States Continue Debate Over Solar Net Metering

In recent years, PACE has been outspoken on the issue of net metering, the policy of compensating solar rooftop owners for their power generation. We have argued that regulators and lawmakers should take care to ensure that non-solar customers aren’t made to pay more under net metering practices.

In April, Executive Director Lance Brown discussed the complexities of net metering and its impact on consumers on America’s Web Radio. In February, we brought you a guest column from former NARUC President David Wright on the topic of net metering events in Nevada.

It is important for consumers to remain part of the net metering discussion because the debate is far from over.  In fact, according to a recent report from The Pew Charitable Trusts, regulators and legislatures in 28 states “are either scrapping net metering or considering doing so.” Pew reports that Hawaii, for example, is closing net metering to new solar customers. Nevada is phasing out net metering at retail rates for everyone, while California has decided to preserve net metering at least until the end of the decade.

According to Pew, one of the reasons for the renewed debate over net metering is due to the U.S. Congress extending a 30% tax credit for installing solar panels through 2021. Without such a lengthy extension, “a lot of steam would have been taken out of solar growth and out of the net metering argument,” said John Godfrey, a spokesman for the American Public Power Association. “But it’s been extended by five years, so you have fuel for conflict [over net metering].”

The renewal of the tax credit will invigorate net metering discussions and have real impacts on solar deployment, causing generation from solar power to increase as much as 50% over the next five years according to Greentech Media Research. Had Congress not extended the credit, “we’d be having a different discussion about net metering,” said Greentech analyst Austin Perea.

As David Wright explained in February, states like Nevada are beginning to come to terms with how to treat the value of solar generation from residential customers. In December, that state significantly reduced compensation to solar customers, prompting strong protests from the solar industry and complaints from some customer groups. According to Greenwich Media Research, solar customers in Nevada could see their power bills rise by half. In addition, now that the state’s aggressive net metering program has been pared down, solar companies are beginning to pull out of Nevada.

“That speaks to a larger theme, which is that rooftop residential solar is very much contingent on net metering design,” Perea said.

The net metering debate is certainly critical to both customers and to the viability of the solar industry. It is important for regulators and policy makers to engage in serious debate over which policies work best to protect the interests of all customers. As discussions move forward in the states, PACE will continue to remain engaged with decision makers and communicate with the public.