PROVIDENCE – A nuanced deliberation between Rhode Island Energy and the R.I. Public Utilities Commission could have implications for owners of residential and commercial solar panels.
A proposal amending the company’s net-metering provision, which credits solar owners for a portion of excess energy generated, could be approved at the public hearing set for Oct. 4.
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Learn MoreAt the request of R.I. Public Utilities Commission, who in December 2022 formally asked Rhode Island Energy to implement a net-metering “tariff” to bring them in compliance with state regulations, the state’s chief utility has proposed an overhaul of the way it previously determined excess credits for energy generated by net-metering customers, solidifying the credit rate and beginning an annual reconciliation that would claw back any previously awarded credits from 2022.
According to Rhode Island Energy public filings, this new annual reconciliation would allow “more precise calculations and administration of renewable net metering credits.”
Since its implementation, net-metering customers have received credits at the retail rate for excess generation produced by their system between 100% up to 125%.
If the change is approved, these customers would instead be credited at the lower “Last Resort Service” rate, for excess production up to 125%, and nothing for energy beyond that threshold. Customers with current overages will either be cashed out from credits on their accounts or could be assessed a reconciliation charge for credits they’ve already received that shouldn’t have been allocated.
Part of the issue, according to Rhode Island Energy, is most residential systems rely on a single meter, limited to gauging the percentage difference between what is generated and what is consumed. As a result, the company argues it is impossible to precisely determine the difference.
And with the increase in residential solar energy systems, the amount of credits has grown in kind, creating an unsustainable model and an administrative debacle.
There are currently 10,178 net-metered accounts. According to its 2023 annual Retail Rate Filing, Rhode Island Energy issued $74.3 million in net metering credits in fiscal 2022 and received $27.8 million of revenue for the sale of that energy to ISO New England Inc., resulting in a net $43 million loss.
However, Seth Handy, attorney for Mass American Energy LLC, who represents one of the two solar companies that have intervened in the commission docket, said that because electric prices remain closely correlated to natural gas prices, the system continues a “perverse dynamic.”
Solar panels drive down grid-wide peaks and allow savings for all electricity customers while supporting the state’s renewable energy goals.
Handy said the new proposal does nothing to address this problem.
“[This] effectively penalizes net metering customers for a market they cannot control,” he said. “This results in a situation where net metering customers can overproduce their consumption and still end up with large annual charges.”
Handy argued in public filings the current structure creates a “capital bias” and incentivizes Rhode Island Energy to prioritize new infrastructure, rather than investing in renewable projects.
“The energy plan in Rhode Island is to get off of natural gas,” he said. “If we want to transition, then we have to compensate [net-meter customers] properly.”
In its filings, the R.I. Division of Public Utilities and Carriers said it supports the proposal, arguing it will “encourage appropriately sized systems, while reinforcing the consequences of actual generation exceeding consumption.”
Rhode Island Energy says it is now working on a communication plan to explain the proposed changes to net-metering customers.
R.I. Division of Public Utilities and Carriers Chief Accountant John Bell said that while net-meter customers may be surprised by the changes, which could lessen the credit compensation they have become accustomed to, it is needed to bring Rhode Island Energy in compliance with the language of the original net-metering legislation passed in 2011.
“Many residencies have been making more than they’ve been using,” he said. “And [RIE] didn’t really know what to do with [the credits].”
Unlike larger virtual systems like commercial solar arrays, residential customers are not able to transfer credits to other residential accounts. Any excess energy above the 125% threshold is simply reabsorbed by the grid.
To deal with the years-long “structural overage,” Rhode Island Energy is asking to wipe away these these excess credits on the books and true-up accounts on an annual basissaid Bell.
Offering a hypothetical scenario using a $0.22 retail rate and a $0.12 Last Resort Service rate, Bell said if the new provision were to be enacted, a residential customer who generates 7,000 kilowatt hours annually but only consumes 6,000, would be compensated $100 less after reconciliation than under the current system; a customer who generates 2,000 kilowatt hours in excess energy per year would see their monthly credit drop from $440 to $180.
The utility says it has not crunched the numbers on how many accounts could be affected and what the potential claw back charges could be.
The utility says it has not crunched the numbers on how many accounts could be effected and what the potential claw back charges could be.
Either way, Handy argues this is a fundamentally inequitable system.
“They are basically being charged for overproduction,” he said. “We spend a ton of money on infrastructure. And the only way to reduce those costs is have a more locally distributed energy economy.”
R.I. Division of Public Utilities and Carriers associate administrator Thomas Kogut said it’s important to remember the statute allows Rhode Island Energy to recoup the costs of the net-metering program.
“The General Assembly could always amend the law,” he said.
(Update: removes avoided cost rate in 5th paragraph, 20th and 21st paragraph clarified.)
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com