Maine advances legislation restoring net metering

The Maine state legislature has voted to advance a bill that would amend the state's statute governing the net metering of small distributed renewable energy projects. If enacted into law, the amendment would reverse regulatory changes imposed in 2017 that reduced the value of net energy billing to participating customers.

Maine has allowed customers with distributed renewable energy generation to use the power they produce to offset their electricity bill since the 1980s. In 2017, the Maine Public Utilities Commission amended its rules governing net energy billing to reduce the amount of power that a customer could net against its electric utility bill. The Commission did this by inventing a concept called "gross metering," which allowed electric utilities to collect charges even for power generated and consumed on-site in real time, while requiring participating customers to install a second meter.

The "gross metering" concept was controversial for a variety of reasons, including the fact that it deterred customer adoption of solar power and other distributed renewables (by adding costs while cutting compensation), and the fact that for the first time ever it allowed utilities to collect charges from customers for power produced and consumed entirely on the customer's premises even where that power never went on utility grid facilities.  The Commission later exempted most medium and large customers from this policy after finding that the cost of installing an extra meter wasn't justified, but left the gross metering requirements in its Rule Chapter 313 governing net energy billing. In response, in 2019 various state legislators proposed bills that would alter or restore the net energy billing paradigm.

One of these bills has now received favorable votes in both the state House and Senate. LD 91, An Act to Eliminate Gross Metering, was originally sponsored by Representative Seth Berry. It clarifies the statutory definition of net energy billing, which currently defines the concept as "a billing and metering practice under which a customer is billed on the basis of net energy over the billing period taking into account accumulated unused kilowatt-hour credits from the previous billing period." As amended by LD 91, the definition would specifically define "net energy" as the "difference between the kilowatt-hours delivered by a transmission and distribution utility to the customer over a billing period and the kilowatt-hours delivered by the customer to the transmission and distribution utility over the billing period." This clarification removes the Public Utilities Commission's ability to define "net energy" in any other way. LD 91 also directs the Commission to amend its rules "to be substantively equivalent to the rules in effect on January 1, 2017" (that is, before the Commission's 2017 regulatory amendment.)

LD 91 faces additional votes in the state legislature, before it would move to the desk of Governor Janet Mills for her signature. The legislature is also expected to consider other bills affecting net energy billing or expanding incentives for solar development, later this session.

Transmission costs up, energy costs down

The cost of electric transmission and distribution service in Maine is going up, at the same time that the cost of electric energy is going down.  What this means has implications not only for Maine but for all societies seeking to reduce the cost of electricity.

The cost of electricity to consumers can generally be broken down into two categories: energy and transmission and distribution service.  Electric energy charges represent the cost of the useable electricity that flows through an end-user's meter.  Transmission and distribution service charges, sometimes called "wires charges" or "delivery charges", represent the cost of delivering that amount of energy to the consumer.

In many states, vertically-integrated utilities both generate and deliver the energy.  Other states have restructured or deregulated their electric generation business; in these states, electric utilities deliver energy produced by non-utility generators.  Consumers in restructured states are usually free to select their own competitive electricity provider, whose energy will be delivered over the wires operated by the monopolistic local utility.  Because utilities continue to have a duty to serve all customers, if a consumer doesn't choose a competitive generation source, the utility will provide energy through a default service or "standard offer".

Maine is an example of a restructured state.  The state Public Utilities Commission regulates transmission and distribution utilities and their rates.  Effective July 1, the wires charges for Maine's two largest utilities -- Central Maine Power Co. (CMP) and Bangor Hydro Electric Company (BHE) -- went up.  On average, CMP customers' rates show an increase of 7.1% for the delivery portion of the bill; BHE customers' delivery rates increased 4.5%.  According to the Maine PUC's press release, the major driving force behind these increases are significant increases in the utilities' federally regulated transmission rates: a 19.6% increase for CMP and a 12% increase for BHE.  These transmission rate increases are in turn driven by multi-billion dollar expansions of and upgrades to the New England transmission grid.

At the same time, average energy prices in New England decreased by 7% between 2010 and 2011, largely as a result of cheaper natural gas supplies and reduced demand for electricity.  These energy price declines translated into decreases in the standard offer service delivered by these two utilities, about 25% to 35% lower than prices one year ago.

These twin forces -- increased investment in the transmission grid and reduced electric energy costs -- are not unique to Maine, but exert themselves in a number of regions of the United States.  One net result of these changes is a shifting of consumer costs away from energy and onto wires charges.  The cost of transmission and distribution service thus plays an increasing role in driving customers' electricity costs.  Given this shift, efforts to reduce the cost of electricity to consumers may find the most fertile ground in ensuring that transmission development is efficient, and that utility developers earn a rate of return on their investment that is fair, or in federal regulators' terms, "just and reasonable".