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Legislative Memo

Darren Suarez
Director of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S 5149 ( Maziarz) / A 7679 (Simotas)

  Support

SUBJECT:

Net Metering Study

 

S 5149 (Maziarz) / A 7679 (Simotas)

DATE:

May 5, 2014

 

The Business Council of New York State supports this legislation as it will help to address a significant information gap regarding net metering. This bill requires the Public Service Commission to perform a study of the economic and environmental benefits and costs associated with the state's net metering laws.

While net metering clearly facilitates the deployment of renewable resources in New York, there is a cost to the program. At this time the State does not have a handle on the cost of the program. It is important to understand the cost to begin to evaluate the program's effectiveness. 

Net metering allows consumers who install renewable energy systems, including solar, wind, farm waste, and micro cogeneration systems, to reduce their electric bills by using less electricity from the grid. It also provides the customer with the potential to receive energy credits for electricity exported to the grid.

The most important issue with regard to net metering is the rate at which the utility pays the net metering customer. While there may be some variation, customers are generally reimbursed for their electricity at the full retail rate. For utilities, this means they pay much more for electricity from net metering customers than they do for electricity from power plants.

The practice of paying full retail price under net metering policies has raised concerns. Retail electricity rates include not only the wholesale cost of electricity but also the costs of taxes, planning, building, and maintaining the complex electrical grid.

When net metered customers receive the full retail price for generation electricity, they are not paying the utility for the use of the power lines, poles, meters and the complex technologies and services necessary to provide them with reliable, around-the-clock electricity. The concern is that those costs are then shifted onto their neighbors without solar panels, thus raising monthly utility bills.

This legislation would require a similar net metering study to one that was mandated in California. The study evaluates the ratepayer impacts of the California net energy metering (NEM) determining “who benefits, and who bears the economic burden, if any, of the net energy metering program.” 

The study compared the reduction in NEM customer bills to the reduction in utility costs. The California study determined NEM will create a cost shift from NEM customers (those who net meter) to other utility customers (to those that don't) by approximately $1.1 billion per year in 2020 (in $2012).

Additionally, the study determined that within the residential sector, customers installing NEM systems since 1999 have an average median household income (based on IOU-provided data at the census tract level7) of $91,210, compared to the median income in California of $54,283 and in the IOU service territories of $67,821.

Although the California study has been criticized for not capturing all of the projected benefits of net metering the study, the study verifies a significant fear of energy experts, that net meter can be a hidden regressive tax. For these reasons, The Business Council supports enactment of this bill.