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Solar industry sees a threat to one of its top selling points

Question at heart of petition over net metering is whether sales from rooftop solar should be deemed retail or wholesale

Workers install solar panels on the roofs of homes under construction south of Corona, California, on May 3, 2018.
Workers install solar panels on the roofs of homes under construction south of Corona, California, on May 3, 2018. (Will Lester/Inland Valley Daily Bulletin via Getty Images file photo)

The solar industry, struggling amid the coronavirus pandemic, faces another threat at the Federal Energy Regulatory Commission: a petition that would effectively end a key incentive for installing rooftop solar called net metering.

The New England Ratepayers Association on April 14 asked FERC to declare that the agency has jurisdiction over net metering, which requires utilities to buy excess power from customers who generate electricity with their own energy resources, such as rooftop solar panels.

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Such customers in some markets receive a credit on their electric bills for the returned electricity, usually based on the rate the utility charges.

Forty-five states allow net metering, which has helped drive homeowners to install solar panels on their roofs. There is about 15,800 megawatts of rooftop solar capacity nationwide, up from about 3,490 MW five years ago, according to the Solar Energy Industries Association.

Annual residential solar investments jumped to $8.1 billion last year from $4.6 billion in 2014, SEIA said. The fastest-growing states for solar installations are California, Florida, Illinois, Texas and Pennsylvania, according to the trade group.

Retail or wholesale?

The question at the heart of NERA’s petition is whether sales from rooftop solar should be deemed retail sales, which are regulated by states, or wholesale sales, which fall under FERC’s jurisdiction.

In decisions issued in 2001 and 2009, FERC has said that net metered electricity sales fall under state authority. NERA, however, contends FERC’s analysis is flawed.

If FERC asserts authority over net metered sales, the practice would be effectively killed, according to Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School.

The solar industry finds NERA’s petition alarming.

“The notion that FERC would take control over states’ retail billing practices is deeply troubling,” said Katherine Gensler, SEIA’s vice president of regulatory affairs. “We strongly urge FERC to put a quick stop to this attempt to give the federal government power over policies that unquestionably belong in the hands of state policymakers.”

Lawmaker support

Democratic Sens. Chris Van Hollen of Maryland, Maggie Hassan of New Hampshire, Martin Heinrich of New Mexico and Sheldon Whitehouse of Rhode Island, plus 16 other senators and four House members in May urged FERC to reject the petition.

The Public Utility Regulatory Policies Act is clear that Congress intended net metering programs to fall under state jurisdiction, not FERC’s, the lawmakers said in a letter to FERC Chairman Neil Chatterjee.

“If FERC granted NERA’s petition, it would overturn long-held precedent and give the federal government decision-making power that has long belonged to the states, including the authority to set rates, terms, and conditions for programs,” the lawmakers said.

State utility regulators are also focused on NERA’s petition, saying it threatens their authority over a key state policy.    Brandon Presley, National Association of Regulatory Utility Commissioners president and chairman of the Mississippi Public Service Commission, said states would fight the petition.

The petition “is a direct assault on state regulators’ ability to do their job and protect the public interest,” Presley said on Twitter.

“I will oppose this attempt to steal power away from states. State regulators won’t roll over and just go along.”

Comment period extended

NARUC asked FERC to extend the comment period on the petition by 90 days because states are focused on dealing with COVID-19, but the commission only added an extra 30 days for the comment period, which ends Friday.

Harvard Law School’s Peskoe contends that NERA’s petition is based on flawed legal analysis. Also, unlike typical petitions at FERC, NERA failed to say how the group is harmed by net metering or describe exactly what the group is. FERC could dismiss the petition on those grounds alone, Peskoe said.

NERA, based in Concord, New Hampshire, doesn’t disclose its membership. The group’s executive director, Marc Brown, is also director of government affairs at Advantage Government Affairs LLC, a lobbying firm. NERA didn’t respond to requests for comment.

NERA appears to be a trade group, not a typical ratepayer organization, according to Tyson Slocum, energy program director for Public Citizen, a consumer watchdog group. Slocum said he plans to ask FERC to require NERA to disclose its members.

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