New England Ratepayers Association’s stance on full net metering gains support
Several national groups on June 15 filed comments in support of the New England Ratepayers Association’s (NERA) legal challenge of full net metering transactions.
NERA in April filed a petition requesting the Federal Energy Regulatory Commission (FERC) “declare that there is exclusive federal jurisdiction over wholesale energy sales from generation sources located on the customer side of the retail meter.” NERA also wants FERC to order that the rates fall under federal purview, contrary to the current standard that places these programs under state authority.
The Competitive Enterprise Institute (CEI), a public policy organization that advocates for free markets and limited government, supports NERA’s stance and specifically asked FERC to exercise its jurisdiction over wholesale electricity sales to eliminate unlawful ratepayer subsidies to distributed generation from rooftop solar units, according to its filing.
“We are particularly concerned about government interventions in the marketplace that may potentially result in serious harm to consumers, are fundamentally unfair, or exceed the legal authority of federal or state agencies,” wrote CEI Senior Fellows Marlo Lewis and Ben Lieberman.
Retail net metering also is unlawful under the Federal Power Act and the Public Utility Regulatory Policies Act (PURPA), according to CEI.
“FERC has jurisdiction over electric transmission and wholesale power sales in interstate commerce, not retail sales within state boundaries,” according to CEI’s filing. “Because utilities compensate NEM [net energy metering] participants at retail prices, the transactions appear to fall within the jurisdiction of state legislatures and public utility commissions.”
But, CEI added that compensating wholesale sales at retail prices does not change the nature of the transaction. “NERA correctly argues that the sale of electricity from a homeowner to a utility, which in turn resells the electricity to other customers, is, by definition, a wholesale sale,” according to its filing. “Thus, such sales are within FERC’s regulatory jurisdiction.”
Similar support came from Tim Andrews, executive director of the Taxpayers Protection Alliance (TPA), a nonpartisan, non-profit taxpayer and consumer advocacy organization.
“Despite TPA’s strong support of the fundamental principles of federalism and devolution to the states, such a decision would nevertheless be in line with a correct application of federal law, which designates wholesale energy sales as under the purview of FERC,” according to TPA’s filing.
Approval of NERA’s petition by FERC also would be in the public interest because it would provide certainty to utility providers, ensure a level playing-field with resulting benefits in capital allocation and environmental investments, and bring immediate relief to consumers, ratepayers and taxpayers around the country, TPA argued.
“Furthermore, states would still have control over many aspects of their net-metering programs — namely eligible technology, system size caps, program caps, and customer types, just to name a few,” wrote TPA’s Andrews.
In fact, Andrews wrote that net-metering set at a state-imposed retail rate forces utilities to pay more for rooftop solar energy (the “retail” rate of electricity) versus the typical wholesale price they pay for all other electricity.
“In no uncertain terms, rooftop solar owners get an unfair offer not extended to any other electricity provider,” he pointed out. “And because of this mandate, utilities need to recoup costs elsewhere, and typically respond by increasing the power bills on poorer households.”
In contrast, the NERA petition seeks to implement a system in line with current statutory mandates, but one that would help poorer households and create a more equitable regulatory framework with the long-term effect of increasing renewable energy output, according to the TPA filing.
“Unfortunately, regressive state government net metering policies across the country hurt ratepayers, lower-income renters, and non-solar customers, who foot the bill to the benefit of wealthy solar customers and investors,” agreed Thomas Schatz, president of Citizens Against Government Waste (CAGW), a private, nonpartisan, nonprofit organization representing more than one million members and supporters nationwide that also supports the NERA petition.
“By making wholesale rates the federal standard, this petition would end regressive full net metering (FNM) policies, saving ratepayers billions of dollars,” wrote CAGW’s Schatz.
Specifically, the CAGW agreed with NERA’s argument that the inequities and inefficiencies of existing nationwide FNM rates are increasingly recognized as both unjustifiable and unsustainable in a world where rooftop solar power is no longer an infant industry, but a growing part of the energy sector that must become truly cost competitive with other resources via rate reforms that more realistically compensate distributed solar.
“The future of solar energy demands practical and fiscally responsible policy. CAGW supports NERA’s petition to FERC to foster fair competition in the energy sector by instituting more energy-efficient practices and saving ratepayers billions of dollars,” Schatz wrote. “I urge you to approve the petition and adopt the declaratory order.”
Kenneth Stein, policy director at the Institute for Energy Research (IER), also supported NERA’s petition, saying that incentivization of rooftop solar through net metering policies is harmful for three reasons, according to the IER filing.
First, for all major full-time-capable generation resources (coal, combined-cycle gas and nuclear), the levelized cost of electricity from new plants would be higher, on average, than the levelized cost of electricity from existing resources.
Second, “policymakers should be wary of throwing good money after bad — of subsidizing a resource whose value is diminishing as additional capacity is added unless storage or some other advanced technology becomes economical,” Stein wrote.
And thirdly, rooftop solar places expensive burdens on non-rooftop solar grid participants. “This cost shifting tends to favor high-income households, which can afford rooftop panels, at the expense of low-income households, which must bear the grid maintenance costs no longer covered by rooftop solar households,” according to IER’s filing.
Grover Norquist, president of Americans for Tax Reform, a nonprofit taxpayer advocacy organization that works to protect taxpayers against tax increases, echoed that sentiment in the group’s filing.
In fact, such shifted costs range between $45 and $70 per month per rooftop solar household, according to Norquist, who wrote that forcing non-solar consumers to pay for overpriced rooftop solar power generation means states are imposing higher costs on those who can least afford it.
“Ending the practice of uncompetitive retail rate net metering mandates across the country will save American taxpayers billions of dollars,” wrote Norquist. “The inefficient rooftop solar scheme is a system of crony capitalism very likely at conflict with federal utility market laws.”
“FERC has an important role to play here by reining state solar subsidies by restoring competitive market order to the utility marketplace,” he wrote.
CEI also cited PURPA in saying that FERC has jurisdiction for an even more fundamental reason: the inherently interstate nature of any electric energy “delivered to a utility that merges and comingles the energy with other energy sources on the interstate electric grid.”
“To be clear, neither NERA nor CEI contends that net metering per se is unlawful, only that “full” net metering — the compensation of residential generation at retail prices — is unlawful,” according to the CEI comments.
