Solar protests erupt in FERC net metering war

Source: By Arianna Skibell, E&E News reporter • Posted: Thursday, May 28, 2020

Mike and Marie Murphy installed rooftop solar on their northern Virginia home in 2017. Now they worry that the Federal Energy Regulatory Commission could jeopardize net metering policies that credit them for feeding electricity into the distribution grid. Mike Murphy

Three years ago, Mike and Marie Murphy had saved enough money to add a solar array to the rooftop of their dream home in the woods of near Culpeper, in northern Virginia.

“We now generate 100% of our electricity through net metering,” Mike Murphy told E&E News.

Net metering is a practice that requires utilities to pay rooftop solar owners for the extra electricity they generate and send to the grid. In the Murphys’ case, they bank rather than sell the energy they don’t use and save that credit for a future offset, allowing the Murphys to cut costs while keeping track of their electricity. “I like to know how it’s measured and how it’s consumed,” Mike Murphy said.

But now Murphy is worried he will lose the right to bank his electricity if the Federal Energy Regulatory Commission approves a recent petition that’s threatening to upend net metering policies nationwide.

“I’m afraid FERC is going to come in and say what’s good for the goose is good for the gander, and we’re not going to allow net metering in Virginia,” he said. “If I were not allowed to net meter, that means I would end up paying more money for electrical power.”

Murphy is not alone in his concern. Since the Massachusetts-based nonprofit New England Ratepayers Association filed an April petition with FERC, opposition has steadily grown louder.

This week, Democratic lawmakers called on FERC to reject the petition. A May 26 letter spearheaded by Sens. Maggie Hassan of New Hampshire, Martin Heinrich of New Mexico and Sheldon Whitehouse of Rhode Island, along with 21 additional members of Congress, said the petition would overturn nearly 20 years of FERC precedent and undermine existing net metering laws in 45 states.

The petition calls on FERC to place the widespread practice under federal jurisdiction. The move away from state regulation could significantly cut the rates paid to rooftop solar owners and other on-site power generators. But the group says placing net metering under federal authority would lower electricity costs for other ratepayers (Energywire, April 20).

“NERA has consistently argued that full net metering policies are socially regressive and overcompensate distributed generators at the expense of all other electricity consumers,” NERA President Marc Brown said in a recent statement.

“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,” Brown said.

The crux of NERA’s legal argument is that net metering transactions constitute “sales for resale,” which it says should be treated as a wholesale power market transaction that falls under FERC jurisdiction.

Opponents have dismissed this idea, saying an energy transfer effectuated through a state-regulated net metering tariff is not a wholesale sale or a transaction in interstate commerce.

“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 wrote. “These decisions are best left to state regulators.”

The lawmakers also called on NERA to disclose its backers to ensure transparency into why the group was making a request for a policy change that could affect the entire country. Brown has repeatedly declined to disclose NERA’s members, including to E&E News, beyond describing them as businesses, associations and individuals in New England. As a 501(c)(4) organization, NERA is not required to disclose its donors to the IRS.

The lawmakers have been joined by many state utility regulators, state attorneys general, environmental groups and rooftop solar homeowners, among others, who have urged FERC to reject the petition.

Theresa Becenti-Aguilar, a commissioner on the New Mexico Public Regulation Commission, said that if FERC adopts the request, it would create “red tape” that makes new distributed residential and small commercial solar installations almost impossible in the Land of Enchantment.

“[It would] eliminate a large number of renewable energy jobs in New Mexico, and … severely restrict consumer choice when considering energy options,” she wrote to FERC.

Brandon Presley, president of the National Association of Regulatory Utility Commissioners and chairman of the Mississippi Public Service Commission, took to Twitter last month to also slam the group’s efforts (Energywire, April 29).

Other interveners in the petition include PJM Interconnection LLC, the National Rural Electric Cooperative Association, the American Public Power Association, the Sustainable FERC Project, the Natural Resources Defense Council, Pacific Gas and Electric Co., and Exelon Corp.

FERC has extended the deadline for comments to June 15.

Brown of NERA said the growing opposition to his group’s petition does not concern him.

“We are very confident in our legal arguments, have yet to see any cogent arguments in opposition, and have no interest in ‘rethinking’ our position,” he wrote in an email. “This is a legal argument not a popularity contest.”

He added: “We continue to receive support from businesses and individuals who oppose costly and exploitive net metering policies.”

Craig Cano, a spokesman for FERC, said once all the public comments are in on June 15, they will be reviewed by Chairman Neil Chatterjee, FERC’s three other commissioners and staff.

“The chairman and commissioners don’t signal prior to their votes,” he said.

Ben Huffman, a partner with the Sheppard Mullin law firm, said FERC’s decision could go either way.

“If you asked me six months or even a year ago what the likelihood was, I’d say pretty low,” he said. “What is the likelihood today? I would give it more credence.”

Huffman, who enumerated the potential impacts the petition could have on solar markets in a May 22 Greentech Media op-ed, said the current FERC composition has shown “a real movement toward asserting jurisdiction over items largely left to states.”

Still, he said, such a move would overturn long-standing precedent and FERC might be deterred by the extra work involved in overseeing net metering across the country. Additionally, many utilities that once opposed net metering have now incorporated it into their business models, he said.

“For utilities with heavy distributed generation penetration, this would create a fair amount of work for them and would change their economics,” he said. “At this stage, with this level of penetration and renewable portfolio standards, it’s a very different landscape than it was 10 years ago.”

Huffman also noted that states committed to rooftop solar as one prong in their efforts to fight climate change would likely find another way to incentivize distributed generation.

“It’s not to say there wouldn’t be any lasting effect,” he said. “And in the short term, definitely there would be, on the whole, a real depression in the market as people stop and figure out what they have to do. There’s a lot of pain and suffering around that.”

For Murphy of Culpeper, Va., the idea that FERC could administer net metering in a way that caters to the needs of solar rooftop owners like himself in all 50 states is “just silly,” he said.

“Virginia is best suited to make its own rules and regulations. I don’t see how this could be good for individual homeowners,” he said. “I don’t want anybody messing with my bank any more than I want anybody stopping people in other states [from selling power] back to the grid.”