The Bulletin Board

Lawmakers reach agreement on net metering, cost shifting

By: - June 15, 2021 1:43 pm
An electricity meter on the side of a house.

The commission ruled the price was too high and would place “an enormous burden on New Hampshire ratepayers.” (Dave Cummings | New Hampshire Bulletin)

In negotiations on Tuesday, lawmakers reached agreement on two key energy policy bills – hammering out crucial details about cost shifting and net metering. Both proposals are now one step closer to becoming law and will make their way to the governor’s desk.

Language about cost shifting was the main point of contention in Senate Bill 91, a piece of omnibus legislation on renewable energy and utilities. Cost shifting is when a ratepayer pays a higher rate to subsidize a project that isn’t directly benefiting them.

Cost shifting is a common argument against net metering – when a ratepayer who installs a solar panel receives a credit for the energy they put back onto the grid with an “adder,” extra cents per kilowatt on top of the normal rate. If that leads to a higher cost for electricity, other ratepayers would pay that higher rate in their electricity bills. But the other side of that argument says that net metering can save the state money by reducing the transmission rate.

The House-amended version of the bill instructed the utilities commission to only allow for net metering projects where no cost shifting occurs. Because of the way the electric grid is set up, many experts believe that mandate would have made it impossible for the Public Utilities Commission to approve any net metering projects.

“The Senate is concerned about the new standard that the House has put into Senate Bill 91, that says ‘to ensure that except for minimal allowances.’ That’s a brand new standard for net metering,” said Sen. Jeb Bradley, a Wolfeboro Republican, during a negotiation session on Monday.

That would have also nullified House Bill 315, which was amended by the Senate to include an increased cap on net metering for municipalities. It increases the ceiling on how much energy municipalities can net meter from 1 megawatt to 5 megawatts, a proposal the Legislature has been working on for years.

Rep. Michael Vose, an Epping Republican, said the standard would only impact larger net metering projects of over 1 megawatt, since the utilities commission had already determined that no significant cost shifting occurred on smaller net metering installations up to 1 megawatt in size.

“We’re talking about going 5 megawatts here, which is a whole different ball of wax,” he said on Monday. “We have a very limited amount of information to look at because the amount of net metering is so small. It’s not an absolute statement that there is no cost shifting; they said there was nothing significant for small amounts of net metering under 1 megawatt.”

A bargaining chip

The fates of the two bills were tied in negotiations, according to Rep. Michael Harrington, a Strafford Republican, who called House Bill 315 “a bargaining chip.”

During Monday’s session, Vose said: “We know that in HB 315, the Senate wants to expand net metering to municipal groups, net metering hosts, and we’re not necessarily opposed to that provided that there are protections in place to minimize cost shifting.”

Negotiators from the House took 24 hours to consider language that members of the Senate presented to them on Monday.

On Tuesday, the negotiators reconvened and reached an agreement on what those protections would be. Instead of absolute language prohibiting cost shifting, the bill was amended to ask the utilities commission to balance “the interests of customer-generators with those of electric utility ratepayers.”

The language asks the utilities commission to maximize net benefits and minimize cost shifting.

It also creates a study commission to look at an appropriate way of accounting for the energy produced by larger, municipal generators of over 1 megawatt. It instructs the study commission to look at limited electrical energy producers and answer questions about avoided transmission cost and reduced load, or demand, on the grid.

While the House had raised concerns about the accounting of renewable energy credits, or RECs, that issue was not addressed in the bill negotiators agreed on. The concern over double dipping of credits may be taken up in the next session.

Sen. David Watters, a Dover Democrat, called it a very good compromise.

“The will was there to try to get it done on both sides,” he said. “It really came out well.”

Once lawmakers reached agreement on Senate Bill 91, House members agreed to the Senate version of House Bill 315 without requesting any additional changes.

“I’m thrilled that we’ve gotten to the point where we’ve passed a bill that will allow us to net meter between 1 and 5 megawatts,” said Rep. Kat McGhee, a Hollis Democrat who sits on the House Science, Technology, and Energy Committee.

She said they heard testimony from 70 towns that would take advantage of the increased cap.

“A lot of towns have been waiting quite a while,” she said. She called today a triumph for the committee’s work on these energy policies.

“Projects all over the state and taxpayers in towns that have already invested in solar, wind, and hydro will now be able to recover a fair value for the energy they supply to the system,” McGhee said in an email.

House Bill 315 also includes provisions for aggregating electric customers that community power advocates have been pushing for.

“The sun is going to shine in New Hampshire, and we’re going to make some money on it,” said Watters, after agreement was quickly reached in discussion of House Bill 315.

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Amanda Gokee
Amanda Gokee

Amanda Gokee reported on energy and environment for New Hampshire Bulletin. She also previously reported on these issues at VTDigger. Amanda grew up in Vermont and is a graduate of Harvard University. She received her master’s degree in liberal studies, with a concentration in creative writing, from Dartmouth College. Her work has also appeared in the LA Review of Books and the Valley News.