Mich. net-metering programs: small, growing and uncertain

Source: Jeffrey Tomich, E&E reporter • Posted: Thursday, September 15, 2016

Utility net-metering programs in Michigan surpassed 2,000 customers for the first time since the programs were created by legislation in 2008.

But the programs, among the many energy policies being debated in the Legislature, still represent just a tiny fraction of peak demand.

The findings were part of an annual report assembled by the Michigan Public Service Commission staff. It comes as the Legislature is gearing up to return to session next week, and address a pair of bills that overhaul the state’s energy policy. The legislation includes significant changes to Michigan’s net-metering law and could be voted on as soon as this month.

Net metering in Michigan was authorized in 2008, and the programs — which credit utility customers for excess generation from rooftop solar systems and other customer-owned generation — are open to customers of rate-regulated utilities, cooperatives and alternative energy suppliers.

This year’s report, summarizing 2015 data, shows participation increased to 2,155 customers from 1,840 in 2014. Total installed capacity exceeded 17,000 kilowatts, up 20 percent from the end of the previous year.

Still, net-metered generation — mostly solar energy systems — represents less than 0.02 percent of Michigan’s retail electric sales.

The state’s two largest utilities, DTE Energy Co. and Consumers Energy, host more than 80 percent of total statewide program capacity. But penetration remains significantly below the cap in the law for both smaller (less than 20 kW) and larger systems (20-150 kW) that limits participation to 0.5 and 0.25 percent of a utility’s load, respectively.

Only one Michigan utility, Upper Peninsula Power Co., met its cap for small distributed power systems. The company notified the PSC on July 22 that it was closing its net-metering program for new customers.

Like elsewhere across the Midwest and the nation, however, even utilities with relatively little solar penetration in their service areas are pressing for net-metering changes. The topic is especially ripe in Michigan as legislators continue to debate sweeping overhauls of state energy laws.

John Austerberry, a spokesman for Detroit-based DTE, said the current net-metering law creates unfair subsidies that must be paid for by customers who don’t own solar systems.

Solar customers “use the grid as much or more than other customers, and they should pay their fare share for it,” he said.

The utility supports grandfathering existing net-metering customers who have already invested in solar systems but would like to see a more equitable policy in place as costs continue to drop, technology improves and more customers seek to take advantage, Austerberry said.

The most recent version of S.B. 438, which passed the Michigan Senate Energy and Technology Committee by a 7-3 vote along party lines in May, would eliminate retail net-metering credits (EnergyWire, May 26).

Customers would instead be compensated for excess generation at wholesale prices, which don’t include transmission and distribution costs. The measure would also impose a grid usage charge. Existing net-metering customers would be grandfathered for up to 10 years.

The solar industry is pushing back against the proposed changes, saying they would hurt the economics of customer-owned generation and discourage further investment by lengthening payback periods.

Sarah Mullkoff, energy program director for the Michigan Environmental Council, said the group is asking the Legislature to allow net metering to continue as is for now given the current level of participation

Recognizing that solar costs continue falling, the group said the Legislature should have the PSC study the potential to credit future solar customers for the value of energy at the time it’s pushed onto the grid, and charging distribution costs based on the net amount of electricity they use.

For now, however, there’s no rush to change Michigan’s net-metering program.

“The current program works well,” Mullkoff said. “There’s no reason to change it.”