Will Maine change its net metering law?

Several pieces of proposed Maine legislation could affect the state's version of net metering. Here's a quick look at Maine's net energy billing policy, how it could change, and what that might mean for consumers.

Maine's electricity rules allow consumers with certain distributed generation facilities (like solar panels) to elect "net energy billing." Like other forms of net metering, the basic concept is that consumers can use their on-site generation to offset their purchases of electricity from the grid, both in real time, and by banking credits for power exported to the grid during periods of time when on-site generation exceeds the consumer's load.

The Maine Public Utilities Commission first adopted a net energy billing rule in the 1980s, allowing customers to net imports and exports within any month or other billing period, in recognition that consumers should not be required to install an extra meter to measure exports from small renewable power facilities and other distributed generation. In 1998, the Commission revised its rule to allow annualized netting as a means of encouraging the use of small-scale renewable technologies designed primarily to serve the customer’s own needs.

In 2017, the Commission revised its rule to reduce the benefits of net metering for future projects, both by reducing the credit for nettable energy, and by shifting the state to a "gross metering" paradigm. Under gross metering, which has been called "one of the strangest and most regressive policies for valuing residential solar in the United States," utilities collect charges even for power generated and consumed on-site in real time. While the Commission later granted an exemption from its gross metering policy for most medium and large customers after finding that the cost of installing an extra meter (estimated at over $3,000 per installation) wasn't justified, the revised rule remains on the books for now.

But further possible changes to net energy billing figure among the numerous energy issues implicated by the list of legislation proposed for the Maine State Legislature's 2019 session. Several bills that have been printed so far suggest that the Legislature will consider various bills that would eliminate gross metering (like LD 91, An Act to Eliminate Gross Metering and LD 143, An Act To Protect Electric Ratepayers from Gross Output Metering Costs), or would replace net energy billing with a market-based mechanism (like LD 41, An Act To Replace Net Energy Billing with a Market-based Mechanism), among other measures. Other bill titles suggest possible changes to the state's policy on shared ownership net metering, which allows multiple customers to offset their load with generation from a community solar project or other off-site facility.

The Legislature's Joint Standing Committee on Energy, Utilities and Technology will schedule public hearings on these bills. The Committee has scheduled public hearings on LD 41 and LD 91 for 1:00 p.m. on January 29, 2019.

Maine community solar farms

As the Maine legislature considers a bill to change the state's solar energy laws, opportunities for customers to participate in community solar farms are drawing interest.  As a result of this interest, some of the legal structures within which Maine community solar projects operate may change.

Community solar farms offer one model for connecting electricity consumers with solar power.  While there are various definitions of what qualifies a project as "community solar", most concepts feature a solar-electric system that provides power or financial benefit to, or is owned by, multiple community members.  This shared ownership, or shared benefit, is key to the community renewable energy model.

The Solar Energy Industries Association notes 25 states with at least one community solar project on-line, with 91 projects and 102 cumulative megawatts installed as of early 2016.  According to the National Renewable Energy Laboratory, interest in the community solar segment flows from "the recognition that the on-site solar market comprises only one part of the total market for solar energy."  Renters, those with shaded or otherwise unsuitable roofs, or anyone choosing not to install a residential system at home might prefer to invest in an off-site, shared ownership solar project.

State laws or regulations typically shape how customers can participate in community solar projects.  For example, Maine's current community solar model relies on the state's shared ownership net energy billing regulations. The Maine Public Utilities Commission rules governing "net energy billing" require investor-owned transmission and distribution utilities to offer net energy billing to any customer of a transmission and distribution utility that owns or has the legal rights to energy generated using an eligible facility.

The current Maine rules allow up to 10 customer accounts to be netted against a commonly-owned eligible generating facility located in the same utility service territory.  These accounts must belong to "shared ownership customers" -- customers that have an ownership interest (or legally enforceable rights and obligations) in the generating facility.  Participating customers must have joint responsibility for the costs of the shared ownership facility, as well as the rights to the benefits of the project's output in proportion to the cost responsibilities.  The local public utility will allocate the project's generation output among the participants, along with any banked credits, based on each customer's ownership interest in the project. 

Under these shared ownership net metering regulations, a solar project in South Paris developed in 2014 became Maine's first shared ownership community solar farm, and a project in Edgecomb became Maine's second operating community solar farm in 2015.  Other community solar projects are under development.

But when community solar projects rely on state laws, they may be affected by changes in law.  The Maine legislature is now considering a bill that would change Maine's solar energy law.  LD 1649 would largely replace a billing treatment called net metering with a series of long-term contracts and utility procurement orders.  It would establish a procurement target for large-scale community solar distributed generation resources of 45 megawatts by 2022.  Under this model, project sponsors would propose projects (up to 5 megawatts each) and could bid for long-term contracts to sell the project output to the local utility.  Project sponsors would recruit "subscribers" to take proportional interests in the resource, with each subscription sized to represent at least one kilowatt of the resource's generating capacity. Each subscriber would receive a bill credit based on his or her percentage interest in the project's production.

This model could enable more than 10 customer accounts to participate in a shared ownership solar project, which would address the limit on how many customers may participate in a community solar project under current regulations.  This could enable an expansion of shared-ownership solar, albeit under a model that relies on power sales to the local utility, instead of self-consumption or net metering.  But LD 1649 could also have an impact on those community solar projects already operating or under development, because it would effectively end net metering and offer only limited grandfathering of existing projects.

One alternative that could support community solar without impacting existing projects would be to expand the net metering paradigm, for example by allowing municipalities or groups of consumers to participate in larger projects that could offset more customer accounts.  For example, Massachusetts encourages municipal participation in solar projects by allowing governmental entities to net meter larger projects than individual customers.  Maine could adopt a similar model, expanding opportunities for municipally owned or shared ownership solar projects.

The Maine legislature's Joint Standing Committee on Energy, Utilities, and Technology held a public hearing on LD 1649 on March 16.  The committee is expected to give the bill further consideration this month.

Maine solar legislation released

The Maine legislature has printed a bill whose enactment would reshape the state's solar energy laws.  The bill, An Act To Modernize Maine's Solar Power Policy and Encourage Economic Development, has been numbered as LD 1649.  It would replace a billing treatment called net metering with a series of long-term contracts and utility procurement orders.

Solar photovoltaic panels on the roof of Gallagher's Auto Parts, in Patten, Maine.

Under net metering or “net energy billing,” an electric utility invoices a customer with solar panels based on the difference between the customer's energy use and the solar project's output.  If the generator output exceeds monthly usage in any billing period, the customer earns kilowatt-hour credits that can be banked and netted against future usage.  The bipartisan non-governmental organization National Conference of State Legislatures has noted that "Net metering policies have facilitated the expansion of renewable energy through on-site generation, also known as distributed generation."

But a 2015 Maine legislative resolve directed the Public Utilities Commission to convene a stakeholder group to consider alternatives to net energy billing, largely in the hopes of helping more consumers connect with solar power.  As part of that case, the state's Office of Public Advocate proposed a structure where individual solar projects would enter into contracts to sell solar power to their local utility.  While stakeholders developed consensus around exploring the concept, there was not uniform agreement around whether it should immediately replace net metering, or whether the new concept should operate "side by side" with net metering for some test period.

The bill now printed as LD 1649 largely reflects the contract-based, solar standard buyer proposal.  It would direct the Public Utilities Commission to enter into twenty-year contracts for the procurement of 248 megawatts of solar energy between 2017 and 2022.  The bill allocates 60 megawatts (24%) to grid-scale solar distributed generation resources; 45 megawatts (19%) to large-scale community solar resources; 25 megawatts (10%) to commercial and industrial resources; and 118 (47%) megawatts to residential and small business resources.  This would represent a significant expansion of solar capacity in Maine compared to what has been developed to date.

Under LD 1649, customers could seek contracts to sell solar power to a standard buyer (the utility) at prices set by the Public Utilities Commission. The standard buyer's stated role is to purchase the output of these distributed generation resources, aggregate the portfolio of resources procured, and sell it into the relevant New England markets. 

Consumers with projects up to 250 kilowatts in capacity could have two options.  The first is to sell the project's entire output to the utility under a contract, and buy all the customer's electricity requirements back from the utility in a separate transaction.  This is sometimes described as a "buy-all, sell-all" structure.

The second option is to use onsite generation to first offset electric consumption, and sell any excess electricity.  This would allow hourly offsetting of onsite load, but would not allow customers to carry forward monthly credits for excess production that could be used to offset future load.  This differs from net metering under Maine's current regulations, which measure net energy use over an entire month billing period, and carry credits forward for up to 12 billing months.

This contracting structure would effectively replace net metering. No new customers could participate in net metering once the new rules take effect.  Those residential and small business customers who already net meter their loads against a distributed solar project would face a choice: either seek a long-term contract under the new program, or elect to net meter for 12 more years.    

The bill would also largely eliminate Maine's policy of virtual net metering, which has allowed customers to net meter load at one site against a solar project located elsewhere in the same utility's service territory.

As of late on March 9, LD 1649, An Act To Modernize Maine's Solar Power Policy and Encourage Economic Development, had not yet been referred to committee, nor a public hearing scheduled.

Maine net energy billing

Maine's net energy billing program gives electricity consumers have the opportunity to offset their electric bill by generating electricity themselves.  This not only supports small-scale and some community-based renewable and efficient electric generation, but can provide customers a significant financial incentive.

Net energy billing is Maine's form of net metering, which allows electric customers with small-scale wind generators, solar panels or other renewable and efficient generation units to sell the power they produce to the utility grid.  In exchange, the utility banks credits that are used to offset the customer's bill for power purchased from the grid.  If the customer generates more electricity in a month than it uses, credits can be banked and carried forward for a 12-month period to offset future bills.

Net energy billing customers can not only sell their power to the grid and bank it for later, but also receive a favorable exchange rate.  Most electric generators who sell to the grid are paid a relatively low wholesale rate, but net energy billing customers are credited at the higher retail rate.  This can provide participating customers a significant financial edge, and could be used to enhance the value of existing community-scale renewable generation such as a small hydroelectric facility.

Maine has offered various forms of net metering since 1987, making it an early leader in the practice.  Many other states have adopted net metering programs, and Congress has directed states to make net metering available to consumers.  Maine's net energy billing program has evolved over time, and now applies to a variety of technologies including solar photovoltaics, wind, biomass, small hydroelectric, hydrokinetic or tidal, geothermal electric, renewable-based fuel cells, and micro-combined heat and power (micro-CHP).

Maine's net energy billing program has several special features.  Generation projects don't have to be located at the same place as the net metering customer.  Maine allows virtual net metering, where a generator meter can be netted against its owner's meter no matter where each is located, as long as both are in the same utility's service territory.

Maine also allows customers to pool together to develop a net metering project.  This so-called "shared ownership billing" allows multiple customers with an ownership interest in a project to share in the benefits of net metering, and may enable more cost-effective projects through the economies of scale.

On top of all this, customers can combine the benefits of net metering with other incentives.  For example, such as grant and rebate funding for qualified projects through state-level energy offices or program support through several federal agencies.

Here are links to the net metering webpages of Maine's three large utilities: Central Maine Power, Bangor Hydro-Electric, and Maine Public Service.