The Business Council of New York State opposes extending New York’s net-metering compensation for at least twenty years. This legislation will expand the size of net-metered resources, extend an imprecise and inefficient fixed price and will result in wasting ratepayer resources.
While net metering has facilitated the deployment of renewable resources in New York, there has been a significant cost to the program While there may be some variation, net metered resources are generally reimbursed for their electricity at the full retail rate. For energy consumer, this means they pay a premium for electricity from a net metered resource.
In 2014, New York State adopted legislation that required the public service commission to conduct a study to analyze the economic and environmental benefits from and the economic cost burden, if any, of the net energy metering program in this state. The study in 2015 concluded the following:
- If net energy metered (NEM) customer installations were to be sited or ‘targeted’ to higher value locations on the distribution grid versus being random or untargeted (i.e., current business-as-usual) then the net costs of NEM (as it is currently structured and administered) to non-participating ratepayers in 2015 would be lower by $16 million
- Residential customers in New York that have installed NEM systems have higher annual median household incomes on average (approximately $80,000 per year) than the median New Yorker.
- NEM is an imprecise instrument with no differentiation in pricing for either higher or lower locational values or higher or lower value technology performance (e.g. peak coincident energy production).
- If NEM systems can be targeted to higher value locations on the distribution grid, then there is a net benefit to society
After reviewing the study New York determined that it is in the best interest of the consumer, the electric grid and the environment to transition away from net-metering resources.
Last year, the NY Public Service Commission issued an order establishing the transitional steps from traditional net metering into a Value of Distributed Energy Resource (VDER) tariff that values and compensates distributed energy resources. Distributed energy projects after interconnected after March 9, 2017 have transitioned into a VDER tariff.
The new VDER tariff compensates projects based on when and where they provide electricity to the grid. Compensation is based upon the wholesale price of energy, the avoided carbon emissions, the demand reduction value (DRV), and the locational system relief value (LSRV). The proposed changes are intended to address the study’s findings.
It should be noted that all projects interconnected prior to March 9, 2017 will retain their previous compensation through net energy metering. Residential projects installed between 3/9/2017 and 1/1/2020 were also grandfathered. While the Business Council may have specific technical concerns with VDER but we cannot quibble with the intent of VDER.
This legislation would bill would amend the public service law to continue net energy metering rates that were in effect as of March 1, 2017 in full force and effect through December 31, 2021, double the size of NEM, and require that the rates remain unchanged for the technical lifetime of the generating equipment. This is legislation is unacceptable, and unwarranted.
Proponents argue that calculating VDER in the PSC's new order is difficult to understand and is uncertain. The proposed fix is disproportionate to the perceived harm and will adversely impact customers and will waste ratepayer resources.
In conclusion, the net-metering experiment has reached its conclusion. The Business Council strongly supports tariffs that value and compensate distributed energy resource in a just and equitable manner. If the current owners/operators believe they are not receiving just compensation they should seek it out through the regulatory process but they should not place costly demands on other New York businesses.