A quick follow-up to my post last week on solar net metering and the debate in Massachusetts. Sen. Will Brownsberger of Belmont, who frequently talks about his personal commitment to climate change as manifested in his home, posted on his blog some backstory and perspective on the solar issue:
Yesterday, the Senate passed a climate adaptation planning bill by a roll call vote of 37-0 with 1 abstention. Notable among the amendments to the bill was an extension of solar net metering for investor owned utilities. This amendment was adopted without objection. The bill now moves to the House of Representatives where its prospects are unclear.
Under solar net metering, solar installations can sell any power that they don’t use on site back to the grid at or near retail rates. There has been considerable controversy about solar net metering — a recent task force on solar incentives was unable to reach consensus. Some argue that net metering gives solar energy an unnecessarily deep subsidy. Others argue that it fairly compensates people and companies who invest in solar panels for the benefits that they provide to the grid and the environment.
The larger debate at the state level concerns the Solar Renewable Energy Credits as well as net metering. While it is appropriate for solar to receive some form of subsidy to reflect its low carbon impact, well-informed economists debate the appropriate magnitude of that subsidy with great passion. I have been agnostic and have been waiting for a full legislative debate on the issue before settling on a position.
Will Brownsberger has a decent record on the environment and voted in support last week. It’s worth noting that the solar amendment moved because much of the Senate leadership recognizes the urgency of the issue, something we have yet to see in the House. Regarding the rest of the Senator’s comments, let me refer to what one solar installer wrote on a list-serv:
I read the statement by Senator Brownsberger and there was a part of this statement that stood out to me. His statement that Net Metering was sold to the Utility, this is not how I would have described it. When you net meter the energy it is used by the nearest demand on the line, when recalled by you or credited to your off-taker you are just getting back the amount that you sent into the line which the utility has already sold. The utilities do not buy the energy they do not send out a check, they get the use of the electricity (which they do not buy) to sell while not having to use their long line distribution and the solar account get back what they put into the system. This idea of selling to the utilities is not a helpful way of look at net metering.
I’d add that net metering itself is not a subsidy. Period. I dug into this topic a bit last week and the overwhelming body of literature supports this claim. It’s not particularly constructive to hash this debate out unless you are working for a utility company. Furthermore, the task force on energy had consensus on any number of issues, and while lifting the cap was not one of them, the vast majority of stakeholders — everyone except for the utilities, Associated Industries of Massachusetts (AIM), and Charlie Baker — supported lifting the caps on solar. (The consultants, too, noted the economic consequences of delay). For its part, AIM had a member testify for solar and against their policy position at a pertinent legislative hearing, a mutiny which drove a few reactionary lobbyists wild.
Senator Brownsberger does get into another really important topic in his post. Belmont, like many other communities, has a municipal utility. Munis are – to my mind – sort of like the Tea Party of energy. If your neighbors and the local light board they elect like clean energy, you’ll do swell. If not, you’re in danger. And don’t even talk about regulatory interference from the state. The Department of Public Utilities has close to no influence over the munis, and munis don’t pay into green programs the rest of us shell out for (with a significant positive benefit that far outweighs costs). They do, however, tend to maintain good rates and reliable service, as shareholder profits aren’t part of the immediate equation on your electric bill. (For more on municipal and public utility ownership, check out what Boulder, CO is doing, the local MA muni choice effort, and the 2013 NYT coverage). Back to Sen. Brownsberger’s comments:
The issue of [solar net metering] has been divisive in Belmont which is a municipal utility and therefore would not be affected by the new legislation. My family installed solar panels in 2010. When the controversy about solar net metering policy arose in Belmont and some asked me to become involved, I sought advice from the Ethics Commission about possible conflicts of interest. The Ethics Commission advised me that I should not participate in the debate about Belmont’s net metering policy. That does not prevent me from taking a position on statewide solar policy, which is a general as opposed to “particular” matter.
Sen. Brownsberger raises a good flag. The situation in municipal plant communities, from Groton to Hingham to Holyoke, is special and needs careful attention, locally and statewide. Reading MLD has explored creative options like community solar and Holyoke is looking at expanding solar on the site of the former Mount Tom coal plant. Some of legislative leadership, particularly in the Senate, seems supportive of bringing municipal plants into the fold of clean energy programs, an issue that merits serious debate.
Until we finish with the standard net metering package, this issue, among any others, certainly will not be attended to. Another critical problem for many installers and would-be solar customers in the state, particularly Unitil customers in North-Central Massachusetts and Eversource customers on the Cape, is interconnection. The time and cost to hook up solar can be extraordinary and unreasonable, and given the fact that solar is good for the consumer and potentially bad for the utility or its shareholders, there’s little incentive for timely or cost-effective service. Sen. Dan Wolf on the Cape, and Rep. Benson over in Lunenberg are particularly attentive to this problem – but we aren’t likely to see any changes until we can get through the first couple of solar hoops.
P.S. – Check out “Why you need to take utility cost estimates with a giant grain of salt” ft. former DPU Chair Paul Hibbard.
The solar installer has a good point, but I’d describe it more like this:
Net metering does impact the utility because it replaces a unit of energy, which that utility buys and sells at a profit, with one that the utility sells at cost, to fulfill a demand.
A customer purchases power (maybe at night, when his panels aren’t producing power) and then during the day, produces power over and beyond his demand for it. Instead of selling that power to the utility at the wholesale rate (which is what the utility would need to purchase it for without any solar installations) he gets a credit at the retail rate – in effect trading the power during the day for the power he consumed at night. The utility then sells that power to someone else who needs it – but basically at cost because it purchased it at the retail rate.
One only has to scale this up to realize the major problem – if the supply of excess solar during the day precisely matched the demand during the day from people without solar, then during the day zero power plants would be running (which is a good thing) but the utility still need to have transmission lines available for this power to flow – and could not realize a profit from it either because all the power being bought/sold via it is “at cost”.
On another note, I believe that there is now a state law which prevents municipal electric utilities from being created. I think that it may be time to revisit this – one only has to look at the competitive advantage that Chicopee has over Springfield regarding electricity rates. From their rate card:
$0.8 (Purchase Power Adjustment)
$-0.663 (Hydro Credit)
$5.60/month customer charge
Compare to Eversource, which is:
$4.286 (distribution for first 600KwH)
$5.286 (distribution above 600KwH)
$0.743 (Res Assist Adj Clause)
$0.273 (Pension/PBOP Adj Mechn PPAM)
$0.172 (Net metering recovery surchrge)
$0.250 (Solar Program Cost Adjustment)
$1.069 (Energy Efficiency Program Chrg rate period 1)
$1.148 (Energy Efficiency Program Chrg rate period 2)
$0.006 (Atty Genl consultant exp)
$0.392 (Storm recovery adjustment)
$14.228 (generation rate period 1)
$9.767 (generation rate period 2)
-$0.093 (Basic Service cost adjustment)
-$0.011 (transition charge)
-$0.2800 (revenue decoupling adjustment)
$6/month customer charge
When I add that all up, it comes to $13.441 cents per KwH in Chicopee, and (for a 600 KwH customer) $23.1902 cents per KwH in Springfield – 73% higher!
That is an astounding difference between the public municipal company and the private for-profit company – not to mention that in the 2011 ice storm (for which I am still paying a surcharge), Chicopee had its power restored very quickly, whereas Springfield took over a week in many neighborhoods. I can’t even imagine how this would pass through state regulators.