Business, Energy, Environment

Groups, customers continue opposition to Mon Power’s proposed cut to net-metering credit; PSC staff propose alternate rate

MORGANTOWN – Mon Power and Potomac Edison net metering customers generate some of their own electricity through home solar installations. The companies’ proposal to cut in half the credits net metering customers receive for their contribution to the grid continues to generate something else — opposition among consumer groups and individual consumers.

Meanwhile, state Public Service Commission staff support changing the credit, but suggest a less drastic cut.

For consumer response, the tally as of story deadline was 1,062 letters against the proposal and one for it.

By way of background, net-metering customers generate all or a portion of their own power, typically through solar, and receive credits on their bill for any power they generate in excess of what they use.

Currently, the companies provide a full 1-to-1 credit, meaning energy given to the utility is worth the same as energy bought from the utility. The current residential base rate is about 11.4 cents per kilowatt hour (kWh) and could go up to about 13 cents as the companies’ several rate cases reach their respective conclusions.

The companies propose to change that to base credits on the wholesale rate for electricity, which the filings calculate at 6.6 cents per kWh – roughly half of the 13 cents per kWh. This would take effect for new net-metering customers joining after March 27, 2024.

Net-metering customers wouldn’t lose money under this proposal, since they receive credits only for excess generation. But they would recoup their investment in solar equipment more slowly.

The companies have said the change is appropriate “so that other customers are not subsidizing net metering customers and so that net metering customers actually pay for the distribution, transmission, and capacity facilities that they use and costs that are incurred for them.”

Customer opposition

A batch of 26 form letters submitted to the PSC on Wednesday hammers on several points. One, net metering customers save money on their electric bills.

Two, net metering contributes to job creation and economic by nurturing innovation, supporting local businesses and generating blue-collar construction jobs.

Three, net metering feeds surplus power back into the grid, reduces strain on the system and enhances grid resilience. “This benefits all electricity consumers, making us less susceptible to disruptions by ensuring a diversified energy mix.”

And four, the companies’ parent, FirstEnergy, is not a West Virginia company. “We cannot allow Ohio-based FirstEnergy to pull the plug on fair market net metering for its West Virginia customers and interfere with our right to produce our own power. Such a shortsighted decision would have significant consequences, impacting every West Virginian.”

Other opposition

Dan Conant, of Shepherdstown, testified on behalf of his company, Solar Holler, which he told PSC is the state’s largest solar development, design, finance and construction firm.

Conant said that the companies’ assertions about cross-subsidization are misguided. Cross-subsidization is prohibited in state code and PSC rules to ensure that no costs related to the installation of bidirectional meters, transformers, or other utility equipment are passed on to other customers.

Solar Holler or its customers already pay for this equipment as a standard practice, including for upgrades of transformers, and for the installation of bidirectional meters, Conant said. Solar ratepayers also pay a monthly customer charge and meter fee – he same fee as any other ratepayer – regardless of whether they purchase any electricity or not.

Solar customers also pay a monthly bill for any electricity they use in excess of the electricity generated by their solar panels, he said. The companies’ proposal “does not adequately account for the value that solar customers are providing to the grid and our neighbors across West Virginia. … These benefits outweigh the costs of solar to the grid.”

Conant said that solar, at its core, is an appliance installed to reduce electricity purchases. “Customers may install a more efficient water heater, LED light bulbs, a new heat pump, or have children who grow up and move out of the house. By FirstEnergy’s logic, empty nesters should be charged more per kWh because they are ‘not paying their fair share.’”

West Virginians can’t shop for their power company, he said, and more than 80% of customers who go solar finance their systems through loans, leases, or power purchase agreements. “In order to finance projects, projects must deliver immediate monthly savings to the homeowner. In the absence of immediate monthly savings, financing will be denied. FirstEnergy’s proposal would eliminate monthly savings and prevent families from going solar.”

Currently, customers who lease their systems can reduce their monthly electricity expenditures by 1,520%. That would no longer be the case if FirstEnergy’s net metering rate reduction request is granted.

Solar Holler will take a direct hit, he said. It has 105 full time employees. In 2023, they are building more than $23 million in projects and over the next 10 years, expects to build $79 million of residential solar in FirstEnergy territory.

“Eliminating these projects would reduce West Virginian’s take home wages by $43.4 million, sales tax collections by a collective $2.5 million, income tax collections by $2.2 million, and lifetime bill savings kept in state by $132 million,” he said. “Solar Holler would see volumes decline by 80%-plus in FirstEnergy territory. We would be forced to shift our focus outside of FirstEnergy territory and likely outside of West Virginia.”

Justin R, Barnes, speaking on behalf of the coalition of West Virginia Citizen Action Group, Solar United Neighbors, and Energy Efficient West Virginia, also alleged that the companies are misrepresenting cross-subsidization law and rules to justify their proposal.

As of May 2023, the companies have 1,668 net metering customers, representing 18.2 megawatts of capacity, he said. Nearly all of the companies’ net metering customers are residential or small commercial customers.

Cross-subsidization, he said, refers specifically to the physical system upgrades necessary to allow the operation of a NEM system, and not the lost sales or cost of service under-recovery that utilities sometimes allege as a basis for cross-subsidization. “The simple fact that a net-metering customer purchases less electricity from a utility than they would otherwise is not evidence that the companies are under recovering costs from those customers.”

He recommended to the PSC that the companies conduct a cost-of-service study to get actual figures to provide evidence regarding their claim of cross-subsidization. A net-metering customer could theoretically have a negative cost of service depending on the amount and timing of their power exports to the grid.

PSC staff recommendation

Terry R. Eads, a consultant for PSC’s Utilities Division, said that the 1-to-1 credit is outdated.

“Recognizing the increased interest in and expansion of self-generation in West Virginia driven in part by increased electric utility rates, a decline in the cost of solar equipment, and tax incentives for solar installations,” he said, “staff believes the time has come to reassess the net metering compensation rate from a cost-benefit standpoint, like occurs for other approved tariff rates.”

If a net-metering customer generates more benefits than costs, he said, it has the effect of shifting cost responsibility to other customers – creating cross-subsidization, because the net-metering customer avoids responsibility to contribute to the utility costs, other than metering and billing cost. “Since the customer-generator still depends on the facilities and services of the utility, it raises subsidy concerns.”

But the companies’ proposal may go too far, and “may actually swing the pendulum from an arrangement that overcompensates the customer generator, to one that does not provide enough compensation.”

He cites some figures to explain staff’s alternate proposal.

Without the solar facility, the customer’s annual bill at present rates would be $1,452. Under the current net-metering arrangement, the customer-generator would only pay $63 per year. Under the companies’ modified arrangement (6.6 cents per Kwh) the customer-generator would pay $386 per year to the utility, or $323 more than under the current net metering rate.

Staff proposes a credit of 8.8 cents per kWh. Using that proposed credit rate, the customer-generator would see their annual payments to the utility increase from $63 to $241 per year, or $178 more than under the current net metering tariff. “In other words, the customer-generator will still achieve a reduction of $1,211 in their bill from the utility company; yet make a reasonable contribution to the fixed costs of the utility system.”