Assessing the rate impact of net metering
Some utilities are making untrue claims about the costs and benefits of net metering. Let's look at the facts.
Some utilities are looking to slow the growth of rooftop solar by claiming that net metering shifts big costs onto non-solar ratepayers. In a recent one-sided article in Bloomberg, for example, the three big California utilities alleged net metering is costing non-solar ratepayers $1.3 billion, but gave no details on how they arrived at that staggeringly high number.
The fact is, the utilities’ net metering math doesn’t add up. The calculations inflate the cost side of the equation, while leaving a rather important piece out of the cost-benefit analysis: the benefits. By using fuzzy math to put net metering on trial in the press, these utilities hope to convince policymakers to put a halt to common-sense solar policies.
What’s needed is a rational dialogue among the stakeholders, and an accurate and comprehensive look at the economic impacts of net metering, considering all the costs and benefits. While the results of each cost-benefit analysis will vary by utility, but here are a few reasons we feel pretty confident that the benefits of net metering will outwiegh the costs of offering the bill credit arragement:
- Solar provides valuable electricity when and where it's needed most. In fact, net-metered power usually replaces the most expensive peak energy.
- Most customer-generated solar electricity never reaches the grid. On average, 60-80% of solar energy system output is used to meet on-site power needs. Just like with energy efficiency measures, net metered customers reduce the total amount of electricity that the utility must generate and deliver to meet the customer's power needs.
- The small amount (20-40%) of exported solar power flows directly the nearest point of unmet electricity demand. Private investment in net metered local energy systems means that utilities save on things like line losses, transmission and distribution infrastructure updgrades, otherwise needed to deliver power to the neighbor.
A closer look at net metering ratepayer impacts in California
A recent analysis of the three CA IOU territories finds that net metering does not impose costs on non-net metered customers.
The net financial benefits to ratepayers in SCE, PG&E, and SDG&E territories will total $92.2 million every year by the time the state’s net metering program is fully subscribed at 5%.
Download the full January 2013 Crossborder Energy report assessing the net ratepayer impacts of net metering in California.
More resources for assessing the ratepayer impacts of net metering
- Download a powerpoint presentation by the the Interstate Renewable Energy Council and Crossborder Energy on how to assess the rate impacts of net metering.
- Download the Solar ABC's report: "A Generalized Approach to Assessing the Rate Impact of Net Metering" here
According to the CPUC’s own independent analysis, “the benefit of NEM is the sum of the costs that the utility avoids as a result of customer generation exported to the grid…[including]: energy purchases; generation capacity or resource adequacy; line losses; transmission and distribution capacity; air pollution permits and offsets including CO2; ancillary services; and renewable energy purchases.” E3, Net Energy Metering (NEM) Cost‐Effectiveness Evaluation, January 2010.