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Utility-backed program to replace net metering faces opposition

BY Sunday, April 29, 2018 02:07pm

Solar industry advocates are dismayed by a recent Michigan Public Service Commission decision that phases out net metering after June 1. 

The new Distributed Generation program changes the way utility customers who generate their own electricity — such as with rooftop solar panels — are compensated for excess power that is sent back to the grid.

Critics say the order is unfair, complicated and out of line with sweeping energy laws passed in December 2016. Some lawmakers are considering legislation that could reverse the MPSC’s decision.

“The Commission’s changes to net metering slams the door on Michigan residents who want to save money on their electricity bills by generating their own clean energy,” state Rep. Gary Glenn, the Republican chair of the House Energy Policy Committee, said in a statement. “The MPSC was supposed to conduct a comprehensive study of the cost of service for distributed generation, but protected the financial interest of two monopoly utilities and failed to side with the ratepayers.”

Glenn issued a joint statement with Rep. Yousef Rabhi, D-Ann Arbor, who introduced bills in March that would maintain net metering and repeal any grid charges established by the MPSC.

Net metering was a contentious piece of the sweeping energy package lawmakers passed in late 2016. Proposals had included a “buy all, sell all” model for most of the debate, which would have required customers with rooftop solar, for example, to purchase all of their electricity at retail rates and then be compensated for excess generation at wholesale rates. As part of a last-minute compromise, lawmakers directed the MPSC to research what is a fair compensation for those customers while keeping net metering in place.

After a year-long process with stakeholders, MPSC staff recommended a similar “inflow-outflow” program in which compensation will be based on a utility’s avoided cost, or the price it would cost a utility to generate the electricity itself. Avoided costs vary by utility, though are lower than retail rates. Any new utility rate cases filed after June 1 must include the new Distributed Generation tariff.

 Customers can enroll in net metering — and be grandfathered in for 10 years — until a utility’s new rate case is approved by the MPSC. Those dates will vary by utility.

Utilities argue that customers with rooftop solar are subsidized by all other ratepayers for the cost of using the electric grid. However, MPSC staff noted in a February report that this figure can be difficult to determine due to “data availability issues” and the relatively small number of net metering customers in Michigan.

“Consumers Energy supports distributed generation as an affordable, sustainable option for our customers, and we appreciate the MPSC’s decision,” said Consumers spokesperson Katie Carey. “We experienced growth in our net metering program in 2017 and expect that to continue this year. We continue to support an approach where all customers who rely on the electric grid pay their fair share of the costs it takes to maintain a reliable and sustainable energy system.” 

Critics say the data set used by the MPSC to determine the cost of net metering customers was incomplete and outdated. Some also argue that net metering customers provide a net benefit to the grid by offering additional, distributed generation during times when grid demand is up, such as on hot summer days.

Robert Rafson, president of the developer Chart House Energy in Muskegon, said the new program will overcharge the average residential customer with solar panels by more than $400 a year. Rafson was closely involved in the stakeholder process.

“In my opinion, (the MPSC) utterly failed to do not only the intent (of the 2016 law), but the entire idea of what they’ve come up with was created by utilities,” he said. “By pushing this off to the Public Service Commission, utilities gave themselves an opportunity to really promote their agenda, which is to stop renewable energy competition as much as possible. (MPSC) had a rare opportunity here to level the playing field and they didn’t do it.”

The Michigan Energy Innovation Business Council also opposes the decision, in part because it will create a “patchwork of (Distributed Generation) tariffs across the state’s utility territories.” 

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