Nonprofit seeks FERC order reversing long-standing net metering policy

Source: By Zack Hale, S&P Global • Posted: Monday, April 20, 2020

A New England-based group represented by utility-aligned attorneys has asked the Federal Energy Regulatory Commission to declare it has jurisdiction over all sales of electricity generated by rooftop solar facilities covered by net metering programs.

The group’s April 14 petition for a declaratory order from FERC would effectively “end net metering as we know it,” Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative, wrote on Twitter.

Net metering compensates customers who send excess generation back to the grid at the full retail rate of electricity. Many utilities have argued doing so overcompensates customer-sited generation and unfairly shifts grid costs to customers who don’t have rooftop solar. But trade groups like the Solar Energy Industry Association insist that net metering benefits all customers by encouraging clean energy generation, creating jobs and increasing grid stability.

The April 14 petition was filed by the New England Ratepayers Association, or NERA, a Concord, N.H.-based tax-exempt 501(c)(4) organization that is not required to disclose its donors.

The group has already prevailed in a separate proceeding dealing with New Hampshire biomass subsidies in which the consumer watchdog group Public Citizen asserted that NERA is actually structured as a corporate trade association representing the financial interests of 12 member companies instead of a conventional household ratepayer-rights group.

NERA’s April 14 petition for a declaratory order did not include a description of the group’s background or membership.

‘In the middle of a pandemic’

The petition asked FERC to declare that it has jurisdiction over energy sales from rooftop solar facilities and other distributed generation located on the customer side of the retail meter whenever the output of those facilities exceeds the customer’s demand. It also asked FERC to declare it has jurisdiction when the energy from such generators is designed to bypass the customer’s load and therefore is not used to serve demand behind the customer’s meter.

Because most rooftop solar installations are considered qualifying facilities, or QFs, under the Public Utility Regulatory Policies Act, or PURPA, the petition also asked FERC to declare that sales from net-metered generation must not exceed a utilities’ avoided cost rate.

Under FERC’s implementing regulations for PURPA, utilities are required to buy power from QFs in their service territories at rates reflecting what they would have to pay to buy that same power from other generators or produce it themselves, referred to as avoided-cost rates. However, FERC in September 2019 proposed revisions to its implementing regulations that would give states more leeway in setting avoided-cost rates.

If FERC were to grant the petition, doing so would reverse the commission’s long-standing policy of leaving net metering to the states by finding that energy transfers covered by net metering programs are actually wholesale sales of electricity in interstate commerce and therefore FERC-jurisdictional, Peskoe maintained in an April 17 email. Since most net-metered programs apply to rooftop solar installations that qualify as QFs, he said the practical result would be that the energy would be priced pursuant to PURPA.

“That said, if FERC grants the petition, it would not have the legal effect of invalidating state net metering rules. Only a federal court can do that,” Peskoe added. “As a practical matter, I suspect that utilities will run to their regulators and legislatures and seek changes to [net metering programs]. Perhaps some parties would also file litigation in federal court.”

Public Citizen has already intervened in the proceeding and will be asking FERC to require more disclosure from NERA, said Tyson Slocum, director of the group’s energy program. He also questioned the timing and nature of the filing, which cost $30,000 to file with FERC and has triggered an expedited review process during the coronavirus public health crisis.

“I think it’s intentional,” Slocum said in an April 17 interview. “They did this filing in the middle of a pandemic knowing a lot of folks are short-staffed and distracted.”

NERA President Marc Brown did not respond to a request for comment on why the group chose to seek a declaratory order from FERC at this time.

“NERA has consistently argued that full net metering policies are socially regressive and overcompensate distributed generators at the expense of all other electricity consumers,” Brown said in an April 14 press release. “Owners of rooftop solar panels have incomes 150% higher than average, leading to a ‘Reverse Robin Hood’ effect which has a disproportionately deleterious impact on the low-income and elderly communities and other citizens on fixed incomes.”

NERA’s April 14 petition was filed by David Raskin and Richard Roberts, attorneys with Steptoe & Johnson LLP. Raskin previously represented the Edison Electric Institute on briefs submitted in the U.S. Supreme Court’s decision upholding FERC’s demand response rule and has also appeared in the U.S. Court of Appeals for the District of Columbia Circuit on behalf of Emera Maine. Roberts has appeared extensively on behalf of Southern California Edison Co.

In the third quarter of 2019, the U.S. residential solar market reached a record high with 712 MWs of solar installed, according to Wood Mackenzie.

Comments in the proceeding are due May 14. (FERC docket EL20-42)