Net Metering Subsidy

June 19, 2020

by John McClaughry

The New England Ratepayers Association has petitioned the Federal Energy Regulatory Commission to assert exclusive jurisdiction over the net metering subsidy program in Vermont and forty other states..

A supportive brief filed by the Heartland Institute explains that net metering laws require utilities to purchase excess electricity from households that have their own electricity generation source. In Vermont utilities must pay full retail price for these electricity purchases. Usually these generation sources are rooftop solar panels.

Utilities typically buy electricity wholesale or generate it on their own. As a result, the power utilities purchase from “distributed-generation” like roof-top solar panels, as opposed to centralized large power plants providing power for many customers, costs them more. Utilities then pass on these costs to other ratepayers in the form of higher prices.

In addition, managing power from rooftop solar sources and other distributed sources connected to the grid requires special equipment to regulate electricity flowing two ways. The costs of installing and maintaining this equipment under net metering laws are paid by ratepayers in general rather than the customers or companies who have installed or operate distributed generation sources. Such cost-shifting is regressive, because rooftop-solar owners have generally higher incomes than others, so lower-income ratepayers end up subsidizing higher-income customers.

The bottom line here is that the state should stop subsidizing upscale rooftop solar owners by making everybody else Py those extra costs.. I’ve been arguing for that for a long time.

— John McClaughry is vice president of the Ethan Allen Institute

{ 5 comments… read them below or add one }

Rick Cowan June 19, 2020 at 9:39 pm

Might I add a correction? I just had a roof-mounted solar system installed and GMP billed me $110 for installation of the meter and participation in the net metering program. I paid for the wiring of the socket and all the associated hardware and software.

Reply

Mike June 20, 2020 at 12:56 pm

Quite likely the roofies are not particularly as interested in the climate issue as they are far more concerned about saving money each month. If utilities must buy the excess, fine if they pays these folks the same rate that they pay from their regular sources. Forcing the utilities to reimburse top dollar on the backs of the rest of the customers is just plain WRONG!!! How these regulations are implemented without the general public’s approval is beyond me.

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Fred June 23, 2020 at 6:19 pm

Well, I am one of those low-income ratepayers who can’t afford a solar rooftop, or even my own home, and I still don’t mind paying a few pennies on my monthly bill if it supports a switch to renewable energy sources. If you want to talk about subsidies, how about THESE taxpayer subsidies which will hurt all of us, not just $ (which you seem to focus on exclusively) but health-wise and environmentally too!:

https://carbontracker.org/energy-transition-will-force-oil-gas-companies-to-close-wells-early-costing-investors-and-taxpayers-billions/

https://carbontracker.org/post-covid-economic-stimulus-risks-locking-in-future-for-costly-coal/

Reply

Justin Turco June 27, 2020 at 9:10 pm

Net metering is a rip-off for everybody who isn’t participating. The sun shines all day, you build up a credit with the flood of solar power then at night you lean on the grid and the traditional baseload (24/7) power sources to ACTUALLY power your home. Who pays for that power. Not you. You built a credit with your production that was never anything but the surplus. Wasn’t needed, didn’t get used, did no real work. Because ISO-New England kept more reserve generation on the grid than all the renewables combined. Get it? That’s a problem! Tesla batteries are fine, BIT DONT EXPECT ME TO PAY FOR IT. You want them…buy them. Then plan your consumption around the availability of the resource. That is how you lower your carbon footprint. Net metering needs to DIE! Then we’ll see who really believes in solar power.

Reply

Meredith Angwin June 28, 2020 at 11:01 pm

Excellent analysis, John.

Reply

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
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