Distributed Generation Gives Utilities Reason to Consider Net Metering
Jun 29 - Bulletin. Northwest Public Power Association
When a utility customer decides to take the necessary steps to install a small private power generator at his or her home, it creates a bit of a quandary for utilities, and the customer alike.
At Sacramento Municipal Utility District (SMUD), the utility will buy solar
power their customers generate at the full retail rate. Clark Public Utilities
(Vancouver, Wash.), and Snohomish County PUD (Everett, Wash.) buy excess
electricity, produced by any environmentally-friendly generation project, also
at the full retail rate.
SMUD's program, the SMUD PV Pioneer Program, began in 1993 giving the utility
an opportunity to partner with customers who had the ability to assist with the
early development and implementation of photovoltaic technology.
State Net Metering Policies
Prepared by Yih-Huei Wan, NREL (revised 10/8/99)
The program's first seeds were planted when SMUD started purchasing,
installing, owning and operating 2 to 4 kilowatt rooftop solar systems on
"borrowed" rooftops of their customers.
The PV Pioneer Program is one of the nation's leaders in net metering. Nearly
600 systems have been installed on the property of SMUD customers who agreed to
help Sacramento reach toward more solar energy.
The program has helped SMUD reduce the cost of solar electricity for the
future by helping the district learn and gain valuable experience in terms of
installing, operating, maintaining, and pricing home photovoltaic systems.
Because of the experience the utility has gained through the PV Pioneer
Program, customers can now take part in true net metering by purchasing their
own PV systems, and consuming the electricity in their own homes.
In 2001, SMUD customers paid $4,800 for a typical 2,000 Watt solar system,
which would provide roughly 50 percent of an average customer's usage. The
district made volume purchases of equipment needed to install a residential
system, and bought down nearly half the cost of the system, helping customers to
find the capital investment more affordable.
Like most other utilities, when the home-based systems generate more
electricity than the customer needs, the excess is purchased by SMUD at retail
rates. When customers use more than the solar system provides them, they are
given the choice between paying a monthly bill, or to pay an invoice to settle
their account at the end of a one-year span.
Snohomish County PUD (Everett, Wash.) has a program that lets those customers
who do generate their own environmentally-friendly electricity "store"
the electricity that is more than their immediate needs with the PUD for future
use.
Those Snohomish PUD customers who use fuel cell, solar, wind or hydroelectric
generation in their homes that are capped at 25 kilowatts are eligible for the
PUD's Net Metering Program. Those customers who take part in the PUD's program,
connect their private generating equipment to the SnoPUD distribution system.
In cases when the customer is producing more power than the household needs,
the meter on the customer's home will literally spin backwards, sending power
back to the grid. The customer essentially sells their excess electricity back
to the utility in return for credits on their account equal to the current rate
charged for power by the utility. Any credits earned by net metering are carried
over month-to-month, but do not carry over into a new calendar year.
The PUD requires an inspection of the distributed generation project so to
ensure that technical and safety requirements are in place to protect the
distribution system. It also will install a more modern electric meter, assuring
accurate measurement of the power that the customer provides to the grid.
Grays Harbor PUD's (Aberdeen, Wash.) net metering policy is similar to the
one at Snohomish PUD. Grays Harbor approved its formal policy in 2002, as
required by Washington state law. At Grays Harbor, at the end of each year, the
utility pays customers for private generation over and above what they consume.
The utility reimburses customers at half of the retail rate, even though the
state allows utilities to require customers to deliver the excess generation
without reimbursement.
At Clark Public Utilities, net metering has been in place since the early
1980s, according to Corporate Communication Manager Mick Shutt.
"We have one customer who has a little tiny hydro project and one who
has a a solar project."
The hydro project, surprisingly, is located in an urban area of Vancouver,
fittingly not far from the Columbia River.
Shutt said the Clark program includes systems up to 100 kilowatts, and that
the PUD buys excess power at the retail rate.
Federal Law Motivates Net Metering Programs
Federal law (PURPA, Section 210) says electric utility customers can use
electricity they generate in their own environmentally- friendly systems to
supply the energy needs of their home, allowing them to offset the power they
would instead buy from their electric utility. However, the law says that if the
customer lives in a state, or is served by a utility where net metering is not
allowed, the excess power should be purchased by the utility at the wholesale
price.
Net metering makes it easier by letting the customer use any extra
electricity to offset utility-provided electricity used elsewhere in the billing
cycle. The customer, in exchange, is billed only for the consumed energy
provided by the utility.
Seems Like Such a Win-Win
Net metering seems like it could easily be a win-win situation for members of
cooperatives and customers of PUDs and municipal systems. But it seems like very
few customers are using it.
Part of the reason could be the capital expense of setting up the systems in
the first place. Another reason could be that many utilities provide programs as
prescribed by law, but most don't publicize the programs. Instead, they view net
metering as more of a headache.
In a time when transmission avenues are congested the same way freeways are,
and distribution reliability is such a big issue, perhaps it is wise for
utilities to begin taking a more serious look at the issue of net metering.
Utilities gain also because they avoid administrative and accounting costs
involved with buying and measuring the small amounts of excess energy provided
by private generation systems.
Obviously, customers who are involved in net metering buy less power from the
utility, which is an indirect cost for the system.
According to the American Wind Energy Association, the revenue loss is
similar to what a utility would experience when a customer reduces electricity
use through taking energy efficiency actions.
More Than Half of the States Require Net Metering
Thirty states are currently requiring at least some utilities to provide
customers with the opportunity to take part in net metering. The requirements in
each state are different.
While most states that allow net metering had the rule enacted by regulatory
commissions, California, Montana, Nevada, Oregon, Utah, and Washington all had
net metering laws enacted laws through action of their legislatures in the late
1990s and early 21st Century. Idaho's Public Utility Commission enacted net
metering rules in 1980, and the Arizona Corporation Commission enacted them in
1981.
In every case included among the states served by NWPPA member utilities,
residential consumers are given the ability to participate in net metering
programs, and each state has different regulations.
For example, in all participating Western states except California all
customer groups are allowed to be net metering users. California's law says that
only residential and small commercial organizations are eligible.
In all cases throughout the NWPPA service territory, except Idaho, the scope
of net metering regulations includes all public power and investor owned
utilities.
The Future
The horizon shows that there will likely be some sort of increase in the use
of net metering as different systems become available to consumers, and prices
begin to fall.
With customers learning more and more about the environmentally friendly
nature of wind power and photovoltaics - not to mention the coming emergence of
residential fuel cells - they will likely begin learning to use such systems on
their own property, and start looking toward their utility for not only some
relief on their electricity bills, but also for help and advice with
installation.
Net metering makes it easier by letting the customer use any extra
electricity to offset utility - provided electricity used elsewhere in the
billing cycle. The customer, in exchange, is billed only for the consumed energy
provided by the utility.
Nelson P. Holmberg is associate editor at Northwest Public Power Association.
He can be reached by telephone at (360) 254-0109, or by e-mail at nelson@nwppa.org
. NWPPA
Copyright Northwest Public Power Association Jun 2004