Surge in Rooftop Solar Power Causes Net Metering Increase

August 30, 2013- New technologies that enable consumers to use energy more efficiently are eroding the revenues of electric utilities. One way the utility industry has tried to stem the tide is by increasing consumers’ net metering costs.

Net metering makes small-scale renewable energy, such as rooftop solar panels, more affordable by crediting the “distributed generation” owners for the excess energy they produce. The electric meter measures how much electricity flows back to the grid from the distributed generation unit. A credit is applied to the consumer’s energy bill. The Energy Policy Act of 2005 requires public utilities to offer net metering to consumers upon request.

Net metering has become the focus as the cost for rooftop solar panels has fallen -- 80 percent since 2008, including 20 percent in 2012 alone. Rooftop solar energy has increased by 900 percent between 2000 and 2011.

While policies vary, the most favorable net metering policy is an excess energy credit equal to the full retail energy rate consumers pay for energy. However, utilities claim this prevents them from recovering their full costs and overpays distributed generation owners.

Despite attempts by utilities to change net metering policies, state regulators are keeping these policies intact. The Idaho Public Utilities Commission rejected Idaho Power’s request to pay less than the full retail rate and to impose higher charges on net metering consumers. The Louisiana Public Service Commission rejected similar requests by Louisiana utilities.

A recent report lists the monetary benefits for utilities in the long run, which include: lower power delivery costs, lower power supply costs, lower system peak costs and fuel flexibility benefits. Other benefits include: reduced toxic emissions and greenhouse gases, improved reliability and local job creation.

After distributed generation reaches a greater scale, utilities are more likely to remain financially viable. The utility’s cost of service will be fairly apportioned between consumers who own distributed generation and those who do not.

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