong support for reconciling the bills and expanding net metering:

Lifting the cap on net metering is essential to the continued success of New Hampshire’s solar industry, and I applaud the House for its bipartisan vote to pass this critical measure. The Senate has already supported this legislation, and I urge them to concur with the version passed by the House and send this bill to my desk as quickly as possible so that we can lift the cap on net metering.

The New Hampshire House and Senate now have the opportunity to reconcile the bills and present them to Governor Hassan for her signature.  Assuming this happens, New Hampshire will significantly expand its net metering program in the near term.

Net metering and utility charges

As more electricity customers are installing solar panels and other distributed generation, many are participating in net metering programs under which they can run their utility meter backwards -- but utilities are complaining that net metering customers don't pay their share of the grid's operating costs.

In states and utility territories where net metering is allowed, customers can use eligible distributed generation (typically renewable generation like solar photovoltaic or small-scale wind, or micro combined heat and power) to offset their consumption of electricity from the grid.  Even if the customer draws power from the grid at some times and injects power back onto the grid at other times, net metering or net energy billing allows the customer to offset distributed generation against purchases. 

While many states embrace net metering as a policy, some utilities complain that net metering customers can be free riders.  If a customer's solar panels produce as much power in a month as the customer consumed, net metering could credit that customer with a zero utility bill - even though at various times times, the customer relied on the grid for imports and exports.  As a result, some utilities are seeking to impose new charges on customers for net metering.  For example, last fall Virginia regulators approved part of utility Dominion's request to impose "standby" charges on certain net metering customers.  Solar advocates and other distributed generation interests typically oppose such charges as roadblocks to achieving the societal benefits of net metering.

The issue continues to simmer around the country.  California utility San Diego Gas & Electric Co. recently proposed adding a "network use charge" onto customers' bills.  SDG&E's concept was that the charge -- about $22 per month for the average net metering customer with a solar PV system -- would properly allocate the cost of maintaining the grid to these customers.  The utility argued that without the charge, net energy metering customers were being subsidized by all other customers.  Earlier this year, California regulators rejected the idea (see the 16-page order at the California Public Utilities Commission website), noting concerns that the proposed charge "may be inconsistent with current law, regardless of whether it is justified by cost causation principles or an analysis of the crosssubsidies inherent in current policies."  As a result, SDG&E refiled its rate application without the charge.