Net-metering News from Maine and California

On December 17, 2018, the Maine PUC exempted medium and large non-residential customer classes of CMP and Emera from compliance with the Commission’s net energy billing provisions in Chapter 313, section 3(f), which require measurement of a customer’s production of “nettable energy.” The Commission enacted, effective for facilities in service as of January 2018, Chapter 313 (1) in light of the declining costs of constructing small renewable generation facilities and (2) in order to reduce the inequity of shifting transmission and distribution (T&D) costs to ratepayers not participating in net energy billing. Order Adopting Rule and Statement of Factual and Policy Basis, Docket No. 2016-00222 at 10 (Mar. 1, 2017). Chapter 313 gradually ratchets down, by 10% each year beginning in January 2018 and down to 0% in 2026, a generators’ potential “nettable energy”—the generation credits that renewable generators can net against their T&D kWh charges. Central Maine Power Request for Approval of T&C Section 57 – Net Energy Billing, Docket No. 2018-00037 (Me. P.U.C. Dec. 17, 2018) (Order Granting Exemption).

The Commission deemed that an exemption of large and medium non-residential classes was justified largely due to the way those customers pay for T&D service—primarily through demand charges—in contrast with small residential customers’ bills that seek recovery of T&D costs through KWh charges. Id.at 1 n.1, 3. The Commission found only a negligible impact on the cost shift to non-net energy ratepayers in the two affected customer classes, one insufficient to justify the costs of additional metering (typically through installation of a second meter). Id.at 3. The Commission will require Emera and CMP to include in their future biannual NEB reports (1) the costs associated with installing second meters, (2) the administrative costs associated with billing, and (3) the estimated costs incurred that form the basis for any billing system changes. Id.at 4.

Across the great divide and also in net-metering news, energy financing companies in California are positioning to adapt to new residential building code mandates in 2020. This past spring, California lawmakers introduced building code revisions that would mandate solar energy deployments on all residential properties under three stories and newly constructed in 2020. The notice of proposed action lauded the new building standards as creating an avoided-cost value over thirty-years that is “greater than any increased construction costs that will result from the Standards.” California Energy Commission, 2019 Standards Notice of Proposed Action, Docket No. 17-BSTD-02 (Jan. 18, 2018) (citing an average of $10,538 in construction costs and $16,251 in net present avoided energy costs).

Now, solar financing providers in tandem with multi-family construction and behind the meter technology companies are looking to profit from the standards using solar car ports’ tax credits and accelerated depreciation benefits to offset construction costs. SDC Energy, Don’t Dread New Title 24 Solar Mandates; Profit from Them, (Dec. 11, 2018). Building owners will gain from the sale of solar energy while tenants see 10% to 15% on their utility bills. Key to this equation is California’s recent approval of “virtual net metering,” a system in which individual tenants and owners of multifamily properties can benefit from both using and selling back to the local utility solar energy generated on site. The program relies on an energy monitoring database that collects individual tenants’ solar energy usage, which is then used to generate a solar usage charge that is added to the rent bill for each tenant.

The landscape of Maine’s community and non-residential small scale generation look markedly different from that in California, and those differing contexts suggest divergent cost-benefit implications for residential and non-residential small-scale renewables.

Please direct any questions to Verrill Dana’s Energy Law Group.