The Maryland-D.C.-Virginia Solar Energy Industries Association contends that utility restructuring will erode support within Virginia for developing renewable energy resources and bringing such resources into the energy mix in the Commonwealth. In the regulated market place there has been a low level of attention by utilities to development of renewable energy in Virginia and the public in the Commonwealth has lost ground compared to other states when it comes to the contribution of low or no pollution emitting technologies and development of an industry in-state for the twenty-first century. The situation has already prompted the state government to take the initiative through a state production incentive provided to manufacturers of photovoltaic collector technology in Virginia. Other renewable energy technologies also deserve support and MDV-SEIA makes the following recommendations to the drafting committee.
MDV-SEIA has proposed that utility restructuring in Virginia follow these basic principles:
The information provided below has been inserted into the drafting group outline of the bill. The reader will note that MDV-SEIA has suggested that a separate subsection be included for renewable energy.
SUGGESTED LANGUAGE FOR SECTIONS OF THE ELECTRIC INDUSTRY RESTRUCTURING ACT
CHAPTER 23. ELECTRIC INDUSTRY RESTRUCTURING ACT.
§56-576. Short title.
In the restructuring regulations or legislation, MDV-SEIA proposes that these points be included in the background statement for the legislation
(1) It is vital that sufficient supplies of electric generation will be available to maintain the reliable service to the citizens and businesses of the Commonwealth and use of renewable energy technologies should be expanding in the electric generation mix.
(2) Credit should be given to renewable energy technologies that do not directly generate electricity but supply other forms of energy for end users that displace electricity generation. Benchmark values should be established and utilities that must comply with portfolio standards should receive appropriate credit towards their renewable energy generation requirements for deployment of these technologies when the utility has provided incentives for consumers to act, or has installed such systems themselves.
(3) The Commonwealth should ensure that universal service and energy conservation policies, activities, and services are appropriately funded and available throughout the Commonwealth, and should guard against the exercise of vertical market power and the accumulation of horizontal market power.
(4) Long-term rate reductions can be achieved most effectively by increasing competition and enabling broad consumer choice in generation service, thereby allowing market forces to play the principal role in determining the suppliers of generation for all customers; However, the Commonwealth recognizes that the market does not fully or appropriately value energy efficiency and renewable energy technologies and that it is a proper role of government to act in the energy sector to ensure that rate payers in the Commonwealth gain the benefits of energy efficiency and renewable energy technologies that the market would overlook.
(5) The primary elements of a more competitive electricity market will be customer choice, preservation and augmentation of consumer protections, full and fair competition in generation, and enhanced environmental protection goals;
(6) The interests of consumers can best be served by an expedient and orderly transition from regulation to competition in the generation sector consisting of the unbundling of prices and services and the functional separation of generation services from transmission and distribution services;
(7) Restructuring of the existing electricity system should not eliminate attention and support for a policy that electricity bills for low-income residents should remain as affordable as possible;
(8) An orderly transition to a competitive generation market is needed and should be undertaken and completed as expeditiously as possible. During the transition, measures are needed to protect electric system reliability, provide electricity corporation investors with a reasonable opportunity to recover prudently incurred costs associated with generation-related assets and obligations, within a reasonable and fair deregulation framework consistent with the provisions of deregulation and restructuring legislation;
(9) The recovery of such prudently incurred costs shall occur only after such electric companies take all practicable measures to mitigate stranded investments during the transition to a competitive market; Charges associated with the transition should be collected over a specific period of time on a non by passable basis and in a manner that does not result in an increase in rates to customers of electricity corporations;
§56-577. Definitions.
§56-578. Applicability; municipalities.
Structure and Transition Matrix, page 1
§56-579. Schedule for transition to retail competition; Commission authority.
Structure and Transition Matrix, pages 1-7
§56-580. Nondiscriminatory access to transmission and distribution systems.
Structure and Transition Matrix, pages 7-9
§56-581. Independent system operator.
Structure and Transition Matrix, pages 9-12
§56-582. Regional power exchange.
Structure and Transition Matrix, pages 12-15
§56-583. Transmission and distribution of electric energy.
Structure and Transition Matrix, pages 15-17
§56-584. Regulation of rates subject to the Commission's jurisdiction.
Structure and Transition Matrix, pages 17-18
§56-585. Licensure of suppliers of retail electric energy; license suspension or revocation; penalties.
Structure and Transition Matrix, pages 18-19
§56-586. Suppliers of last resort.
Structure and Transition Matrix, pages 19-20
§56-587. Voluntary aggregation permitted.
Structure and Transition Matrix, page 20Consumer, Environment and Education Matrix, pages 7-10
§56-588. Metering, billing and other related distribution services.
Structure and Transition Matrix, page 20
§56-589. Consumer protections and customer services; penalties.
Structure and Transition Matrix, pages 20-21Consumer, Environment and Education Matrix, pages 10-15
DISCLOSURE [a] Before service is initiated by a generation company, aggregator, or supplier to any customer, the generation company, aggregator, or supplier shall disclose information on rates and other information to its potential customer in a written statement that the customer may retain. The State Corporation Commission shall promulgate rules and regulations prescribing the form, content, and distribution of such information, including, but not be limited to, the following: disclosure of the rate to be charged; any charges, fees, penalties, or other conditions imposed upon a customer should he or she choose to purchase power from another generation company, aggregator, or supplier during the term specified in the contract; the fuel mix and emissions of the generation sources; whether a credit agency will be contacted; deposit requirements and the interest paid on deposits; due date of bills and all consequences of late payment; consumer rights where a bill is estimated; consumer rights of third-party billing and like arrangements; consumer rights to deferred payment arrangements; low-income rates; limits, if any, on warranty and damages; the applicable provisions of this section; the provisions for default service; a toll-free telephone number for service complaints; any other fees, charges, or penalties; and the methods by which a consumer shall be notified of any changes to any of these items. A generation company, a supplier, or an aggregator licensed by the department to do business in the commonwealth pursuant to this section shall prepare an information booklet describing a customer's rights under the provisions of this chapter. Such company, supplier, or aggregator shall annually mail this booklet to its customers.
[b] A generation company, an aggregator, or a supplier shall be allowed to advertise the percentage of its power or energy portfolio that is generated by employers that operate under collective bargaining agreements or that operate with employees hired as replacements during the course of a labor dispute or that connotes or signifies to the ratepayer the relative environmentally beneficial effects of the power or energy sold by said generation company, an aggregator, or a supplier pursuant to rules and regulations promulgated by the department.
[c]) In addition to the disclosure requirements provided for in subparagraphs [a] and [b], the department shall promulgate such rules and regulations prescribing information to be disclosed by a generation company in any advertising or marketing of electricity rates, which regulations shall include, but not be limited to, disclosure of the rate to be charged in bold print in the case of print advertisements or through clear spoken language in the case of television or radio advertisements and on any monthly billing materials. The state government department shall coordinate with the attorney general to avoid duplication and to ensure consistency with the attorney general's regulations.
§56-590. Public purpose programs.
Structure and Transition Matrix, page 21Consumer, Environment and Education Matrix, pages 1-4
§56-590.1. Environment
Consumer, Environment and Education Matrix, pages 16-18
§56-590.2. Energy efficiency
Consumer, Environment and Education Matrix, pages 19-20
§56-590.3. Utility workers Protection
Consumer, Environment and Education Matrix, pages 20-24
The Maryland-D.C.-Virginia Solar Energy Industries Association suggests that an addition section be added to the restructuring legislation to cover provisions related to renewable energy.
§56-590.4 Renewable Energy
56-590.4 (Section 1) For purposes of this section, "renewable energy" means solar energy, wind, ocean thermal energy, wave or tidal energy, fuel cells powered with biomass derived fuel or fuel produced with a solar, wind, ocean thermal or wave or tidal energy system furnishing electricity, landfill gas and low emission advanced biomass conversion technologies. These technologies do not involve the combustion of coal, petroleum or petroleum products, municipal solid waste or nuclear fission.
(Section 2 ) Basic Service Charge for Renewable Energy Beginning on [date] the Commonwealth is authorized and directed to require a mandatory charge per kilowatt-hour for all electricity consumers of the Commonwealth to support the development and promotion of renewable energy. Said charge shall be the following amounts: one tenth of one mill ($0.0001) per kilowatt-hour in calendar year 1998; one fifteenth of one mill ($0.00015) per kilowatt-hour in calendar year 1999; one fifteenth of one mill ($0.00015) per kilowatt-hour in calendar year 2000; one twentieth of one mill ($0.0002) per kilowatt-hour in calendar year 2001; one twentieth of one mill ($0.0002) per kilowatt-hour in calendar year 2002; and one fifteenth mill ($0.00015) per kilowatt-hour in each calendar thereafter.
(Section 3) [a] The Commonwealth of Virginia is authorized to establish and set up a separate trust fund to be known as the Virginia Renewable Energy Trust Fund, hereafter referred to as the renewable energy fund. There shall be credited to the renewable energy fund all amounts collected pursuant to section 2 of Article 3 chapter 56-590.4 and any income derived from the investment of amounts credited to the fund. The fund shall be eligible to receive funds from federal programs, corporations and non-government organizations that contribute to renewable energy, environmental and rate-payer oriented programs. All amounts credited to the renewable energy fund shall be held in trust and used solely for activities and expenditures consistent with the public purpose of the fund as set forth in subsection X of this section.
[b] The Department of Mines, Minerals and Energy will initiate a public process to design and then for the Commonwealth of Virginia to charter an organization, public or private non-profit, to manage the Virginia Renewable Energy Trust Fund. The Fund will operate under direction of a public-private board of directors. The purpose of this organization will be to receive and use the funds collected from the Basic Service Charge for Renewable Energy expenditures that promote investment in renewable energy sources in accordance with a comprehensive plan developed by it to foster growth, development and commercialization of renewable energy sources, related enterprises and stimulate demand for renewable energy and deployment of renewable energy sources which serve end use customers in this state. Such expenditures may include, but not be limited to, grants, direct or equity investments, contracts or other actions which support research, development, manufacture, commercialization, deployment and installation of renewable energy technologies, and actions which expand the expertise of individuals, businesses and lending institutions with regard to renewable energy technologies.
[c] The directors of the fund may draw upon monies in the fund for the public purpose of generating the maximum economic and environmental benefits over time from renewable energy to the ratepayers of the Commonwealth through a series of initiatives that exploits the advantages of renewable energy in a more competitive energy marketplace by promoting the increased availability, use, and affordability of renewable energy, by making operational improvements to existing renewable energy projects and facilities which, in the determination of the directors of the renewable energy fund, have achieved results which would indicate that future investment in said facilities would yield results in the development of renewable energy more significant if said funds were made available for the creation of new renewable energy facilities, and by fostering the formation, growth, expansion, and retention within the Commonwealth of preeminent clusters of renewable energy and related enterprises, institutions, and projects, which serve the citizens of the Commonwealth.
(c) Public interests to be advanced through the board's actions shall include, but not be limited to, the following: (i) the development and increased use and affordability of renewable energy resources in the commonwealth, (ii) the protection of the environment and the health of the citizens of the commonwealth through the prevention, mitigation, and alleviation of the adverse pollution effects associated with certain electricity generation facilities; (iii) the delivery to all consumers of the commonwealth of as many benefits as possible created as a result of increased fuel and supply diversity; (iv) the creation of additional employment opportunities in the commonwealth through the development of renewable technologies; (v) the stimulation of increased public and private sector investment in, and competitive advantage for, renewable energy and related enterprises, institutions, and projects in the commonwealth; and (vi) the stimulation of entrepreneurial activities in these and related enterprises, institutions, and projects.
(d) In furtherance of these and other public purposes and interests, the directors of the renewable energy fund may expend monies from the fund to make grants, contracts, loans, equity investments, energy production credits, bill credits, or rebates to customers, to provide financial or debt service obligation assistance, or to take any other actions, in such forms, under such terms and conditions and pursuant to such selection procedures as the board deems appropriate and otherwise in a manner consistent with good business practices; provided, however, that the directors of the renewable energy fund shall generally employ a preference for competitive procurements; provided, further, that the board shall endeavor to leverage the full range of the resources, expertise, and participation of other state and federal agencies and instrumentalities in the design and implementation of programs under this section; and provided, further, that the fund has determined and incorporated into the minutes of its proceedings a finding that such actions are calculated to advance the public purpose and public interests set forth in this section, including, but not limited to, the following: (i) the growth of the renewable energy-provider industry; (ii) the use of renewable energy by electricity customers in the commonwealth; (iii) public education and training regarding renewable energy; (iv) product and market development; (v) pilot and demonstration projects and other activities designed to increase the use and affordability of renewable energy resources by and for consumers in the commonwealth; (vi) the provision of financing in support of the development and application of related technologies at all levels, including, but not limited to, basic and applied research and commercialization activities; (vii) the design and making of improvements to existing renewable energy projects and facilities as defined herein which were in operation as of December 31, 1997; and (viii) matters related to the conservation of scarce energy resources.
The board shall, in consultation with [a designated state agency] and an advisory committee established pursuant to subsection Xx, adopt a detailed plan for the application of the fund in support of the design, implementation, evaluation, and assessment of a renewable energy program for the commonwealth, subject to periodic revision by the board, that ensures that the fund shall be employed to provide financial and non-financial resources to overcome barriers facing renewable energy enterprises, institutions, and projects in a prudent manner consistent with the public purposes and interests set forth in this section. Said plan, to the extent practicable, shall consist of at least four components: (i) "product and market development" to establish a foundation for growth and expansion of the Commonwealth's renewable energy enterprises, institutions, and projects, including pilot and demonstration projects, production incentives, and other activities designed to increase the use and affordability of renewable energy in the commonwealth; (ii) "training and public information" to allow for the development and dissemination of complete, objective, and timely information, analysis, and policy recommendations related to the advancement of the public purposes and interests of the renewable energy fund; (iii) "investment" to support the growth and expansion of renewable energy enterprises, institutions, and projects; and (iv) "research and development" within the commonwealth and the region related to renewable energy matters. Said plan shall specify the expenditure of such monies from the fund to each of these component activities; provided, however, that monies so expended shall be used to develop such renewable energy projects with priority given to projects, institutions, and enterprises, first, within the commonwealth; next, to such activities within the Mid-Atlantic region that serve the regional power grid; and finally, all other such activities regardless of location. In developing said plan, the directors of the fund are hereby authorized and directed to consult with and utilize the services of the department of minerals and mining and energy for such technical assistance as the directors of the fund deem necessary or appropriate to the effective discharge of the their responsibilities and duties relative to the fund.
(e) Subject to the approval of the board, investment activity of monies from the fund may consist of the following: (i) an equity fund, to provide risk capital to renewable energy enterprises, institutions, and projects; (ii) a debt fund, to provide loans to energy enterprises, institutions, projects, intermediaries, and end-users; and (iii) a market growth assistance fund, to be used to attract private capital to the equity and debt funds. To implement these investment activities, the corporation is hereby authorized to retain, through a bid process, a public or private sector investment fund manager or managers, who shall have prior knowledge and experience in fund management and possess related skills in renewable energy and related technologies development, to direct the investment activity described herein and to seek other fund co-sponsors to contribute public and private capital from the commonwealth and other states; provided, however, that such capital is appropriately segregated. Said manager or managers, subject to the approval of the board, shall be authorized to retain necessary services and consultants to carry out the purposes of the fund. Said manager or managers shall develop a business plan to guide investment decisions, which shall be approved by the board prior to any expenditures from the trust fund and which shall be consistent with the provisions of the plan for the fund as adopted by the board.
For the purposes of expenditures from the fund, renewable energy technologies eligible for assistance shall include the following: solar thermal, solar photovoltaic and solar thermal electric energy; wind energy; ocean thermal, wave, or tidal energy; fuel cells; landfill gas; waste-to-energy which is a component of conventional municipal solid waste plant technology in commercial use; naturally flowing water and hydroelectric; low emission, advanced biomass power conversion technologies, such as gasification using such biomass fuels as wood, agricultural, or food wastes, energy crops, biogas, biodiesel, or organic refuse-derived fuel; and storage and conversion technologies connected to qualifying generation projects;. Such funds may also be used for appropriate joint energy efficiency and renewable projects, as well as for investment by distribution companies in renewable and distributed generation opportunities, if consistent with the provisions of this section. The following technologies or fuels shall not be considered renewable energy supplies: coal, oil, natural gas and nuclear power.
The use of monies to implement the provisions of this section shall be deemed to be an essential governmental function. Notwithstanding any general or special law to the contrary, the provisions of this chapter shall apply to expenditures made from the fund; provided, however, that no such expenditure shall be deemed to involve a capital facility project; provided further, that no lease or license executed in furtherance of the public purpose and interests of the fund shall exceed 30 years in duration, and the duration and terms shall be developed in a manner consistent with good business practices; and provided further, that the corporation shall take no action which contravenes the Commonwealth's reversionary interest in any of its real property.
[4] The governor shall, from the recommendation submitted by the directors fund appoint an advisory committee to assist the fund in matters related to the fund and in the implementation of the provisions of this section. Said advisory committee shall include not more than 15 individuals with an interest in matters related to the general purpose and activities of the fund and the knowledge and experience in at least one of the following areas: electricity distribution, generation, supply, or power marketing; the concerns of commercial and industrial ratepayers; residential ratepayers, including low-income ratepayers; economics, financial or investment consulting expertise relative to the fund; regional environmental concerns; academic issues related to power generation, distribution or the development or commercialization of renewable energy sources; institutions of higher education; municipal or regional aggregation matters; and renewable and clean energy issues. The directors of the fund shall consult with said advisory committee in discharging its obligations under this section.
[5] The books and records of expenditures and investments of monies from the fund shall be subject to a biennial audit by the auditor of the Commonwealth.
[6] Beginning with the fiscal year ending on June 30, 1999, on or by August 15th of each year, the directors of the fund, in conjunction with the advisory committee, shall annually submit to the governor, the joint committees on government regulations and energy, respectively, and the house and senate committees on ways and means a report detailing the expenditure and investment of monies from the fund over the previous fiscal year and the ability of the fund to meet the requirements and provisions of this section, and any recommendations for improving the ability of the fund to meet said requirements and provisions.
(b) In the fiscal year ending on June 30, 2001, the board of directors and the advisory committee of the Virginia Renewable Energy Trust Fund shall review the adequacy of the monies generated by the Basic Service Charge for Renewable Energy in meeting the requirements of the Fund. If, after such review, said board determines that an adjustment in said mandatory charge is necessary, said board shall file recommendations in the form of legislation with the clerk of the house of representatives. On or before January 1, 2002, said board shall submit to the house and senate committees on ways and means and the joint committee on government regulations a report which reviews in detail the activities and expenditures of the renewable energy trust fund to date and proposed activities and funding levels of said trust fund for the succeeding five years for review and approval thereby; provided, however, that said proposed activities continue to achieve the objectives of the program. Following receipt of the five-year report from said board, the house and senate committees on ways and means and the joint committee on government regulations shall meet jointly and with sufficient public notice for the purposes of conducting a public hearing to review the contents of said report; provided, however, that the five-year review shall be made available to the public no later than 45 days before said public hearing.
(Section 4) The State Corporation Commission of Virginia shall establish a renewable energy portfolio standard for all retail electricity suppliers selling electricity to end-use customers in the commonwealth. By December 31, 1999, the Department of Mines, Minerals and Energy shall determine the actual percentage of kilowatt-hours sales to end-use customers in the Commonwealth supplied from existing renewable energy generating sources and electricity-displacing active solar energy systems. Every retail supplier shall provide a minimum percentage of kilowatt-hours sales to end-use customers in the commonwealth from new renewable energy generating sources, according to the following schedule: (i) an additional one percent of sales by December 31, 2003, or one calendar year from the final day of the first month in which the average cost of any renewable technology is found to be within 10 percent of the overall average spot-market price per kilowatt-hour for electricity in the commonwealth, whichever is sooner; (ii) an additional one-half of one percent of sales each year thereafter until December 31, 2009; and (iii) an additional one percent of sales every year thereafter until a date determined by the resources. For the purpose of this subsection, a new renewable energy generating source is one that begins commercial operation after December 31, 1997, or that represents an increase in generating capacity after December 31, 1997, at an existing facility.
(b) For the purposes of this section, a renewable energy generating source is one which generates electricity using any of the following: (i) solar photovoltaic or solar thermal electric energy; (ii) wind energy; (iii) ocean thermal, wave, or tidal energy; (iv) fuel cells utilizing renewable fuels; (v) landfill gas; (vi) waste-to-energy which is a component of conventional municipal solid waste plant technology in commercial use; (vii) naturally flowing water and hydroelectric; and (viii) low-emission, advanced biomass power conversion technologies, such as gasification using such biomass fuels as wood, agricultural, or food wastes, energy crops, biogas, biodiesel, or organic refuse-derived fuel; provided, however, that after December 31, 1998, the calculation of a percentage of kilowatt-hours sales to end-use customers in the commonwealth from new renewable generating sources shall exclude clauses (vi) and (vii) herein. The division may also consider any previously operational biomass facility retrofitted with advanced conversion technologies as a renewable energy generating source. After conducting administrative proceedings, the division may add technologies or technology categories to the above list; provided, however, that the following technologies shall not be considered renewable energy supplies: coal, oil, natural gas and nuclear power.
(Section 4) DISCUSSION MDV-SEIA will submit proposed language for a NET METERING provision. In most states that have enacted net metering for renewable energy systems, the vehicle has been legislation. This is to avoid jurisdictional questions with regard to the Federal Energy Regulatory Commission and issues associated with PURPA, the Public Utilities Regulatory Policy Act of 1978. The following information explains the concept of net metering and outlines the net metering provisions Maryland enacted in 1997.
Net Metering for Residential Solar Electric Systems
What is "Net Metering?"
Photovoltaic (PV) panels are solar energy collectors that make electricity from sunlight. A PV system can be installed in a stand-alone setup, called off-grid, or be connected to the utility grid. "Net metering" occurs when a homeowner's, or a commercial entity's, grid-connected PV system sends excess electricity it produces to the utility, running the utility electric meter backwards in the process. With net metering, the solar energy electricity generator "trades" electricity back and forth with the utility at a single price.
What is the disincentive now?
Under the Public Utilities Regulatory Policy Act of 1978 (PURPA), utilities are required to purchase energy from small power producers who have systems under 100 kilowatts in capacity. The utility pays an avoided cost amount that the public service or state corporate commission approves. For example, in Maryland, this rate (Schedule X) for Baltimore Gas & Electric averages 1.8 cents per kilowatt hour. To measure the energy it receives from the homeowner, BG&E has to incur costs to install a second utility meter on the home and set up another account. The homeowner only receives 1.8 cents a kilowatt hour for electricity sent to BG&E, but is paying as much as 17 cents a kilowatt hour for electricity, if on a time-of-day meter. Under these conditions, little incentive exists for the homeowner to put in a larger PV system that would give the utility new, practically free, generation capacity that is most available on hot sunny days.
How does it work?
The figure "PV Interaction With Residential Load" illustrates how net metering benefits a utility as well as a homeowner. The graph plots the amount of energy a residential PV system produces by hour during a summer day in Sacramento, California. The left axis shows the level of demand in kilowatts and the area under the solid line is the total amount of kilowatt-hours the home consumes. The three dashed lines represent different PV systems, a 1, a 2, and a 4 kilowatt system. A one kilowatt PV system would not generate enough electricity to eliminate completely the need for the utility to provide power to the house. The homeowner would actually be under investing in solar, and the utility would endure the worst situation, it would lose kilowatt hour sales during the day, but still have to provide capacity to meet the residential peak demand that occurs about 7 p.m. Encourage the homeowner to buy a larger PV system, and you give the utility capacity during the day that offsets its own peak power generation. The utility avoids investing any money in the PV capacity it would use to shut off its own most-expensive generation equipment. In this tradeoff, the utility loses some of its revenue during the day for the kilowatt hours the larger PV system provides the homeowner, but it is able to cut 1.5 (or 3.5) kilowatts of capacity needed during its peak hours while still earning income from the kilowatt hours it sells between 7 p.m. and 7 a.m..
Net metering makes this favorable trading situation possible by giving the homeowner a better price for the electricity he or she sells to the utility when excess power is available. It also reduces the cost to the utility because the utility does not have to install another meter or create a new type of billing mechanism. The existing single residential meter is able to run backwards and credit the homeowner for the energy sent to the utility. Furthermore, the utility system will have gained capacity that emits zero air pollution.
In time, we fully expect utilities to invest in micro generation plants spread throughout their service territories to cut energy demand where substations and power plants are struggling to meet the loads. Until utilities are convinced that investment in distributed, small power generation really is a profitable approach for them, especially with utility deregulation gathering momentum like a cannon on a pitched deck, net metering will begin establishing the value of this approach.
Is a net metered solar electric system that is grid tied safe?
In 1996, the New York state legislature passed a net metering bill, but the Governor vetoed it when utility companies contended that grid-tied PV is not safe. This is nonsense. Every utility has customers with emergency generators that kick on during a utility power outage. A transfer switch isolates these customers from the grid until the outage ends. The invertors used to convert solar generated DC electricity to AC power have similar safety switches that isolate the home from the grid until the outage is over. These systems are well proven and safe and legislation enacting net metering will ensure that solar system owners that tie to the grid use code approved equipment. In fact, the greater danger is bootlegged systems. A lack of the net metering incentive could push homeowners to install PV systems in a way to net meter without following safety requirements and using code approved equipment.
Why do we want Net Metering?
More sales are needed increase solar manufacturing levels and lower solar energy costs. Legislatively mandated net metering will help reward homeowners who install solar energy systems. Besides ensuring that PV equipment is installed properly, net metering will also save the utility costs it would have to bear administering such customers. Finally, we will be promoting more use of a non-polluting resource that reduces greenhouse gas emissions and air pollution and supplies energy during periods of peak demand.
The cost of photovoltaic collectors and systems has fallen dramatically. Over twenty years ago, a PV system cost hundreds of dollars per watt of electricity produced under peak operating conditions. Today, systems can be installed at a cost between $7 and $12 per peak watt, and the price will go down further with more economies of scale and technological and manufacturing advances. Unfortunately, in the last two years, the federal government has cut its support for the PV industry by almost 30 %. To reach its potential sooner rather than later, and to keep growing to stay ahead of international competitors, U.S. solar companies need to increase sales to generate income and earnings to invest in expanding production lines and improving the technology.
Up to now, almost all the photovoltaic systems that have been installed are small systems for remote electrical loads, like signaling and communications equipment or data gathering. Residential PV systems are almost uniquely found on homes so far from a utility grid that it is cheaper to buy solar than pay to have the grid extended. Such systems require a substantial investment in batteries to store energy for use at night and see the owner through several cloudy days. Net metering will increase sales of solar energy systems by letting the solar homeowner use the utility grid as his "battery," a tremendous cost saving. It will simply stimulate the market.
Enacting net metering a win-win-win-win policy option with absolutely no on-budget cost to the State. Net metering will:
Where did this idea come from?
Net metering is not covered by any federal government rule or regulation. Energy policy experts are recommending its establishment through state legislation because of concern that deregulation will affect provisions in PURPA that support small power producers. Several states that are implementing utility restructuring policies have created complementary legislation or regulations to improve the economics for consumers of renewable energy systems, simplify renewable energy interconnection with the grids and encourage consumers to invest directly in renewable energy technology. For example, California has stipulated that utility ratepayers contribute $2 billion for energy efficiency and renewable energy programs in the next four years. Arizona has stipulated that in 1999, ½ of 1 % of all retail electricity sold by utilities must be generated by new solar energy resources, at either utility or customer-sited facilities.
As of mid-1996, sixteen states had some type of net-metering provisions formally in place. These states are: Arizona, California, Connecticut, Idaho, Indiana, Iowa, Maine, Massachusetts, Minnesota, New Hampshire, North Dakota, Oklahoma, Rhode Island, Texas, and Wisconsin. With the addition of Maryland in 1997 and a couple of other states, this number is now nearer 20. In Pennsylvania Philadelphia Electric Company created its own program for renewable energy only, open to all customers classes, for systems 50 kilowatts or smaller.
Of the 16 states with net metering in 1996, for twelve of them all customer classes are eligible for their net metering "program. Two states limited eligibility to residential customers only. Wisconsin has made all retail customers eligible. Only California limited eligibility to solar electricity systems only. The remainder of the states made all renewable resources eligible, and in some cases, included cogeneration systems. Overseas, Germany, Japan, and Switzerland have all established net metering nationally.
The states divide into several groups when it comes to the price a utility pays for net-metered electricity. At the end of the billing period, three states established that "net excess generation" of electricity the utility received would be "granted" to it by the customer. In nine states, the net energy generated would be purchased at the utility's avoided cost rate. In Idaho, Minnesota, and Wisconsin, the utility will pay the retail rate for the net excess kilowatt hours the customer generates. (Philadelphia Electric had no net excess provision). In the Maryland legislation, Delegate Rosenberg's bill had a provision that if more electricity were supplied to the utility in a month than was purchased, the customer would get a credit on the next month's bill for that energy. Baltimore Gas & Electric has submitted an amendment to the bill that would eliminate the carryover credit. The solar industry association recommended that the Maryland legislature stick with the original language in this regard. A compromise suggestion was that if a credit were to exist at the end of a 12 month period, the utility only pay avoided costs for the surplus power it received to settle the account and start the next 12 month period even.
Of the sixteen states with net metering in 1996, three states used legislative provisions to enact their net metering policy. In the other thirteen states, the public utility commission took the action. California and New York are the states that acted most recently and both chose the legislation rather than utility regulatory commission path. Maryland acted legislatively in line with recommendations that legislation establish net metering to avoid possible conflicts with utility deregulation proceedings and confusion with PURPA.
In Maryland, Delegate Rosenberg modeled House Bill 869 closely to law the California legislature enacted in 1995. Maryland's proposed law enables net metering for single family homes, limits systems to less than 80 kW peak capacity in size, requires them to be located on the utility customer's premises and establishes a cap which limits the total amount of net-metered solar electric capacity that can be installed in Maryland. The table below compares the Maryland law with California and Hawaii net metering programs.
| Maryland Net Metering Legislation | California Net Metering Law | Hawaii Interconnection Law (Act 205) |
| HB 869 enacted June 1997 | Law enacted 1995 | Law enacted 1996 |
| Solar Electric Technologies | Photovoltaic Systems Only | Solar, Wind, Hydro |
| Principal residence systems, first come first served | Residential systems, first come first served | Residential systems, first come first served |
| Maximum size 80 kilowatts | Maximum size 10 kilowatts | Maximum size 10 kilowatts |
| Single meter to run backward | Single meter to run backward | Dual meter system, utility pays avoided costs |
| Capped at 0.2 % of total utility peak load forecast for 1998 (34.722 megawatts) | Capped at 0.1% of total utility peak load in California | Capped at 0.1% of total utility peak load in Hawaii |
The Maryland Legislative Proposal
House Bill 869 followed model net metering legislation that the California Solar Energy Industries Association provided. The model is intended for photovoltaic only systems, with a limit on total capacity installed to alleviate utility fears and set a cap on the amount of rate payer "subsidy" that occurs. Bill 869 specified eligibility to single family dwellings that are a utility customer's "principal residence." Delegate Rosenberg submitted an amendment to correct this language with clarification that lets net metering apply to residences. The bill specifically prohibited a utility from adding charges to a net metered customer. We believe this to be a very important provision because we know of a case where the California Public Service Commission ruled against such charges because they eliminated the economic benefit of having a PV system.
§56-591. Transition costs and benefits.
Structure and Transition Matrix, page 22
§56-591.1. Stranded Costs
Structure and Transition Matrix, pages 1-21
§56-592. Nonbypassable wires charges.
Structure and Transition Matrix, pages 22-23
§56-593. Divestiture not required; functional separation.
Structure and Transition Matrix, pages 23-26
§56-594. Legislative transition task force established.
Structure and Transition Matrix, pages 26-29