NetMetering

THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTSPO Box 98129 | Atlanta, Georgia 30359

ph: 404/633-1866 | fx: 404/633-4896 | www.slcatlanta.orgSERVING THE SOUTH

Southern LegiSLative ConferenCe

of

the CounCiL of State

governmentS

© Copyright December 2014

Energy policies in Southern Legislative Conference (SLC) member states are undergoing substantial changes as installations of distributed generation* systems, such as rooftop solar panels and oth-

er small-scale renewable energy technologies, continue to expand. This expansion has been encouraged by state and federal tax credits, which have made renewable energy tech-nology, especially solar energy technology, increasingly affordable. Further encouraging the installation of distribut-ed generation technologies is the availability of net metering programs, whereby customers who generate some of their own electricity are able to offset their electricity bills by selling their excess power back to a utility provider. Net me-tering allows customers an opportunity to recoup the high initial cost of installing distributed generation systems, and may provide a positive return on investment. As a result of these incentives, in the United States, someone is install-ing a solar power system every four minutes.1 According to Stateline, a state policy news provider, “more than 323,000 homeowners and businesses used solar panels in net meter-ing programs in 2012, compared with 151,000 in 2010, an increase of 114 percent.”2

Increases in the use of distributed generation systems by consumers have led to an increase in demand for utilities to

* distributed generation – power generation at the point of consumption; a common example of a type of distributed generation is residential roof-top solar panels

offer net metering. Of the 15 states represented by the SLC, 11 have statewide net metering policies, while Texas has a voluntary policy. Alabama, Mississippi and Tennessee do not yet have net metering policies in place. This SLC Region-

al Resource reviews the concept of net metering and analyzes the status and nature of net metering legislation and trends in SLC member states. In order to provide clarity to this top-ic, a glossary of terms has been provided. Additionally, Table 2 provides a summary of net metering policies in the SLC region.

Net Metering

A variety of definitions of net metering can be found in the legislation and policies implemented by states. For the pur-poses of this SLC Regional Resource, net metering is defined as a billing system that allows utility customers to use the electricity they generate in excess of their consumption to offset their use of electricity from the grid.3 Although the most common form of distributed generation is solar, some states also include other technologies such as wind and micro-turbine; biomass; hydroelectric; geothermal electric; renewable fuel cell; tidal energy; wave energy; and anaerobic digestion.4 Net excess generation† can be measured monthly or annually.

† net excess generation – additional, unused electricity produced by a distributed generation source

Anne Roberts, Policy AnalystSouthern Legislative ConferenceDecember 2014

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eCHARGING FORWARD:NET METERING POLICIES IN SLC STATESA REGIONAL RESOURCE FROM THE SLC

2 NET METERING POLICIES IN SLC STATES

Nationwide, most states’ net metering policies often are es-tablished through legislation, with the legislative branch directing the state public utilities commission to draft and adopt administrative rules to implement net metering. While some states’ net metering policies apply to custom-ers of all types of electric utilities (such as investor-owned utilities, municipal utilities and electric cooperatives), oth-ers apply only to customers of investor-owned utilities. State policies vary widely by several other key criteria, including individual system capacity limits,‡ aggregate system capacity limits,§ eligible customer types, eligible system types, treat-ment of net excess generation at the end of a billing period, and ownership of renewable energy credits (RECs)¶ associ-ated with customer generation.

Capacity Limits

Capacity limits are used to regulate the system size of net metered installations, generally with a kilowatt-based limit. According to the U.S. Energy Information Administration, the average annual electricity consumption for a U.S. resi-

‡ system capacity limit – the maximum amount of service or number of customers that a system can provide services to at a defined level of service§ aggregate system capacity limit - the maximum amount of distributed generation energy that can be produced through the practice of utilizing a single generating system to offset electricity use on multiple meters¶ renewable energy credit (REC) – represents the property rights to the environmental, social and other non-power qualities of renewable electricity generation; an REC, and its associated attributes and benefits, can be sold separate from the underlying physical electricity associated with a renewable-based generation source

dential utility customer in 2012 was 10,837 kilowatt-hours (kWh), an average of 903 kWh per month. Given that aver-age consumption rate, Missouri, for example, has authorized net metering for systems up to 100 kilowatts (kW), whereas Kentucky has authorized net metering for systems up to 30 kW.5 However, in most SLC states, residential capacity lim-its range from 10 kW to 25 kW.

Capacity limits vary widely by utility type, which can include customer, technology and system type. North Carolina, for example, has made capacity limits applicable only for investor-owned utilities,6 while Louisiana has established limits for commercial, agricultural and residential custom-ers.7 States also often adopt different capacity limits for individual systems and aggregate net metering systems. For example, Arkansas has established system capacity limits for individual customers but has no aggregate net metering ca-pacity limit.8

Compensation for Net Excess Generation

Customers who participate in net metering receive credit for their net excess generation, generally on a monthly or annu-al basis, and the rate at which customers are credited varies. In West Virginia, customers receive credit at the retail rate** on each subsequent bill; however, credit does not carry-over from year to year.9 In Missouri, net excess generation is credited to a customer’s next bill at an avoided-cost rate.10, †† In contrast, Oklahoma electric utilities and regulated electric

** retail rate – the rate paid by consumers of electricity provided by a given utility†† avoided-cost rate – the cost the utility would incur if it was to generate or purchase power from another source

A home with solar panels. Photo courtesy of Thomas Hart via flickr Creative Commons license.

A standard bidirectional meter. Photo courtesy of Solar Decathlon via flickr Creative Commons license.

NET METERING POLICIES IN SLC STATES 3

cooperatives are not required to purchase net excess gener-ation from customers.11 Notwithstanding these particular regulations, in most SLC states, customers are credited at the full retail electric rate. Because electric rates often include costs associated with maintaining the grid, such as poles, wires, meters and other infrastructure that make the electric grid safe and reliable, not all utility companies support this policy.12 Electric companies maintain that reimbursing cus-tomers for net excess generation at the retail rate raises the cost of electricity for customers who do not participate in net metering programs and allows net metering customers to avoid contributing to the maintenance of the grid.

Ownership of Renewable Energy Credits (RECs)

Renewable energy credits represent the property rights to the environmental, social, and other aspects of renewable electricity generation. An REC, and its associated attributes and benefits, can be sold separate from the underlying phys-ical electricity associated with a renewable-based generation source. State net metering policies often specify ownership of RECs earned by renewable energy producers through elec-trical generation. State policies determine if the distributed generation customer retains the credits or if they are trans-ferred to the utility or cooperative that purchases the excess generation. Owning RECs can be critical to meeting state renewable portfolio standards.‡‡ In Arkansas,13 Kentucky,14 Missouri15 and Virginia16 the customer-generator§§ retains their RECs. In North Carolina, the utility owns the RECs unless the customer chooses to participate in a net metering program under a time-of-use tariff¶¶ with demand charges.17

‡‡ renewable portfolio standards – a requirement in any given year, in a given state, that requires an electric utility to own credits (RECs) in an amount equal to a certain percentage of electric energy sold in the preceding calendar year by the electric utility to retail customers§§ customer-generator – an electric retail customer who owns and operates a customer-sited generation project utilizing an alternative or renewable energy resource or a net metering system¶¶ time-of-use tariff – electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year. Prices paid for energy consumed during these periods are pre-established and known to consumers in advance, allowing them to vary their usage in response to such prices

Liability and Indemnity

Because renewable generation technologies often are costly to acquire and install, many states have implemented measures to protect these investments. Some states, including Arkansas, Florida and Louisiana, require both parties (the customer-generator and the electric utility) to enter into indemnity agreements. Other states, such as North Carolina, Virginia, and West Virginia, require customer-generators to carry liability insurance. Kentucky requires that the customer-generator carry liability insurance and enter into an indemnity agreement with the electric utility. Customer-generators in Missouri must carry liability insurance if they produce more than 10 kW. Under Oklahoma’s policy, electric utilities are not allowed to require new liability insurance in addition to the generator’s standard property insurance.

SLC State Net Metering Policies

Net metering policies vary state by state, due to each state’s unique needs and concerns. This section briefly summarizes net metering policies in the SLC region by state. As indicat-ed earlier, Alabama, Mississippi and Tennessee do not have net metering policies in place and have not been included in the summary.

Arkansas

In 2001, the Public Service Commission was directed to establish net metering rules by House Bill 2325.18 The legis-lation empowered the Commission to “establish appropriate rates, terms and conditions for net metering contracts, in-cluding a requirement that metering equipment be installed to both accurately measure the electricity supplied by the electric utility to each net metering customer and also to accurately measure the electricity generated by each net me-tering customer that is fed back to the electric utility over the applicable billing period.”19 It also permitted the Com-mission to authorize a utility to assess a fee or charge if the utility’s direct costs of interconnection*** and administration of net metering outweigh the “distribution system, environ-mental and public policy benefits of allocating costs among the electric utility’s entire customer base.”20 The bill also gave

*** interconnection – a link between a utility’s network with equipment or facilities not belonging to that network


the Commission the authority to expand the scope of net metering.

In 2007, House Bill 2334 was enacted to expand the avail-ability of net metering.21 In 2012, the Commission amended the net metering rules to exempt local, state, and federal government entities and agencies from previously required indemnity agreements and, a year later, approved new net metering tariffs for all electric utilities under its jurisdiction.

Renewable energy systems up to 25 kW in capacity and non-residential systems up to 300 kW in capacity are eligible for net metering. There is no limit specified for the aggregate capacity of all net metered systems. Customer-generators are permitted to carryover net excess generation month to month during an annual billing cycle and retain ownership of RECs. Net excess generation is credited at the utility’s re-tail rate; however, any remaining net excess generation is forfeited to the utility four months after the end of each an-nual billing cycle.22

Florida

The Public Service Commission adopted rules for net me-tering and interconnection for renewable energy systems up to 2 megawatts (MW) in capacity in March of 2008.23 These rules apply only to investor-owned electric utilities. The following June, the Legislature enacted House Bill 7135 con-firming that the Commission had the authority to adopt the March 2008 rules.24 This legislation also required municipal electric utilities and cooperatives to “develop a standardized interconnection agreement and net metering program for customer-owned renewable generation” by July 1, 2009.25

Under the Commission’s rules, net excess generation is carried forward at the utility’s retail rate to a customer’s sub-sequent bill for up to 12 months. At the end of a 12-month billing period, the electric utility compensates the custom-er-generator for any remaining net excess generation at the utility’s avoided-cost rate. Customer-generators retain own-ership of RECs, but are permitted to sell the RECs back to the utility.

All electric utilities are required to file annual reports with the Commission. These reports detail the number of customer-generators and the size, type and location of their renewable energy systems; the aggregate capacity of

net metered generation; amount of energy delivered to and generated from interconnected customers; and total energy payments made to interconnected users.26 Although the Commission does not have authority over municipal electric utilities and electric cooperatives, these electric providers also are required to file annual reports with the Commission.

Georgia

The Georgia Cogeneration and Distributed Generation Act of 2001 required that all electric utilities make “either bi-directional metering or single directional metering available to customer-generators depending on how the distributed generation facility is connected to the distribution system of the electric service provided.”27 Eligible renewable technologies include photovoltaics, wind and fuel cells. Net metering programs are available through all electric utilities and applicable to commercial, industrial, residential, nonprofit, local, state and federal government, agricultural and educational sectors. Limits for residential projects are set at 10 kW, and limits for commercial projects are set at 100 kW. The aggregate capacity of distributed generation systems is limited to 0.2 percent of a utility’s system peak demand from the previous year. Any net excess generation is credited to the customer-generator’s bill at a predetermined rate filed with the Public Service Commission, though a customer may choose to sell all electricity from a system, rather than using the generated electricity.28 Georgia’s law does not address REC ownership.

Kentucky

In 2004, statewide net metering legislation, Senate Bill 247, was enacted requiring all investor-owned utilities and rural electric cooperatives to offer net metering to customers with solar electric systems of 15 kW in capacity or less.29 In 2008, Senate Bill 83 expanded the net metering law by requiring electric utilities to offer net metering to customers who gen-erate electricity with photovoltaic, wind, biomass, biogas or hydroelectric systems with capacities up to 30 kW.30 The bill directed the Public Service Commission to issue rules by January 2009, and electric utilities were given 90 days from the issue date to file tariffs, including all terms and condi-tions of net metering programs.

With the exception of Tennessee Valley Authority utilities, net metering is available to all customers of investor-owned


utilities and rural electric cooperatives.31 Net excess genera-tion is credited to the customer-generator at the retail rate and credits are allowed to carry over indefinitely. The Com-mission is authorized to limit a utility’s obligation to offer net metering if the cumulative generating capacity of net metered systems reaches 1 percent of the utility’s single-hour peak load during the previous year.32 Under Kentucky’s law, customers retain ownership of their RECs.

Louisiana

Net metering is available for residential customers up to 25 kW in capacity. Net metering facilities may apply for, and be entitled to, state or federal funding for a portion of project costs. In 2008, Senate Bill 359 increased net metering capaci-ty limits of commercial and agricultural generators from 100 kW to 300 kW.33 The increase was approved by the Public Service Commission in May 2011 and, the following July, the Commission adopted standards that determine the ap-propriate billing rate of renewable energy systems exceeding 300 kW capacity on a case-by-case basis.34 Once any utility’s net metering purchases exceed 0.5 percent of its retail peak, it no longer is obligated to offer net metering. Louisiana’s law does not address the ownership of RECs.

Missouri

Under the provisions of Senate Bill 54, established in 2007, net metering is made available to customers on a first-come, first-served basis until the total generating capacity of all net metering systems equals 5 percent of the utility’s single-hour peak load during the previous year, after which the commission for a public utility or the governing body for other electric utilities may increase the total rated gener-ating capacity of net metering systems to an amount above 5 percent.35 Systems must be intended to offset part or all of a customer’s electricity consumption and must be located on the premises owned, operated, leased or otherwise con-trolled by the customer-generator.36 RECs are owned by the customer-generator.

Unlike many SLC states, customer net excess generation is credited at the utility’s avoided-cost rate, not the retail rate. Credits expire one year after issuance without compensa-tion. Providers are required to offer the exact same electrical energy rates, rate structure, and monthly contractual or tar-iff changes to regular customers and customer-generators.

Finally, electric utilities must offer an all-in-one application for systems of 10 kW in capacity or less that includes a sim-ple interconnection request, procedures and a brief set of terms and conditions.37

North Carolina

In 2005, the Utilities Commission established a require-ment that Duke Energy, Progress Energy and Dominion North Carolina Power, the three major investor-owned utilities in the state, offer net metering.38 The Commission required that net metering “be made available to a utility cus-tomer that owns and operates a solar photovoltaic system, wind-powered, or biomass-fueled renewable energy facil-ity without battery storage. The renewable energy facility may have a capacity of up to 20 kW for a residential custom-er-generator and a 100 kW [capacity] for a non-residential customer-generator.”39

In 2007, Senate Bill 3 directed the Commission to consider allowing larger generators to participate in net metering programs. In 2009, after a thorough investigation, the Com-mission did increase system capacity limits of renewable energy facilities to 1 MW.40 The Commission also ordered the three electric utilities to file annual reports indicating the number of net metering applicants and customer-generators, aggregate amounts of on-peak and off-peak generation cred-ited and ultimately granted by the utility, and the reasons for any rejection or removal of customer-generators from net metering.

Customers are permitted to participate in net metering programs under any available rate schedule. However, if a customer chooses to receive service under any tariff oth-er than a time-of-use demand tariff, all RECs associated with the generation must be surrendered with no compen-sation. Under the time-of-use tariff, on-peak generation is used to offset on-peak consumption, and off-peak genera-tion is used to offset off-peak consumption. Any remaining on-peak generation is then used to offset off-peak consump-tion, while off-peak generation only may be used to offset off-peak consumption.41

Oklahoma

An early proponent of net metering, the Oklahoma Corpo-ration Commission (OCC) adopted terms and conditions of


purchase in 1988, the first SLC state to do so. These rules make net metering available to all customer classes and do not set limits on the amount of aggregate generation. Ad-ditionally, electric utilities are not permitted to require new liability insurance as a condition for interconnection. In 2014, the Legislature passed Senate Bill 1456, enabling elec-tric utilities to petition the Commission for permission to apply a fixed charge to customer-generators who install net metered generation on or after November 1, 2014.42 Imme-diately after signing the bill into law, Governor Mary Fallin issued an executive order clarifying that Senate Bill 1456 did not mandate an increase in electricity charges and directed the Commission to consider alternative rate reforms.43 The law does not apply to electric cooperatives, which are not regulated by the Commission.

Unlike the renewables portfolio standards adopted by oth-er states, which require electric utilities to retire RECs to demonstrate compliance, Oklahoma does not require elec-tric utilities to purchase and retire RECs. Instead, each utility in Oklahoma that owns or operates electricity generation fa-cilities must file a report with the OCC each year by March 1. The report must document the total installed capacity of all generation facilities, number of kilowatt-hours generated by each facility, and the energy source for each facility. Because of this difference, Oklahoma’s net metering policy does not address REC ownership.

South Carolina

In 2014, the General Assembly passed Senate Bill 1189 to create the voluntary Distributed Energy Resources Program and ordered the Public Service Commission to develop new net metering rules. An expansive bill, Senate Bill 1189 of-fered many guidelines regarding eligible systems, system size, cost recovery and rate structuring rules.

Net metering is limited to resident customers with systems of 20 kW in capacity or less and nonresidential customers with systems that are less than 1 MW in capacity or that meet 100 percent of demand.44 The law holds the utility re-sponsible for maintaining an account of total electricity produced and consumed. When more electricity is pro-duced than consumed in a month, excess credits carryover to the next month. Electric utilities are required to compen-sate customer-generators for any excess electric production on an annual basis. Excess generation credits cannot be used

to pay for non-volumetric charges.45, ††† South Carolina’s law does not explicitly address RECs.

New net metering rates will be established after the Office of Regulatory Staff and/or outside consultants conduct a cost-benefit analysis of distributed generation.46 The Com-mission will use the cost-benefit analysis to determine what costs are incremental and recoverable and any additional service charges that customer-generators should pay in or-der to have access to the grid.

Finally, the new law includes a grandfather clause for cus-tomer-generators participating in net metered facilities prior to the availability of new net metering rates. These customer-generators are permitted to remain in historic net metering programs through December 31, 2020.47

Texas

Currently, Texas does not offer a statewide net metering program. However, the cities of Brenham and El Paso have instituted net metering and interconnection procedures. Additionally, Austin Energy, the municipal utility of Austin, Texas, and San Antonio City Public Service (CPS Energy) have made net metering available to their customers. REC ownership is not specified in the policies of the cities of Brenham and El Paso, nor is it specified under Austin Ener-gy’s policy. CPS Energy offers a rebate program to customers who enroll in net metering. If customers choose to enroll in this program, REC ownership is transferred to CPS Energy. Table 1 provides an overview of these four programs.

Virginia

In 1999, net metering was established with the passage of Senate Bill 1269, or the Virginia Electric Utility Restructuring Act, as currently amended, and makes net metering available on a first-come, first-served basis until the capacity owned and operated by customer-generators reaches 1 percent of an electric distribution company’s adjusted Virginia peak-load forecast for the previous year.48 In April 2009, the governor signed House Bill 2155 into law, making changes to the net metering policy in Virginia. The revised law allowed electric utilities to approve a higher capacity limit at their discretion

††† non-volumetric charge – a flat charge to the end-use customer regardless of the amount of consumption for a given period of time


Table 1: Texas Net Metering ProgramsJurisdiction / Utility

Eligible Renewable Applicable Sectors System Capacity Limit Net Excess Generation Authority

BrenhamPhotovoltaics, wind, biomass, micro-turbines, other distributed generation technologies

Commercial, industrial, residential, general public/consumer, nonprofit, schools, state government, agricultural, institutional

10 MW Monthly excess credited at utility’s avoided-cost rate

Distributed-generation ordinance, enacted 09/16/2010

El Paso ElectricSolar thermal electric, photovoltaics, wind, biomass, geothermal electric, small hydroelectric, wave energy, fuel cells using renewable fuels, other distributed generation technologies

Commercial, residential, nonprofit, schools, local government, construction, multi-family residential, low-income residential, institutional

For most customer-generators: 50 kW or 100 percent of estimated/act-ual electricity consumption, whichever is less

Credited to customer-generator at avoided-cost rate; if credits exceed $50, a refund check is issued

Texas Utilities Code 39.554, effective 06/17/2011; Public Utilities Commission of Texas Substantive Rues 25.211 and El Paso Electric Company Schedule No. 48, effective 09/01/2011

San Antonio City Public Service (CPS Energy)

Photovoltaics Commercial, industrial, residential, nonprofit, schools, institutional

None Customer-generator reimbursed at avoided-cost rate ($0.0165/kWh)

CPS Energy

Austin EnergySolar thermal electric, photovoltaics, landfill gas, wind, biomass, geothermal electric, municipal solid waste, anaerobic digestion, small hydroelectric, tidal energy, wave energy

Commercial 20 kW Credited to customer’s next bill at avoided-cost rate

Ordinance No. 20120607- 055-Distributed-generation from Renewable Sources Rider, enacted 06/07/2012

Source: Database of State Incentives for Renewables & Efficiency

and permitted customers served on the basis of time-of-use tariffs to participate in net metering. The law also established ownership of RECs for the customer-generator. Customers are offered a one-time option to sell their RECs to the utility, but this does not preclude the utility from voluntarily entering into an agreement for the sale and purchase of RECs at any time.49

In 2011, House Bill 1983 required residential customer-generators exceeding 10 kW in capacity to pay a monthly standby charge, developed by the utility and approved by the Corporation Commission.50 Dominion Power has been approved to charge a transmission and distribution standby charge to any residential net metering customer who owns and operates, or contracts to own and operate, an electric generation system with a capacity greater than 10 kW and less than 20 kW.51 The net metering policy was amended again in 2013 with the passage of House Bill 1695, creating

net metering programs for agricultural customers of investor-owned utilities and electric cooperatives.52 House Bill 1695 allows for net excess generation to be carried over on a monthly basis. At the end of each 12-month period, customer-generators have the option to carryover any net excess generation or sell it to the utility at the wholesale cost. The credit amount carried forward cannot exceed the amount of energy purchased during the previous year.

West Virginia

In January 2007, the Public Service Commission issued an order accepting the state’s consensus agreement on in-terconnection and net metering; the agreement included provisions for interconnecting net metered systems.53 In 2009, House Bill 103 directed the Commission to adopt net metering and interconnection rules and standards.54 Under these rules, net metering is available to all retail electricity


customers. System capacity limits vary depending on the customer type and electric utility type, as specified by the Commission. The rules require that net metering tariffs be identical to the tariff for which the customer would qualify if that customer was not a customer-generator, in terms of rate structure, retail-rate components and monthly charges. Customers on a time-of-use tariff are permitted to partici-pate in net metering programs. Net excess generation can be carried over to each subsequent bill of a customer-generator. REC ownership is not specified under West Virginia’s rules.

Conclusion

As the use of distributed generation technology continues to grow, electric utility customers likely will continue to call for access to net metering programs. It is important for state policymakers and public utility commissions to continue to balance customer demand with the impacts that distributed generation technologies have on the electric power grid as well as the electric utilities. This balance may include assess-ing the actual costs and benefits to the utility, tracking the number of participants in net metering programs, and for-mulating rate structures that require customer-generators to contribute to the maintenance of the grid.

Additionally, the examination of access to renewable genera-tion technologies and net metering programs by low-income individuals and what policies can be developed to expand this opportunity also may be a consideration by policymakers.

From 2012 to 2013, solar generation in the Southern re-gion (including Maryland, Puerto Rico and the U.S. Virgin Islands) grew by 87 percent.55 While solar generation rep-resents only one segment of renewable generation, it is instructive to note growth in this industry as it relates to the promulgation of additional regulation in areas not im-mediately associated with net metering. Policymakers may consider crafting regulations for the protection of public safety officials, such as firefighters. Such regulations could include specifications on access and spacing of photovolta-ic panels to ensure roof access, provide pathways to specific areas of the roof, and provide opportunities for smoke venti-lation areas and to provide safe emergency access to the roof.

These conversations, which are just beginning in some SLC states, provide an opportunity for continued legislative ac-tion in the Southern region.

Glossary » aggregate system capacity limit – the maximum amount of energy that can be produced through the practice of utilizing a single distributed generation system to offset electricity use on multiple meters

» avoided-cost rate – the cost the utility would incur if it was to generate or purchase power from another source

» customer-generator – an electric retail customer who owns and operates a customer-sited generation project utilizing an alternative or renewable energy resource or a net metering system

» distributed generation – power generation at the point of consumption; a common example of a type of distributed generation is residential roof-top solar panels

» interconnection – a link between a utility’s network with equipment or facilities not belonging to that network

» net excess generation – additional, unused electricity produced by a distributed generation source

» net metering – a billing system that allows utility customers to use the electricity they generate in excess of their consumption to offset their use of electricity from the grid

» non-volumetric charge – a flat charge to the end-use customer regardless of the amount of consumption for a given period of time

» renewable energy credit (REC) – represents the property rights to the environmental, social, and other qualities of renewable electricity generation; a REC, and its associated attributes and benefits, can be sold separate from the underlying physical electricity associated with a renewable-based generation source

» renewable portfolio standards – a requirement in any given year, in a given state, that mandates an electric utility to own credits (RECs) in an amount equal to a certain percentage of electric energy sold in the preceding calendar year by the electric utility to retail customers

» retail rate – the rate paid by consumers of electricity provided by a given utility

» system capacity limit – the maximum amount of service or number of customers that a system can provide services to at a defined level of service

» time-of-use tariff – electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year; prices paid for energy consumed during these periods are pre-established and known to consumers in advance, allowing them to vary their usage in response to such prices

» volumetric charge – a single, average rate multiplied against the number of kWh and/or kW consumed


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2. Ibid.3. “Policies for Compensating behind-the-Meter Generation Vary by

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2014, http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=OK01R. (accessed September 17, 2014)

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(accessed September 18, 2014)17. “North Carolina Incentives/Policies.”18. Judy, Rodgers, and Riggs, House Bill 2325, accessed September 23,

2014, http://lses.org/version1/hb2325.html. (accessed September 23, 2014)19. Ibid.20. Ibid.21. Smith and Broadway, House Bill 2334, 2007, ftp://www.arkleg.state.

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Sections/Documents/loaddoc.aspx?FileName=_h7135er.

docx&DocumentType=Bill&BillNumber=7135&Session=2008.

25. Ibid.26. “Florida Incentives/Policies.”27. The Georgia Cogeneration and Distributed Generation Act of 2001,

2001, http://prod-http-80-800498448.us-east-1.elb.amazonaws.com/w/

images/9/9d/GA04R.pdf.

28. “Georgia Incentives/Policies,” DSIRE USA, accessed September 16, 2014, http://dsireusa.org/incentives/incentive.cfm?Incentive_Code=GA02R.

(accessed September 16, 2014)29. Legislative Research Commission, General Assembly Action,

Informational Bulletin (Frankfort, Kentucky: Legislative Research Commission, May 2004), http://www.lrc.ky.gov/lrcpubs/IB214.pdf.

30. Legislative Research Commission, General Assembly Action, Informational Bulletin (Frankfort, Kentucky: Legislative Research Commission, May 2008), http://www.lrc.ky.gov/lrcpubs/ib226.pdf.

31. “Kentucky Incentives/Policies.”32. Ibid.33. Rebecca Mowbray, “State-Increased Size of Alternative Energy

Systems Hooked up to Power Grids Could Boost Solar-Panel Installations,” The Times-Picayune - NOLA.com, August 17, 2008, http://www.nola.com/business/index.ssf/2008/08/

the_state_has_increased_the_ma.html.

34. “Louisiana Incentives/Policies.”35. “SB54 - Modifies Provisions Relating to Renewable Energy,

Alternative Fuel, and Environmental Regulation,” accessed September 23, 2014, http://www.senate.mo.gov/07info/BTS_Web/Bill.

aspx?SessionType=R&BillID=128. (accessed September 23, 2014)36. “Missouri Incentives/Policies.”37. Ibid.38. State of North Carolina Utilities Commission, Order Adopting Net

Metering (Raleigh, October 10, 2005), http://starw1.ncuc.net/NCUC/

ViewFile.aspx?Id=766d7127-977d-4312-a98c-e2fc6fa09742.

39. Ibid.40. State of North Carolina Utilities Commission, Order Amending Net

Metering Policy (Raleigh, March 31, 2009), http://starw1.ncuc.net/

NCUC/ViewFile.aspx?Id=f1b29a03-4445-4930-9dfd-14682ceb368e.

41. “North Carolina Incentives/Policies.”42. Griffin et al., Senate Bill 1456, 2014, http://webserver1.lsb.state.ok.us/cf_

pdf/2013-14%20ENR/SB/SB1456%20ENR.PDF.

43. “Gov. Mary Fallin - Executive Order 2014-07,” accessed September 24, 2014, https://www.documentcloud.org/documents/1146319-gov-mary-fallin-

executive-order-2014-07.html. (accessed September 24, 2014)44. Gregory et al., Senate Bill 1189, 2014, http://www.scstatehouse.gov/

sess120_2013-2014/prever/1189_20140521.htm.45. “South Carolina Incentives/Policies,” DSIRE USA, accessed September

17, 2014, http://dsireusa.org/incentives/incentive.cfm?Incentive_

Code=SC09R. (accessed September 17, 2014)46. Gregory et al., South Carolina Distributed Energy Resource Program.47. Ibid.48. “Net Metering,” accessed September 16, 2014, http://www.seia.org/

policy/distributed-solar/net-metering. (accessed September 16, 2014)49. David Tuscano et al., House Bill 2155, 2009, https://leg1.state.va.us/cgi-

bin/legp504.exe?091+ful+HB2155H1.

50. Terry Kilgore et al., House Bill 1983, 2011, http://www.dsireusa.org/

documents/Incentives/2011%20HB%201983.pdf.

51. “Virginia Incentives/Policies.”52. Randall Minchew et al., House Bill 1695, 2013, https://leg1.state.va.us/

cgi-bin/legp504.exe?131+mbr+HB1695.

53. Office US EPA, “West Virginia | State and Local Climate and Energy Program | US EPA,” Choose from the 8 types, choose only 1, accessed October 7, 2014, http://www.epa.gov/statelocalclimate/state/tracking/

individual/wv.html.

54. Thompson and Armstead, House Bill 103, 2009, 103, http://www.

legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=hb103%20ENR.

htm&yr=2009&sesstype=1X&i=103.

55. Southern States Regional Energy Profile (Southern States Energy Board, 2014), http://www.sseb.org/wp-content/uploads/2014/07/2014-

Southern-States-Energy-Profiles_FINAL.pdf.


Table 2: SLC Net Metering Programs

State Arkansas Florida Georgia Kentucky Louisiana Missouri North Carolina Oklahoma South Carolina Virginia West Virginia

Authority Code § 23-18-601 et seq., effective 10/01/2001; PSC Order No. 8, Docket 06-105-U, enacted 11/27/2007; PSC Order No. 7, Docket No. 12-060-R, enacted 09/03/2013 and HB 2019, enacted 04/12/2013

25-6.065, F.A.C., effective 4/7/2008 and Statute 366.91, effective 7/01/2008

O.C.G. § 46-3-50 et seq., effective 06/01/2002

KRS § 278.465 et seq., effective 07/13/2004 and amended effective 07/15/2008 and PSC Order 2008-00169, enacted 01/08/2009

R.S. 51:3061 et seq., effective 10/01/2003; PSC Order, Docket No. R-27558, effective 11/30/2005 and PSC Docket No. R-31417, effective 06/26/2013

386.890 R.S. MO, effective 01/01/2008 and 4CSR 240-20.065, effective 02/28/2009 (subsequently amended)

NCUC Order, Docket No. E-100, Sub 83, enacted 10/20/2005; NCUC Order, Docket No. E-100, Sub 83, enacted 12/27/2005; NCUC Order, Docket No. E-100, Sub 83, enacted 7/26/2006 and NCUC Order, Docket No. E-100, Sub 83, effective 06/01/2009

O.A.C 165:40-9-1, et seq., enacted 5/23/1988; Senate Bill1456, effective 11/01/2014 and Executive Order 2014-07, effective 04/21/2014

Senate Bill 1198, effective 06/02/2014

Virginia Code 56-594, effective 07/01/2000; 20 VAC 5-315-10 et seq., effective 05/25/2000; SCC Order Adopting Net Metering Regulations (PUE-2009-00105), effective 04/28/2010; HB 1983, effective 07/10/2011 and HB 1695, enacted 03/13/2013

General Order 184.2; West Virginia Code 24-2F-1 et seq., effective 07/01/2009; General Order No. 258, effective 08/30/2010 and General Order No. 258.1, effective 07/18/2011

Eligible Renewable

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, microturbines using renewable fuels, small hydroelectric, fuel cells using renewable fuels, microturbines

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, CHP/cogeneration, hydrogen, small hydroelectric, tidal energy, wave energy, ocean thermal

Photovoltaics, wind, fuel cells, fuel cells using renewable fuels

Photovoltaics, wind, biomass, hydroelectric, biogas, small hydroelectric

Photovoltaics, wind, biomass, hydroelectric, geothermal electric, small hydroelectric, fuel cells using renewable fuels, microturbines

Solar thermal electric, photovoltaics, wind, hydroelectric, small hydroelectric, fuel cells using renewable fuels

Photovoltaics, landfill gas, wind, biomass, hydroelectric, hydrogen, anaerobic digestion, small hydroelectric, tidal energy, wave energy, fuel cells using renewable fuels

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, municipal solid waste, CHP/cogeneration, small hydroelectric

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, CHP/cogeneration, hydrogen, small hydroelectric, tidal energy, wave energy, fuel cells using renewable fuels

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, municipal solid waste, small hydroelectric, tidal energy, wave energy

Solar thermal electric, photovoltaics, landfill gas, wind, biomass, hydroelectric, geothermal electric, fuel cells, small hydroelectric, renewable fuels, fuel cells using renewable fuels

Applicable Sectors

Commercial, industrial, residential, general public/consumer, nonprofit, schools, local government, state government, federal government, agricultural, institutional

Commercial, industrial, residential, nonprofit, schools, local government, state government, tribal government, federal government, agricultural, institutional

Commercial, industrial, residential, nonprofit, schools, local government, state government, federal government, agricultural, institutional

Commercial, residential, nonprofit, schools, local government, state government, agricultural, institutional

Commercial, residential, agricultural



Commercial, industrial, residential, general public/consumer, schools, local government, state government, federal government

Commercial, residential, general public/consumer, nonprofit, schools, utility, investor-owned utility, institutional


Commercial, industrial, residential, nonprofit, local government, multi-family residential, agricultural

Applicable Utilities

Investor-owned utilities and electric cooperatives

Investor-owned utilities All utilities Investor-owned utilities, electric cooperatives (except TVA distribution utilities)

All utilities All utilities Investor-owned utilities Investor-owned utilities, regulated electric cooperatives

All utilities with more than 100,000 customers, excluding cooperatives

Investor-owned utilities, electric cooperatives

All utilities

Net Excess Generation

Credited to customer’s next bill at retail rate. Following an annual billing cycle, up to an amount equal to 4 months’ average usage can be carried over into the next annual billing cycle

Credited to customer’s next bill at retail rate; excess reconciled annually at avoided-cost rate

Credited to customer’s next bill at a predetermined rate filed with the Public Service Commission

Credited to customer’s next bill at retail rate; carries over indefinitely


Credited to customer’s next bill at avoided-cost rate; credits expire after 12 months

Credited to customer’s next bill at retail rate; granted to utility at beginning of summer billing season

Utilities and regulated electric cooperatives are not required to purchase monthly net excess generation from customers

Credited to customer’s next bill on a monthly basis; annual pay out to customer zeros out monthly carryover

Credited to customer’s next bill at retail rate; after 12-month cycle, customer may opt to carryover credit indefinitely or to receive payment at avoided-cost rate

Credited to customer’s next bill at retail rate with no annual true-up (perpetual carryover)

System Capacity Limit

300 kW for non-residential; 25 kW for residential

2 MW 100 kW for non-residential; 10 kW for residential

30 kW Commercial and agricultural: 300 kW; Residential: 25 kW

100 kW Individual system:1 MW; residential: 20 kW; non-residential 100 kW

100 kW or less; 25,000 kWh/year or less

20 kW for residential; 1,000 kW or 100 percent of demand for non-residential


Investor-owned utilities with more than 30,000 customers: 2 MW for industrial; 500 kW for commercial; 25 kW for residential. Investor-owned utilities with fewer than 30,000 customers, municipal utilities and cooperatives: 50 kW for commercial and industrial; 25 kW for residential



Table 2: SLC Net Metering Programs

State Arkansas Florida Georgia Kentucky Louisiana Missouri North Carolina Oklahoma South Carolina Virginia West Virginia

Authority Code § 23-18-601 et seq., effective 10/01/2001; PSC Order No. 8, Docket 06-105-U, enacted 11/27/2007; PSC Order No. 7, Docket No. 12-060-R, enacted 09/03/2013 and HB 2019, enacted 04/12/2013

25-6.065, F.A.C., effective 4/7/2008 and Statute 366.91, effective 7/01/2008

O.C.G. § 46-3-50 et seq., effective 06/01/2002

KRS § 278.465 et seq., effective 07/13/2004 and amended effective 07/15/2008 and PSC Order 2008-00169, enacted 01/08/2009

R.S. 51:3061 et seq., effective 10/01/2003; PSC Order, Docket No. R-27558, effective 11/30/2005 and PSC Docket No. R-31417, effective 06/26/2013

386.890 R.S. MO, effective 01/01/2008 and 4CSR 240-20.065, effective 02/28/2009 (subsequently amended)

NCUC Order, Docket No. E-100, Sub 83, enacted 10/20/2005; NCUC Order, Docket No. E-100, Sub 83, enacted 12/27/2005; NCUC Order, Docket No. E-100, Sub 83, enacted 7/26/2006 and NCUC Order, Docket No. E-100, Sub 83, effective 06/01/2009

O.A.C 165:40-9-1, et seq., enacted 5/23/1988; Senate Bill1456, effective 11/01/2014 and Executive Order 2014-07, effective 04/21/2014

Senate Bill 1198, effective 06/02/2014

Virginia Code 56-594, effective 07/01/2000; 20 VAC 5-315-10 et seq., effective 05/25/2000; SCC Order Adopting Net Metering Regulations (PUE-2009-00105), effective 04/28/2010; HB 1983, effective 07/10/2011 and HB 1695, enacted 03/13/2013

General Order 184.2; West Virginia Code 24-2F-1 et seq., effective 07/01/2009; General Order No. 258, effective 08/30/2010 and General Order No. 258.1, effective 07/18/2011

Eligible Renewable

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, microturbines using renewable fuels, small hydroelectric, fuel cells using renewable fuels, microturbines

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, CHP/cogeneration, hydrogen, small hydroelectric, tidal energy, wave energy, ocean thermal

Photovoltaics, wind, fuel cells, fuel cells using renewable fuels

Photovoltaics, wind, biomass, hydroelectric, biogas, small hydroelectric

Photovoltaics, wind, biomass, hydroelectric, geothermal electric, small hydroelectric, fuel cells using renewable fuels, microturbines

Solar thermal electric, photovoltaics, wind, hydroelectric, small hydroelectric, fuel cells using renewable fuels

Photovoltaics, landfill gas, wind, biomass, hydroelectric, hydrogen, anaerobic digestion, small hydroelectric, tidal energy, wave energy, fuel cells using renewable fuels

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, municipal solid waste, CHP/cogeneration, small hydroelectric

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, CHP/cogeneration, hydrogen, small hydroelectric, tidal energy, wave energy, fuel cells using renewable fuels

Solar thermal electric, photovoltaics, wind, biomass, hydroelectric, geothermal electric, municipal solid waste, small hydroelectric, tidal energy, wave energy

Solar thermal electric, photovoltaics, landfill gas, wind, biomass, hydroelectric, geothermal electric, fuel cells, small hydroelectric, renewable fuels, fuel cells using renewable fuels

Applicable Sectors

Commercial, industrial, residential, general public/consumer, nonprofit, schools, local government, state government, federal government, agricultural, institutional




Commercial, residential, agricultural



Commercial, industrial, residential, general public/consumer, schools, local government, state government, federal government

Commercial, residential, general public/consumer, nonprofit, schools, utility, investor-owned utility, institutional


Commercial, industrial, residential, nonprofit, local government, multi-family residential, agricultural

Applicable Utilities

Investor-owned utilities and electric cooperatives

Investor-owned utilities All utilities Investor-owned utilities, electric cooperatives (except TVA distribution utilities)

All utilities All utilities Investor-owned utilities Investor-owned utilities, regulated electric cooperatives

All utilities with more than 100,000 customers, excluding cooperatives

Investor-owned utilities, electric cooperatives

All utilities

Net Excess Generation

Credited to customer’s next bill at retail rate. Following an annual billing cycle, up to an amount equal to 4 months’ average usage can be carried over into the next annual billing cycle

Credited to customer’s next bill at retail rate; excess reconciled annually at avoided-cost rate

Credited to customer’s next bill at a predetermined rate filed with the Public Service Commission



Credited to customer’s next bill at avoided-cost rate; credits expire after 12 months

Credited to customer’s next bill at retail rate; granted to utility at beginning of summer billing season

Utilities and regulated electric cooperatives are not required to purchase monthly net excess generation from customers

Credited to customer’s next bill on a monthly basis; annual pay out to customer zeros out monthly carryover

Credited to customer’s next bill at retail rate; after 12-month cycle, customer may opt to carryover credit indefinitely or to receive payment at avoided-cost rate

Credited to customer’s next bill at retail rate with no annual true-up (perpetual carryover)

System Capacity Limit


2 MW 100 kW for non-residential; 10 kW for residential

30 kW Commercial and agricultural: 300 kW; Residential: 25 kW

100 kW Individual system:1 MW; residential: 20 kW; non-residential 100 kW

100 kW or less; 25,000 kWh/year or less

20 kW for residential; 1,000 kW or 100 percent of demand for non-residential


Investor-owned utilities with more than 30,000 customers: 2 MW for industrial; 500 kW for commercial; 25 kW for residential. Investor-owned utilities with fewer than 30,000 customers, municipal utilities and cooperatives: 50 kW for commercial and industrial; 25 kW for residential


THE SOUTHERN OFFICE OF THE COUNCIL OF STATE GOVERNMENTS

REGIONAL VIEW NATIONAL REACH

This report was prepared by Policy Analyst Anne Roberts for the Energy & Environ-ment Committee of the Southern Legislative Conference (SLC) of The Council of State

Governments (CSG), under the chairmanship of Repre-sentative William E. “Bill” Sandifer III of South Carolina. This report reflects the body of policy research made available to appointed and elected officials by the South-ern Office.

The Southern Office of The Council of State Gov-ernments, located in Atlanta, Georgia, fosters and encourages intergovernmental cooperation among its 15 member states. In large measure, this is achieved through the ongoing work of the standing committees of its Southern Legislative Conference and supporting groups. Through member outreach in state capitols, policy research, international member delegations, staff exchange programs, meetings and fly-ins, staff support

state policymakers and legislative staff in their work to build a stronger region.

Founded in 1947, the SLC is a member-driven organi-zation and the largest of four regional legislative groups operating under CSG and comprises the states of Ala-bama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.

The SLC’s six standing committees provide a forum which allows policymakers to share knowledge in their area of expertise with colleagues from across the South. By working together within the SLC and participat-ing on its committees, Southern state legislative leaders are able to speak in a distinctive, unified voice while addressing issues that affect their states and the entire region.

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