MA considers expanding net metering for small hydro

Massachusetts energy regulators are investigating whether to allow more small hydroelectric projects to benefit from a policy known as "net metering."
 
Net metering allows electric customers with their own small generators to sell the power they produce to the utility grid, offsetting the customer's bill for power purchased from the grid.  This effectively incentivizes electricity consumers to develop customer-sited generation that can generate power at a lower cost than grid-delivered power.  Many states have adopted net metering programs to encourage renewable and other distributed generation.  Most states' programs are restricted by size (a project's maximum generating capacity, or the program's total enrolled capacity) and by technology (e.g. solar photovoltaics usually qualify, but coal usually doesn't).

Massachusetts' current version of net metering allows customers to qualify by installing any type of generating facility, including a hydroelectric facility, as long as the facility is smaller than 60 kilowatts.  Size limits are larger for certain projects powered by wind, solar photovoltaics, or anaerobic digestion, as well as for farm-related "Agricultural Net Metering Facilities" -- up to 2 megawatts for most such projects, or 10 MW for some publicly owned facilities.  But under Massachusetts' current rules, hydroelectric facilities that are larger than 60 kW and are not Agricultural Net Metering Facilities are not eligible for net metering.

Whether that restriction makes sense is now the subject of an investigation by the Massachusetts Department of Public Utilities.  The 2014 enactment by the state legislature of An Act Relative to Credit for Thermal Energy Generated with Renewable Fuels, Chapter 251 of the Acts of 2014, directed the Department to study the feasibility, impacts and benefits of allowing customers to net meter electricity generated by micro-hydro and other small hydroelectric facilities.  The Act directed the Department to develop a report based on this analysis, and to submit the report to the legislature by July 1, 2015.

The Massachusetts DPU opened its investigation on October 16, 2014.  In the Department's order opening the investigation, it posed 13 questions to the public.  Topics ranged from the proper definition of "small hydroelectric" to the pros and cons of allowing new or existing small hydroelectric projects to net meter.   Written comments on these questions are due by the close of business on December 5, 2014.  In addition, the DPU held a technical conference on November 7 at which these issues were explored.

What will the Massachusetts Department of Public Utilities find regarding net metering and small hydroelectric projects?  How will the state legislature respond to the DPU's report expected this coming summer?  Will Massachusetts expand net metering opportunities for small hydropower?

Virginia considers net metering and utility standby charges

Virginia, like many states, allows grid-connected electricity customers to use customer-sited generation to offset its electric bill.  This practice is called net metering.

Virginia regulators are now considering a proposal by utility Dominion Virginia Power to impose two “standby” charges on net-metered solar photovoltaic systems larger than 10 kW.  The policy questions raised by this case appear in other contexts where incentives for clean, distributed generation run up against utility ratemaking considerations.  Utilities typically argue that they need to allocate costs fairly among their customers, while customer-sited generation advocates point to both the value of distributed generation and the array of incentives promoting customer-sited generation.

In June 2011, the Virginia legislature enacted House Bill 1983, directing Dominion to allow residential customers to net meter solar photovoltaicsystems between 10 kW and 20 kW.  Dominion responded by petitioning the Virginia State Corporation Commission (SCC) for approval of tariff changes that it argued are necessary to reflect its actual costs in supporting these customers’ peak loads.  The utility proposed to add monthly standby charges for transmission and distribution service based on each net-metered customer’s highest 30-minute demand.

Utilities often argue that their fixed costs in serving net-metering customers – maintaining wires, transformers, and other infrastructure – are the same as if the customers had no generation.  If a customer can be self-sufficient most of the time, the utility grid must still be of a sufficient size to deliver the customers’ peak demand when it is needed, such as when customer-sited generation fails.  Dominion requested approval of its standby charges to ensure fair cost allocation among customers.

Distributed generation advocates, on the other hand, argue that the standby charges would result in overcharging net-metered customers.  In Dominion's case, a witness for the Maryland, District of Columbia and Virginia Solar Energy Industries Association testified the standby charge would result in higher charges for a net-metered customer than a regular customer consuming the same amount of grid-purchased electricity.  The witness also testified that net-metering customers should receive credits for generating cost-effective energy, and for reducing the utility’s transmission line losses.  Diverse distributed generation may also reduce utilities’ distribution costs.  The solar association argued that Dominion's standby charges ignored these benefits, and would chill distributed solar development in spite of Virginia's net-metering policy.

The Virginia State Corporation Commission held a hearing on Dominion's request last week, and is expected to issue an order resolving the matter.