New Hampshire’s electric utilities have come out in favor of continuing the state’s current system for compensating customers who share surplus solar power on the grid.
Eversource, Unitil, and Liberty Utilities surprised clean energy advocates by submitting joint testimony to state regulators last month endorsing the state’s current net metering structure. The program credits customers roughly 75% of the standard electricity rate for any unused solar generation that flows back onto the grid and is used by other customers.
“I am delighted that our utility friends have come over to our way of seeing things,” said Sam Evans-Brown, executive director of Clean Energy New Hampshire.
The utilities’ testimony is part of New Hampshire’s current deliberations over whether the state’s net metering rules should be adjusted. The process in New Hampshire is playing out as many other states are also debating what role net metering should play in the transition to clean energy.
Net metering provides an important source of revenue for solar customers when their generation doesn’t perfectly match their electricity use, but critics contend that it unfairly shifts costs to consumers who don’t generate their own renewable energy.
“I think renewable energy is great,” said Rep. Michael Vose, chair of the state House’s Science, Technology and Energy Committee, who has supported bills that would have cut net metering rates. “If people can afford to buy it and want to buy it, they should go ahead, but I am not in favor of subsidizing renewable energy and shifting costs to people who don’t directly benefit from that renewable energy.”
New Hampshire’s current rules, put in place in response to 2016 legislation, replaced a previous system that gave participants credits equal to the price utilities charge customers for electricity. This same law also required the state to conduct studies on the impact and effectiveness of net metering and make changes to the regulations if the findings warranted.
The net metering debate
Previously, the utilities had advocated for much lower rates for net metering customers. Nationally, utilities have often taken the same position as well, arguing that higher net metering rates push costs onto customers who can’t afford to buy solar panels.
At a glance, it’s easy to dismiss: if a homeowner sends 1 kilowatt-hour of power to the grid and receives a credit worth the price of 1 kilowatt-hour, it would seem everything should come out even. But the retail price of electricity includes more than just the cost of the power itself — everything from the salaries for lineworkers who do maintenance to the cost of debt on construction projects to keep the wires and poles safe and reliable.
“The whole system is packaged up and rolled into the price,” Evans-Brown said.
So when a homeowner receives a full retail credit for their power, they are getting paid for more than just the energy they are providing, increasing the cost to run the utility. These costs are then passed on to the utility’s entire consumer base. A lower net metering credit means less of this sort of cost shifting and, some argue, a fairer deal for customers without solar.
The gap between net metering rates and utility costs can be even more pronounced at certain times of day. In the early afternoon on a sunny summer day, demand on the grid is low, meaning the price for power from the grid drops as well. At the same time, solar panels are producing plenty of excess energy. Utilities can end up paying higher rates for this electricity than they would have had they been buying from a power plant, at a time when excess residential solar energy wasn’t even needed to help meet high demand.
“Solar does not make the grid more reliable or resilient, nor does it improve power quality in any way,” Thomas Meissner, chief operating officer of Unitil, testified in 2016.
Supporters of a strong net metering rate, however, argue that net metering creates an array of benefits for utilities that solar generators should be compensated for. The report produced in accordance with the 2016 law notes that solar can reduce capacity payments the utilities must make, reduce the cost of complying with renewable energy standards, and lower the amount of power lost traveling through transmission lines, among other benefits.
Utilities, however, have generally downplayed these benefits. However, in their joint testimony, the utilities go so far as to praise the economics of the system.
“New Hampshire’s net metering policy — which is among the most balanced in New England — has been effective in encouraging the growth of [solar] resources in our state, and there is no evidence that the current compensation level is creating unjust cost shifts,” said Eversource spokesperson William Hinkle, after the testimony was filed.
The future of the policy
The state report presents similar findings. It concludes that distributed solar generation should provide increasing value to the grid over the next 12 years. It also found evidence that limited cost shifting would occur, increasing the average residential bill in the range of 1% to 1.5%.
Supporters of net metering say this number is so small that it is an acceptable price to pay for the benefits of increased renewable energy. Vose, however, is concerned about any increased costs for consumers who have not chosen to install solar panels.
“That is one of the problems we’ve tried to ameliorate, to minimize such cost shifting whenever possible,” he said.
Nationally, net metering remains contentious in many states. For example, North Carolina’s public utility authorities have angered environmental groups and many in the solar industry by approving a utility plan to reduce payments to net metering customers. And earlier this year, California cut rates by about 75% for new net metering customers, with utilities pushing for even more cost-cutting concessions.
“They’re hugely disincentivizing rooftop and community solar,” said Patrick Murphy, senior scientist at PSE Healthy Energy, who researches clean energy transitions and energy equity.
Overall, the more a state lowers its net metering credits below the retail price, the more likely utilities are to embrace — or at least accept — the program, Murphy said. In New Hampshire, the reduction from full retail price to 75% has been enough to satisfy utilities.
The New Hampshire net metering docket remains open and the matter is under consideration by the Public Utilities Commission. Vose thinks it very possible that net metering rates will be further lowered. Evans-Brown, however, thinks the utilities’ recent testimony could have a significant influence toward keeping the current system in place.
“This makes it more likely that we will get a favorable outcome,” he said.
