Net Metering Under PA 295

PA 295 also required the Public Service Commission to establish statewide interconnection and net metering standards for renewable-energy systems. Net metering is a simplified method of metering the energy consumed and produced by a home or business with its own renewable energy generator. Under net metering, excess electricity produced spins the existing home or business electricity meter backwards, banking the electricity until the customer needs it. This provides the customer with retail value for all the electricity produced.

Per the Michigan Public Service Commission's requirements, the net metering project must be sized small enough so that it is no larger than what is needed to meet a customer's electric energy needs. This law applies only to rate-regulated utilities and alternative electric suppliers and authorizes net metering for renewable energy systems using solar, wind, biomass, geothermal, anaerobic digester gas, landfill gas, municipal solid waste, and moving water. The application fee for small generators (up to 20 KW) is $75 for interconnection to the grid, and an additional $25 for net metering.

Prior to Public Service Commission's new electric interconnection and net metering standards, which took effect May 27, 2009, utilities were permitted to use a variety of billing options for participating customers, most of which were not considered "true" net metering. In an effort to increase these previously low participation levels, PA 295 requires utilities to provide net metering customers with electric service at a nondiscriminatory rate that is identical to that which would be charged were the customer not participating in net metering. Net metering billing practices now comprise two distinct categories: true net metering and modified net metering.

"True" net metering is available until the aggregate net metered capacity reaches 0.5% of a utility's peak load, and includes almost all participating residential customers. Under true net metering, the customer receives the full retail rate for all excess energy units generated. Systems 20 kW and smaller are able to receive true net metering rates, and net metering credits carry forward indefinitely. As of June 2009, there were 120 new customer net metering installations in Michigan, the majority of which were solar and wind systems.

According to the Public Service Commission's website regarding net metering, the tier of systems 20 kW and smaller will include mostly residential customers and meets these specifications:

• Billing is based on net usage.
• Customer receives the full retail rate for all excess kWh.
• Utility shall use the customer's existing meter if it is capable of reverse registration (spinning backwards) or install an upgraded meter at no additional cost to the net metering customer.
• Utilities with fewer than 1,000,000 customers shall charge net metering customers at cost for an upgraded meter if the customer's existing meter is not capable of reverse registration (spinning backwards).
• A generator meter shall be provided at cost, if requested by the customer. (The generator meter is for the customer's benefit. Utilities are not obligated to read a customer's generator meter.)
• No interconnection costs (beyond the combined $100 interconnection/net metering application fees), study fees, testing or inspection charges.
• Net metering credits carry forward indefinitely.

Customers with systems 20kW to 150 kW are eligible to receive "modified" net metering until aggregate net metered capacity reaches 0.25% of a utility's peak load. These participants pay full retail rate for electricity deliveries from the utility and receive the generation portion of the retail rate or wholesale rate for deliveries to the grid. Net excess generation (NEG) can be carried forward indefinitely. Customers who produce NEG under the program own the RECs associated with their generated electricity and may arrange for these RECs to be purchased by their utility. Although REC prices are market-based, Michigan's Renewable Energy Portfolio Standard is expected to have an impact on REC values, possibly increasing their worth as demand rises.

The modified net metering group is divided into two subgroups according to the PSC's website:

0.25% for >20 kW to 150 kW Modified Net Metering

• Customers pay full retail rate for electricity deliveries from the utility and receive the generation portion of the retail rate or a wholesale rate for deliveries to the grid.
• No charge for the engineering review.
• Customers pay all interconnection costs, distribution study fees, and any network upgrade costs.
• Customers with generators up to 150 kW can use their generation on-site (behind the meter) without paying a standby charge.

0.25% for >150 kW up to 550 kW Modified Net Metering

• Nearly the same as the >20 kW to 150 kW program.
• This tier is only available to methane digesters.
• Customers pay standby charges.