What the Recent FERC Ruling Means for Solar Net Metering
- Business of Solar
In a major victory for residential and community solar, the Federal Energy Regulatory Commission (FERC) dismissed a petition that would have drastically upended state net-metering laws.
The action arose from a petition filed by the New England Ratepayers Association (NERA) in April 2020. NERA contended that states did not have the authority to implement retail net-metering laws or policies for distributed-solar power, and that this jurisdiction fell under FERC’s purview. The association also requested FERC to order that the rates for such sales be priced in accordance with the Federal Power Act (FPA) or Public Utility Regulatory Act (PURPA).
Essentially, if successful, NERA’s petition would have eliminated state net-metering laws by placing all oversight authority under federal authority.
FERC released its order, ruling that the petition did not identify a specific controversy, uncertainty or harm that the commission should address in a declaratory order. The commission dismissed the petition.
While FERC’s ruling ensures consumers and communities will continue to enjoy the benefits of their state’s net-metering policies, some uncertainties remain.
FERC Commissioner Bernard McNamee noted that the order, “does not address any of the significant underlying issues...nor is it a decision on the merits of the issues contained in the petition.” This leaves some legal issues unaddressed regarding potential challenges to states’ authority over net metering.
The Petition Faced Broad Solar Industry Pushback
NERA’s petition drew widespread opposition from a large cross-section of the solar industry. More than 450 organizations, 57,000 individuals, 37 state public utility commissions and 31 state attorneys general submitted comments opposing NERA’s petition. Edison Electric Institute, a large utility trade group that has historically opposed solar net metering, declined to support NERA’s petition. The Center for Biological Diversity, filed a legal brief that urged FERC to dismiss the petition.
Two dozen Members of Congress wrote to FERC requesting the commission reject the petition. The Congress Members noted that net metering is a mechanism that reduces consumer costs and increases clean energy supplies all while creating a more resilient, responsive and effective grid.
FERC’s ruling serves as a big win for climate and communities, as states will be able to continue implementing and regulating their own net-metering laws.
How Net Metering Helps Customers and Communities
With net metering still compensating PV system owners, these policies will allow for solar power to remain a driving force for renewable energy.
Forty-one states have implemented net-metering policies to compensate rooftop- and community-solar owners if their PV systems provide more energy to the grid than they use. An additional seven states have distributed generation compensation rules, but they differ slightly from net metering. More than 2 million retail electricity customers utilize solar net metering, all of whom rely on the decades-long precedent of state energy policies.
In its petition, NERA argued that net metering regulations overcompensate distributed solar generators at the expense of all other electricity consumers.
However, multiple studies have shown that net metering provides an array of benefits for both solar and non-solar customers. The Brookings Institute surveyed a significant amount of research and studies on these policies in action. The Institute found overwhelmingly that net metering frequently benefits all ratepayers, and these benefits outweigh the costs while imposing no significant cost increase for non-solar customers.
Retail net metering has been a critical component in the clean energy transition underway across the country. As more people, businesses and communities continue to learn the benefits of solar power, net metering will remain a key policy.
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