New York IOUs told to raise net metering ceilings - PSC wants DER's value known, not capping growth

ROCKVILLE, Md. - Oct. 23, 2015 - PRLog -- The New York PSC on Oct 15 told the large utilities of the state to pick new net metering ceilings above the established 6% after Orange & Rockland (O&R) requested halting net metering when the ceiling was reached – which it warned would be soon. The utility argued cost shifting to homes without solar PV would be significant but the PSC wants the value of DER better understood before doing anything that could cap its growth.

The PSC on Dec 15 set a ceiling on the amount of net metered generation the major electric utilities had to interconnect – under its Public Service Law – at 6% of load. Orange & Rockland, in a petition July 13, said the applications it received for net metered interconnections were nearing the ceiling and proposed to stop interconnecting net metered generation when the ceiling was reached.

The petition offered alternatives to net metering for interconnecting the DG that formerly qualified for net metering, while waiting for the harmonization of net metering with the goals envisioned in the state's Reforming the Energy Vision (REV) proceeding, issued in April of 2014 and still being developed.

The utility wanted a "buy-all, sell-all" arrangement where a DG customer would sell all of its generation output at a wholesale rate to its connected utility and buy all the power it needed at the retail rate, its petition said. The utility reported that as of July 1, it had connected 2,407 net metered customers at a total capacity of 22.6 MW, which, when added to a queue of another 654 approved projects worth 79.3 MW, would add up to 101.9 MW.

The 6% ceiling equates to 62 MW, O&R said, and 27 of the applications it received were for 2 MW systems, driven largely by financial credits under the state's Transition Plan Order.

The net metering ceiling was raised from 1% to 3% in June of 2013, O&R said in its petition, and that order found that net metering could increase the complexity and cost of maintaining and managing utility grids. In raising the limit to 3%, the benefits of net metering were balanced against the costs and it was noted that any increase above the 3% level would need more analysis, it added.

When the ceiling was increased again in December, a rate impact analysis showed the public interest would not be harmed at the 6% penetration level, O&R argued. That level was seen as high enough to handle the net metered installations expected in the time before the REV process would sort out the problems and "harmonize" the rules.

But if the 6% ceiling were exceeded, O&R argued, rate shifting from net metered customers to other customers would be significant. O&R did not try to predict the date when actual interconnections would hit the ceiling, but expected it to be in the "near future," the PSC order said.

The cost shifting problem got worse under a Transition Plan Order, especially because many of the projects in its interconnection queue are premised upon the grandfathering of financial credits for DG projects, O&R said. The projects are generally interconnected at the non-demand, small commercial rate, which, as discussed in the NEM (net energy metering) Cap Order – the one that raised the ceiling – creates unexpected opportunities for uneconomic arbitrage through monetary crediting, it added.

The NEM Cap Order widened the net metering ceiling decisions to all major utilities in the state and the recent order also covered them all. They are Central Hudson Gas & Electric, Consolidated Edison, New York State Electric & Gas, Niagara Mohawk under the name National Grid, Orange & Rockland and Rochester Gas & Electric.

O&R figured non-net metered customers would pay an extra $7.3 million/year in price shifting due to net metering if the ceiling were raised to cover all the DG in its queue. Ratepayers are already surcharged about $1.3 million/year to fund existing clean energy programs including direct subsidies to net metered generation, it added.

The statute that initially set the ceiling had implicitly required the analysis of any cost shifting that would occur if the ceiling were raised, O&R said.

Solar industry disagrees

The Solar Energy Industries Assn (SEIA) asked the PSC to reject O&R's petition as moot since the commission's staff had recommended in its Ratemaking Whitepaper that net metering remain in place until DER were properly valued in the REV process. Utilities are obligated to continue accepting net metering applications even if the 6% ceiling is exceeded, SEIA added.

Solar City, a leading solar installer, asked that O&R's proposal to use buy-all, sell-all arrangements for net metering not be considered in this proceeding. Alternatives to net metering should be addressed in REV, it added.

This entire story was published in Smart Grid Today (http://www.smartgridtoday.com/public/New-York-IOUs-told-t...) on October 23, 2015 and has been slightly edited for this format. To read more articles like this one, sign up for a Free Trial to Smart Grid Today: https://www.smartgridtoday.com/public/14day-Free-Trial.cf... .

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