This past Friday, the New Hampshire Public Utilities Commission (PUC) lifted the so-called cap on net metering. I explained net metering, and the “cap'” in a prior post, which I partially reproduce below. In a nutshell, net metering forces electricity consumers who do not use solar to subsidize electricity consumers who use solar:
Because solar power is intermittent, solar-owners do not go “off the grid.” They need a back-up energy source. Net metering is a euphemism for State government requiring utilities to purchase energy generated by solar installs that exceeds the energy the solar-owner receives from the grid.
That is, the price the utility must pay for the excess electricity is not what it would cost the utility to generate the power itself (the wholesale cost), but the cost of generation plus all the other costs (transmission, delivery and grid maintenance costs) required to deliver the electricity to the consumer (the retail cost).
Think of it this way. Imagine a car dealership. It buys cars from the manufacturers at the wholesale rate, and then sells them at the retail rate. Of course, the retail rate is higher because it reflects all the additional costs that the dealer incurs to sell the car.
Now imagine State government tells the dealer that it must buy a certain amount of cars from a certain manufacturer at the dealer’s retail price. The result of this governmental actions is that the dealer’s cost of business has now gone up. In order for the dealer to break even, the dealer must raise prices on the other cars it sells.
Another way of looking at it is that if the utility bought the excess solar power at the wholesale rate, the credit to the solar-owner would be much lower. The solar-owner would be paying for the costs of transmission, delivery and grid maintenance just like the other customers. Instead, under net metering the non-solar customers have to pay more so that the solar-owners can pay nothing for these costs.
In sum, net metering forces consumers who do not have solar to pay more for electricity in order to reduce the cost of operating residential solar. To make matters worse, the wealth transfer is from low and middle income households to higher income households.
While the PUC modified the rate the utility must pay for so-called “excess” solar power to allow only 25 percent of distribution charges, that is still much higher than the true wholesale rate. In other words, the PUC slightly decreased the subsidy that non-solar consumers must pay to subsidize solar, but removed the limit on how much of this “green pork” consumers must pay in total.
The PUC apparently determined that forcing non-solar consumers to subsidize solar does not increase the cost of electricity for non-solar consumers … which as I explained in the prior post is nonsensical.
The question now is whether the GOP legislature and GOP governor will let this stand.