NewEnergyNews: Monday Study – Solar Net Metering Takes Centerstage


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    Monday, August 02, 2021

    Monday Study – Solar Net Metering Takes Centerstage

    Q2 2021 Quarterly Report

    Autumn Proudlove, Brian Lips, David Sarkisian, July 2021 (North Carolina Clean Energy Technology Center)

    Executive Summary


    The purpose of this report is to provide state lawmakers and regulators, electric utilities, the solar industry, and other stakeholders with timely, accurate, and unbiased updates on state actions to study, adopt, implement, amend, or discontinue policies associated with distributed solar photovoltaics (PV). This report catalogues proposed and enacted legislative, regulatory policy, and rate design changes affecting the value proposition of distributed solar PV during the most recent quarter, with an emphasis on the residential sector…


    The authors identified relevant policy changes through state utility commission docket searches, legislative bill searches, popular press, and direct communication with stakeholders and regulators in the industry.

    Questions Addressed

    This report addresses several questions about the changing U.S. solar policy landscape:

    • How are state legislatures, regulatory authorities, and electric utilities addressing fastgrowing markets for distributed solar PV?

    • What changes to traditional rate design features and net metering policies are being proposed, approved, and implemented?

    • Where are distributed solar markets potentially affected by policy or regulatory decisions on community solar, third-party solar ownership, and utility-led residential rooftop solar programs?

    Actions Included

    This report series focuses on cataloging and describing important proposed and adopted policy changes affecting solar customer-generators of investor-owned utilities (IOUs) and large publicly-owned or nonprofit utilities (i.e., those serving at least 100,000 customers). Specifically, actions tracked in these reports include:

    • Significant changes to state or utility net metering laws and rules, including program caps, system size limits, meter aggregation rules, and compensation rates for net excess generation

    • Changes to statewide community solar or virtual net metering laws and rules, and individual utility-sponsored community solar programs arising from statewide legislation

    • Legislative or regulatory-led efforts to study the value of solar, net metering, or distributed solar generation policy, e.g., through a regulatory docket or a cost-benefit analysis

    • Utility-initiated rate requests for charges applicable only to customers with solar PV or other types of distributed generation, such as added monthly fixed charges, demand charges, stand-by charges, or interconnection fees

    • Utility-initiated rate requests that propose a 10% or larger increase in either fixed charges or minimum bills for all residential customers

    • Changes to the legality of third-party solar ownership, including solar leasing and solar third-party solar power purchase agreements (PPAs), and proposed utility-led rooftop solar programs

    In general, this report considers an “action” to be a relevant (1) legislative bill that has been passed by at least one chamber or (2) a regulatory docket, utility rate case, or rulemaking proceeding. Introduced legislation related to third-party sales is included irrespective of whether it has passed at least one chamber, as only a small number of bills related to this policy have been introduced. Introduced legislation pertaining to a regulatory proceeding covered in this report is also included irrespective of whether it has passed at least one chamber…


    In the second quarter of 2021, 42 states plus DC took a total of 179 actions related to distributed solar policy and rate design (Figure 1). Table 1 provides a summary of state actions related to DG compensation, rate design, and solar ownership during Q2 2021. Of the 179 actions cataloged, the most common were related to DG compensation rules (60), followed by community solar (38), and residential fixed charge and minimum bill increases (30).


    Five of the quarter’s top policy developments are highlighted below.

    South Carolina Regulators Approve Solar Choice Metering Tariff Designs

    In May 2021, the South Carolina Public Service Commission approved net metering successor tariff (“Solar Choice Metering Tariff”) designs for Dominion Energy and Duke Energy. Both Dominion Energy’s and Duke Energy’s tariffs include monthly time-of-use netting and a minimum bill, while Duke Energy’s tariff also includes a non-bypassable charge based on system size and a grid access fee for systems over a certain size.

    Kentucky Public Service Commission Issues Net Metering Decision

    The Kentucky Public Service Commission ruled on Kentucky Power’s net metering successor tariff proposal in May 2021, largely rejecting the proposed design and maintaining monthly netting instead. The Commission reduced the credit rate for monthly net excess generation from the retail rate to 9.746 cents per kWh for residential customers. Kentucky regulators are also set to address net metering successor proposals from Kentucky Utilities and Louisville Gas & Electric in September 2021.

    HECO Utilities Propose New Distributed Energy Resource Programs

    In Hawaii, the HECO utilities proposed two new distributed energy resource programs for residential and commercial customers in May 2021. The Standard Program includes a timevariant export rider and a non-export rider. The Advanced Program features a bring-your-own device program with grid services compensation in addition to the Standard Program riders. The Advanced Program also offers a rooftop rental program with the utility installing systems in front of the meter and participants receiving bill credits.

    Sacramento Municipal Utility District Proposes Net Metering Successor

    The Sacramento Municipal Utility District (SMUD) presented its net metering successor tariff proposal to its Board of Directors during Q2 2021. The tariff would take the form of net billing, with instantaneous exports credited at 7.4 cents per kWh, regardless of time of day or season. The proposed changes also include a one-time interconnection fee, an optional residential critical peak pricing rate, and a low-income virtual net metering program.

    Pedernales Electric Cooperative Considers Net Metering Changes

    In Texas, the Pedernales Electric Cooperative Board of Directors recently considered changes to its net metering program, including a move to time-varying credit rates, a $5.15 per kW demand charge, and an interconnection fee. At a July 2021 meeting, the Board approved a lower interconnection fee and decided to further study the issue of net metering credits and rate design.


    Regulators Evaluating Time-Varying Credit Rates for Net Metering Customers

    Regulators in a growing number of states have been evaluating the use of time-varying credit rates for net metering customers. During Q2 2021, the South Carolina Public Service Commission approved net metering successor tariffs for Dominion Energy and Duke Energy, which both feature time-of-use netting and credit rates. In Hawaii, the HECO utilities also proposed new distributed energy resource programs that include time-varying credits for exported energy. Pedernales Electric Cooperative in Texas recently considered a move to time-varying credit rates for net metering customers, but opted to study the issue of credit rates further before making a implementing a change. In New Mexico, regulators approved a new optional residential time-of-day rate that will allow net metering customers to participate and receive time-varying credit rates.

    Utilities Designing Distributed Generation Programs to Encourage Storage

    States and utilities are taking an increasingly holistic view to distributed energy resource (DER) program design, particularly as more customers choose to pair their generating systems with battery storage. In Hawaii, the HECO utilities filed proposals for new DER programs, including a bring-your-own-device program that allows any DER, whether it is load-consuming or energy-producing, to enroll and receive economic incentives for allowing the utility to control the device. The Sacramento Municipal Utility District proposed a new “Solar and Storage Rate” as its net metering successor, which includes a reduced export credit rate, an optional critical peak pricing rate, and battery storage incentives. Utilities’ net metering 3.0 proposal in California includes specific requirements for solar-plus-storage systems, and legislation recently enacted in Vermont authorizes regulators to adopt rules governing storage systems paired with net metering facilities.

    States Continue to Focus on Community Solar for Low-Income Customers

    Much of the community solar activity in 2021 has continued to center on encouraging access for low-income customers. Legislation passed in Delaware would require at least 15% of each community solar facility’s capacity to serve low-income customers, and a bill passed by the Rhode Island State House would require at least 35% of project capacity or savings to be allocated to low or moderate income customers. In Washington, lawmakers enacted a bill that authorizes the Utilities and Transportation Commission to approve discounts for low-income customers to participate in community solar programs, and the Sacramento Municipal Utility District proposed a new virtual net energy metering program for multi-family affordable housing. In New York, the New York State Energy Research and Development Authority and National Grid filed a joint petition for an Expanded Solar for All program that would provide community solar and associated guaranteed bill savings to low-income customers.


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