Recent rule changes in Ohio would not fully reward solar energy and other renewable resources for the flexibility they bring to the market, say advocates.
On November 8, the Public Utilities Commission of Ohio released new net metering rules on how utilities compensate customers who supply their own excess generation to the grid.
Compared to rule changes adopted in 2014, the changes reduce the amount customers get, limit reimbursement to credits against future bills, and make a distinction between customers who stay with the utility and those that seek out an alternative supplier.
New net metering rules
Ohio’s new net metering rules “made some progress in a few respects, but also took Ohio backwards in several very important regards,” said Trish Demeter at the Ohio Environmental Council.
Among other things, the changes will allow a system that can produce up to 20 percent more than a customer’s electricity usage. This shift would help customers whose energy needs may change over time, Demeter said. A net metered system could also be installed on a neighboring property.
However, Demeter continued, “the new rule takes a wrong turn in how net metering customers are credited for the excess power they put onto the grid.”
Specifically, the rule would not credit customers with the “capacity” portion of their overall rate. Instead, customers would get just the energy-only portion, which comes to only about 85 percent of the bundled rate.
“This decision goes against Ohio law that expressly encourages distributed generation and explicitly states that net metering customers get treated equally to non-net metering customers in terms of rates,” Demeter said.
Scott Blake, a spokesperson for American Electric Power, says the utility is still reviewing the new rules, but said they appears to “appropriately balance” net metering credits “while also maintaining the integrity of the electric system.”
The new rules represent a shift from the PUCO’s previous position. In 2014, the PUCO moved to require utilities to compensate net metering customers for the full retail rate, including the capacity portion.
AEP appealed that decision to the Ohio Supreme Court. However, the court has held the case in abeyance pending the hearings and rulemaking process that led to this month’s new rules.
Effects on shopping customers
Parts of the new net metering rules could also discourage customers from shopping for competitive rates or switching electricity suppliers, Demeter noted. For one thing, the rules provide only for credits against future charges, rather than direct payment of amounts due. Customers may be less likely to switch suppliers or risk losing the value of those credits, she said.
The new PUCO rules also treat shopping and non-shopping customers differently. AEP had previously pushed for such treatment.
Under the new rules, customers who accept the utility’s standard service offer will be credited for the energy-only portion of their excess electricity production. But customers who choose a competitive supplier will be subject to whatever terms are in the contract for service with that provider.
If a supplier were to offer no compensation for excess generation, “then the customer-generator may shop with another [competitive] provider that will provide better compensation for excess generation or take service through its electric utility’s standard service offer,” the PUCO’s Nov. 8 order said.
What’s next?
The new rules won’t take effect for a while yet. Under the PUCO’s procedures, its order doesn’t become final until it has ruled on any matters that might be raised in requests for reconsideration.
After that, parties who disagree with parts of the final rule will have an opportunity to see review by the Ohio Supreme Court. That appeal wouldn’t automatically stop the new rules for taking effect, however.
Possible grounds for an appeal might include the capacity charge issue, which was central to the 2014 case that has been held in abeyance. Time-of-use considerations might factor into such a challenge as well, because energy-only prices for electricity are generally higher at times when solar panels produce the most excess power.
Other grounds might also include the provisions restricting compensation to credits for future service and those permitting different treatment to customers who choose a competitive supplier.
At the same time, utilities might choose to challenge parts of the rules that they had earlier disagreed with, such as the provisions.for sizing and placement of solar panels or other generation capacity.
“This decision clearly favors utilities in the short term, is unfair to current net metering customers, and puts Ohio on the wrong path in terms of being ready for [the] coming surge of customers choosing to install distributed energy resources at their home or business,” Demeter said. “Given that the PUCO took five years to finalize this rule, we could be stuck with this bad precedent for a while.”