Key Findings from “Reforming Net Metering: Providing a Bright and Equitable Future”

The issue of net metering and the role that small scale, on-site distributed generation (DG) technologies will play in the future is discussed extensively in a report titled Reforming Net Metering: Providing a Bright and Equitable Future released in spring 2014 by the American Legislative Exchange Council. Key findings of the report include:  In many states where a utility is statutorily required by law to reimburse DG customers at the retail rate for their surplus electricity generated, DG customers are able to avoid paying for much of the electric grid infrastructure they use and other services provided by a utility. New DG technologies rely extensively on the grid to operate efficiently. They need the distribution grid to be changed from a one-way delivery system to a complicated two-way network, a process that demands extensive investment in new technologies. Paradoxically, new technologies that benefit DG customers are being financed in large part by non-DG customers. This state-imposed subsidy amounts to a cost-shift from those who can afford and value DG technologies to those who do not. Data reveals that those who install DG technologies on or near their homes typically have significantly higher incomes than the median household income. This income disparity suggests existing net metering policies are doubly regressive. DG technology is generally used by people with disposable income while existing policies place additional cost burdens on people who cannot afford to subsidize the system. In January 2014, ALEC adopted the Updating Net Metering Policies Resolution , which encourages state policymakers to (1) update existing net metering policies to require that everyone who uses the grid helps pay to maintain it, (2) create a fixed grid charge or other rate mechanism that recover grid costs from DG systems to ensure that costs are transparent to the customer, and (3) ensure that electric rates are fair and affordable for all customers and that all customers have safe and reliable electricity.

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For more information, contact John Eick, Director of the ALEC Energy, Environment, and Agriculture Task Force at jeick@alec.org.

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