1. In which we describe how net metering has typically worked in Maine.
Maine is about to have its annual conversation about solar policy. Last legislative session, the debate was framed by what the Public Utilities Commission might do. This time, the context is what the Commission has done: specifically the Commission’s new rules governing net metering. There’s been a lot of heat generated by this rule, including at least one legal appeal, but not much light. In order to have an informed debate about their impact, we need to understand how the previous rules, in effect through the end of this year worked. Let’s start there.
Most customers who install solar don’t plan to lose money on the deal. They make an up-front investment in solar panels with the expectation that it’ll pay off over a number of years. Some of that payoff comes through federal tax incentives, but most of it comes from the energy produced by those panels over their lifetime. Net metering is the policy that makes that payoff work in Maine.
Here in Maine, the solar debate is often framed as “how much solar gets paid,” i.e. how much per kWh, and whether those prices are above or below “market” rates. But this is a fiction. No one is really “buying” this power: for a variety of reasons, the energy produced by rooftop solar isn’t bought and sold in New England’s wholesale energy markets. And no one is getting checks written to them by their utility. Customers only get “paid” through a reduction of their utility bill.
Maine’s current net metering debate is about how much of their electricity bill customers should not pay if they’ve installed solar. Solar advocates oppose the Commission’s new rule because they believe that solar customers should pay less of their bills, and the Governor and others oppose the same rule because believe that solar customers should pay more. Because payback drives customer adoption, how much those customers (don’t) pay has implications for how quickly rooftop solar grows in Maine, and how the costs of of our solar policy are shared among all customers.
To understand how the Commission’s rule changes how much of their bill future solar customers will pay, we need to know how the existing net metering rule works.
Here is a house with solar on the roof. Under net metering, there is a single metering point between the house and the rest of the distribution grid.
At any given moment that meter is recording one of three things:
The utility dutifully records the meter reading at set intervals, and adds it all up in one bucket at the end of the month.
What’s in that bucket dictates what the customer’s electricity bill will be at the end of the month. Like the meter readings, that’s going to be one of three things:
This monthly adding up can hide that, at any given moment, the customer may have been producing, consuming or not. Under net metering, this net monthly reading dictates what a solar customer will pay on their bill.
Let’s go to the bill. A utility bill covers two separate services:
1) Supply, the cost of generating electricity, what we pay the owners of electricity generation plants for making power, and
2) Transmission and distribution, the cost of delivering it to your home, what we pay the electric utility to maintain the poles and wires and other related costs (like the billing system required to track all this).
The table below shows the current supply and transmission rates for Emera Maine and Central Maine Power customers.
For Central Maine Power customers, these costs appear on two different pages of the paper bill. Both supply and T&D are paid for based on usage, though some portion of distribution costs are recovered through a fixed monthly charge. To find out what a customer owes, the utility multiplies their meter reading times the cost. You can see this on the bill.
If in a month a customer used more than they produced, usage is a positive number. They still pay an electricity bill, but it’s lower because their self generation has reduced the overall amount of their electricity consumption.
If in a month a customer used exactly as much they produced, usage is zero. The customer only pays the fixed charge — the bill is as close to zero as it can be.
In both cases the customer’s bill has been lowered because of net metering.
But the real magic of net metering happens in those months when production exceeds consumption. In those months, the customer only pays the fixed charge, and those kilowatt hour credits are carried forward to be substracted from the customer’s usage in future months. Credits are used on a first in, first out basis and last for up to a year, at which point any unused credits expire. This allows customers to reduce their electricity bills in future months where they’re using more than they’re producing.
In the next post, we’ll talk about why the Commission and others think this is a problem to be solved.