My Turn: Too much net metering not a good thing

For the Monitor
Published: 6/22/2020 6:20:15 AM

Over the last decade, New Englanders benefited from a steady decline in wholesale electricity prices. In 2019, the annual hourly average price for electricity was about 3 cents while year-to-date in 2020 the price is hovering at 2 cents for a kilowatt-hour.

These low prices clearly demonstrate the value of free markets. Yet, despite these low prices, New Englanders suffer the highest retail electricity rates in the continental U.S. New Hampshire ranks fourth for the highest rates behind Massachusetts, Connecticut, and Rhode Island. Every time concerns are raised about our high prices, Concord points a collective finger at power plant owners and the grid operator, but the fact is that New Hampshire’s Legislature has repeatedly passed bills that increase our prices outside of the competitive energy market.

The latest attempt at raising prices took the form of House Bill 1218, which proposes to dramatically expand New Hampshire’s net-metering program.

Net metering is a policy that incentivizes consumers to supply some of their electricity needs from small renewable systems built at their homes or workplaces. Net-metered customers benefit from the program in two ways. First, they lower their monthly electric bill by purchasing less energy from their utility. Second, any energy that’s produced beyond what the home or business can use is sold back to the utility at the standard offer rate of at least 8 cents per kilowatt-hour.

Generally, installers size such “behind-the-meter” generation to match the energy needs of the customer so the energy sold back is not excessive. This is the case in New Hampshire, where over 4,500 small solar systems have been recognized as behind-the-meter renewable resources with an average size less than 14 kilowatts each.

Under New Hampshire law, the largest system eligible for net-metering is 1,000 kilowatts or 1 megawatt. A 1,000-kilowatt solar system is capable of supporting over 1,600 homes and requires roughly 4 acres of land.

HB 1218 seeks to increase this cap to a whopping 5,000 kilowatts. Such large systems would produce generation well in excess of what any residential customer and most, if not all, New Hampshire businesses could possibly consume. The bulk of this generation would be sold back to the utility at the standard offer rate of 8 cents per kilowatt-hour when its wholesale value is just 3 cents. The difference represents an over-market cost for raw electricity of 5 cents.

That over-market price can add up quickly. Should New Hampshire developers build just 650 megawatts (MW) of new behind-the-meter solar generation – a reasonable estimate given Maine’s recent experience with raising its net-metering limit – the over-market costs could balloon to $42 million per year. Add to that the costs for some already existing hydropower that will be eligible for net metering under the bill and the cost becomes $50 million per year.

Where does that money come from? From a utility’s shareholders? No, that would violate the constitution’s Takings Clause. From taxpayers? No, the law does not provide for any tax money.

There can be only one other source: you and me, the ratepayers of the electric utilities. That explains why costs do indeed get shifted from net metering ratepayers to the rest of us. The money has to come from somewhere.

As Richard Labrecque, manager of Distributed Energy Resource Planning at Eversource who appeared by invitation before the House Science, Technology, and Energy committee on Feb. 10 testified, “There is no way to bury or hide a subsidy. No matter how we treat or account for net metered surplus kilowatt hours, the fact that we must pay retail prices for a wholesale product can simply not be dismissed.”

Assuming a 20-year life for these facilities, the cost approaches $1 billion. That’s the reason Gov. Sununu rightly vetoed several net-metering bills over the past three years.

The governor also argued that raising the cap unfairly benefits large developers, which it does. In Maine, large 5,000 kilowatt solar systems now “hog” all the capacity on circuits and substations making it much more difficult for small, residential-sited projects to move forward.

HB 1218 is nothing more than a backdoor way to further subsidize large, corporate renewable energy developers in the state under the false pretext of helping New Hampshire homeowners and businesses assume control of their energy needs.

(Michael Vose of Epping serves on the House Science, Technology, and Energy Committee.)


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