Fight for states' rights on net metering continues after petition's dismissal: panelists

Washington — The Federal Energy Regulatory Commission this summer tossed a controversial petition that threatened net metering programs across the country. Opponents of the petition, however, remain vigilant as the agency left the door open to address in future proceedings a jurisdictional spat that they believe infringes on states' rights and energy federalism, panelists said at a Sept. 21 clean energy forum.

Net metering programs allow customers' retail electricity bills to be credited for generation from rooftop solar or other behind-the-meter resources that exceeds their on-site needs. FERC determined in 2001 and reaffirmed in 2009 that as long as a customer's load during the retail billing period was more than the credited excess generation, there was no FERC-jurisdictional sale.

The commission in a July 16 order dismissed a petition for a declaratory order (EL20-42) filed by the anonymously funded nonprofit New England Ratepayers Association that asked the agency to revisit and reject that precedent. But concurring statements attached to the order from two commissioners seemingly attempt "to shine a light on a roadmap to have the policy changed," Arkansas Public Service Commission Chairman Ted Thomas said Sept. 21 at National Clean Energy Week's Policy Makers Symposium.

Thomas, who led the National Association of Regulatory Utility Commissioners' working group opposing the NERA petition, noted that FERC punted on making a policy decision with regard to the petition, and instead denied it on procedure for failing to identify a specific harm or controversy in a tariff.

Different vehicle

While rehearing of the order dismissing the petition is "almost certainly going to be denied" and a court appeal by NERA is unlikely to get anywhere, Thomas pointed to other avenues for keeping the matter alive, including those referenced in Commissioner James Danly's and now former Commissioner Bernard McNamee's own statements.

Danly said the issues raised in the petition could end up before federal district courts as preemption cases asserting that a state law is improperly conflicting with federal law. McNamee suggested a Federal Power Act Section 206 complaint alleging unjust and unreasonable rates tied to a specific state program and specific set of facts could be the vehicle that puts the matter before the commission again.

Thomas said he was "less worried about the preemption argument" because FERC's existing policy disclaims jurisdiction over net metering, and "NERA's strategy ... to get that policy knocked out to enable preemption suits to be filed in the states" failed.

As for attacks on a specific state policy, Thomas said the cost shift in many states is too negligible to make a case for unjust rates. Where there is greater rooftop solar deployment, "the states are addressing in their own ways these cost shift arguments," and any complaint would have to challenge the state's decisionmaking and thoughts on environmental policy, Thomas said.

"Does FERC really want to be in the business of questioning each individual state's environmental policy? Probably not," he said.

Thomas added that "the political reality is that if FERC opens the door to this and doesn't immediately grandfather people, members of Congress are going to hear from those 2 million net metering customers, and FERC's going to get what it doesn't want — Congress over there in FERC's business."

Disclaiming jurisdiction

A bigger concern, Thomas said, is if states seek out declaratory orders from FERC disclaiming jurisdiction over their programs, particularly if those programs attempt to integrate storage resources into the net metering programs. This is likely to happen in states that are part of regional transmission organizations, as storage participation in the RTO markets would maximize those resources' value.

That scenario, Thomas said, stretches thin the argument that there is no sale for resale, keeping FERC out of the equation. "But if you have a broad policy that's well thought out, a state could file with FERC basically asking them to disclaim jurisdiction," he said. "Of course, all of this depends on one's perception of the personalities on the FERC."

NERA asserted in the petition that full net metering was simply bad policy, fostering inequitable cost shifts among customers, distorting wholesale power markets and disadvantaging "firm resources" needed to maintain reliability. The group, which says it advocates for ratepayers in the region but has drawn criticism for not disclosing its donors, had urged FERC to declare that all excess generation from a utility customer's distributed energy resources located behind the meter was a wholesale sale subject to FERC's jurisdiction.

According to analysis by the think tank R Street Institute, the petition drew more than 49,360 comments in opposition, compared with just 21 filings of support.

Opponents of the petition argued that a policy shift as envisioned by NERA would have stripped states of their authority over rates paid for energy sold back to the host utility by net metering customers. Such a move would have turned on its head the economics that supported existing installations of residential and commercial rooftop solar systems and likely slowed the growth of new behind-the-meter solar systems.