B&M Strong, Smart Sustainable - Modernizing the Grid

New Hampshire Issues Revised Guidelines

The New Hampshire Public Utilities Commission is the latest regulatory agency to weigh in on concerns that existing net metering schedules unfairly require customers without self-generating capability to subsidize those that do self-generate. After considering two different settlement proposals addressing the situation, the commission adopted certain changes to reconcile the two drafts, thereby setting forth a series of reforms that are aimed at minimizing the impact of net metering on nonparticipating ratepayers. The commission said that the resulting "alternative net metering tariff" had been designed to mitigate potential adverse effects on those electric distribution customers who are not net-metered. It stated that the new net metering rate plan is to be put into effect by jurisdictional electric utilities and will remain in place for a period of years while further net metering data are collected and analyzed, pilot programs are implemented, and a distributed energy resource (DER) valuation study is conducted. 

The commission commented that although the two proffered settlements contained many similar elements and objectives, they diverged on certain specifics. The commission said that one settlement had been presented by a coalition of utility and consumer parties (UCC) , while the other had been filed by a coalition of distributed generation advocates and environmental organizations known as the Energy Future Coalition (EFC). 

In describing the two settlements tendered, the commission observed that the UCC proposal would change the applicable net metering methodology so that all kilowatt-hours (kWh) "imported" or consumed by a small customer-generator from the utility distribution system would be billed the full amount of all retail kWh-based charges, while all kWh "exported" by the customer-generator to the utility distribution system would be credited at the applicable export or wholesale rate, with the credits netted monthly against the charges. 

By contrast, the commission reported, the EFC plan would maintain monthly netting, but with imported kWh first netted against exported kWh and the appropriate rate then applied to the result. The commission elaborated that under the EFC proposal, instantaneous netting would be implemented only for nonbypassable charges, such as the system benefits charge, the stranded cost recovery charge, the state electricity consumption tax, storm recovery riders, or other similar surcharges. 

In squaring the two proposals, the commission deemed preferable a new protocol under which small customergenerators (those having renewable energy systems of a capacity of 100 kW or less) will net meter their distributed generation resources under a monthly netting regime. That is, the commission clarified, those customers will receive monthly excess export credits equal to 100% of standard kWh charges for energy service and transmission service but only 25% of kWh rates for distribution service. The commission ruled that net-metered customers will remain liable for all nonbypassable charges and also must pay the full amount for their electricity imports from the electric grid. 

The commission stressed that the above-listed provisions are applicable only to smaller customergenerators. It explained that larger net-metered customers, with selfgenerating capacity exceeding 100 kW, will be billed in accordance with separate provisions of the utility code. 

During the transition years of the new approach to net metering, the commission found that systems that are installed or queued during that time should have their net metering rate structure "grandfathered" until December 31, 2040. However, the commission stated, upon completion of the DER assessment study, and with the availability of additional customer load and system data, it intends to open a new proceeding to determine whether and when further changes should be made to the net metering tariff structure it was authorizing in the instant order. 

Expounding on its reasoning, the commission remarked that the UCC's recommendation for so-called "instantaneous netting" would represent a substantial change for small customer- generators, leading it to conclude that a near-term transition from monthly netting to instantaneous netting was apt to produce significant customer confusion, complicate project marketing and development, and send potentially inefficient customer price signals. Nevertheless, the commission opted to approve a transition from monthly netting to instantaneous netting for small customergenerators, as was eventually agreed to by both coalitions. 

The commission pointed out that both of the coalitions had proposed a reduction in the amount of the distribution credit for electricity exported by net-metered small customer-generators, although not by the same amount. The commission related that whereas the UCC had suggested reducing the distribution credit to zero while retaining the default energy service and transmission rate credits at 100%, the EFC had advocated for an initial decrease in the distribution credit to 75% and then ultimately to 50% during what was termed "Phase I" of the implementation. 

Examining the different terms presented, the commission stated that it appeared that while the actual net benefits of distributed generation (DG) to utility systems clearly was less than 100% of the utility distribution rate component, it just as clearly was greater than zero. The commission added it anticipates that the DER valuation study will provide more definitive information regarding the actual net costs and benefits of DG system deployment. 

However, in view of the current lack of evidentiary support for calculating the net export credit amount based on actual net benefits, the commission deemed it prudent to rely on traditional rate-making precepts, including the principle of "gradualism" and the goal of mitigating potential cost shifts in determining the applicable credit for the distribution rate component. It thus concluded that a reduction in the distribution-related credit for net-metered small customer generators from 100% to 25% was warranted as a near-term, transitional measure. 

The commission affirmed that, in the interests of simplicity and greater administrative efficiency, it was unnecessary for any other interim reductions, such as a short-term decrease from 100% to 75% or 50%, to be implemented in the new net metering tariff. Re Development of New Alternative Net Metering Tariffs, DE 16- 576, Order No. 26,029, June 23, 2017 (N.H.P.U.C.).