On April 11, Massachusetts Governor Charlie Baker signed into law compromise legislation modestly raising the cap on the state’s net metering program. Net metering allows customers to generate solar power to offset electricity costs and provide surplus power to the grid.
The program was previously limited to 4 percent of peak electricity demand for private projects and 5 percent for public projects. These limits were reached in National Grid’s service territory last March, stalling solar development and prompting a flurry of legislative activity. Monday’s law is a culmination of those efforts, but because it raises the caps by only 3 percent, the legislature will likely need to revisit the issue within a year.
The new law also reduces the value of net metering credits for industrial, non-profit, community-shared, and low-income solar projects. Once the Department of Energy Resources (DOER) certifies and provides a “date of notification” that 1,600 MW of solar capacity has been installed in the state, these solar generators will receive credits for excess power that are valued at 60 percent of the retail rate of electricity. Homeowners and governmental entities will continue to be credited at the full retail rate. Projects deemed eligible for net metering prior to DOER’s 1600-MW certification will receive credits at the retail rate for 25 years.
After the 1,600-MW mark, distribution companies are permitted to seek DOER approval to include a “monthly reliability minimum contribution” on the bills of net metering customers. Notwithstanding independent studies tending to show that net metering customers actually provide a benefit to the grid, such charges would seek to ensure that “all distribution company customers contribute to the fixed costs of ensuring the reliability, proper maintenance and safety of the electric distribution system.”
Distribution companies pursuing monthly minimum charges must file their proposals in either a base distribution case or revenue-neutral rate design proceeding. DOER can approve of the charges if they equitably allocate the fixed costs of the distribution system, do not excessively burden ratepayers, do not unreasonably inhibit the development of renewable facilities, and are dedicated to offsetting reasonable and prudent costs necessary to maintain the distribution system.
Finally, the law directs DOER to develop a successor to the Solar Renewable Energy Credit (SREC) II program that “promotes the orderly transition to a stable and self-sustaining solar market at a reasonable cost to ratepayers.”
It is not clear how much time this legislation buys for the solar industry. The cap increases are sorely needed for solar developers in the short term, but without a more permanent solution, the debate will shift to Massachusetts’ omnibus energy bill and the SREC II successor.