A growing number of states have considered reforms to their net metering practices in recent years, a period of decreasing prices for distributed energy resources, rapid changes in technology and evolution of the electricity system.
Depending on its design, a net metering program can advance specific policy goals while maintaining sound principles of rate design. Trade-offs in rate design are inevitable as regulators balance different priorities, such as rates that accurately reflect cost causation and rates that are simple for customers to understand. Reliance on long-standing rate-making principles will be key to prudent decision-making.
This paper was produced for the Wisconsin Public Service Commission as part of its review of the state’s net metering practices.
The authors examine net metering approaches in the context of general rate-making principles and policy goals. They then explore considerations associated with specific design components of net metering tariffs — including eligibility, metering, netting intervals and customer buyback credits — and the methods used to calculate fixed, energy-based and demand-based charges. The final section details recent net metering reforms in seven states: North Carolina, South Carolina, California, Arizona, Minnesota, New York and Michigan.