By John McClaughry
The New England Ratepayers Association has petitioned the Federal Energy Regulatory Commission to assert exclusive jurisdiction over the net metering subsidy program in Vermont and 40 other states.
A supportive brief filed by the Heartland Institute explains that net metering laws require utilities to purchase excess electricity from households that have their own electricity generation source. In Vermont utilities must pay full retail price for these electricity purchases. Usually these generation sources are rooftop solar panels.
Utilities typically buy electricity wholesale or generate it on their own. As a result, the power utilities purchase from “distributed-generation” like roof-top solar panels, as opposed to centralized large power plants providing power for many customers, costs them more. Utilities then pass on these costs to other ratepayers in the form of higher prices.
In addition, managing power from rooftop solar sources and other distributed sources connected to the grid requires special equipment to regulate electricity flowing two ways. The costs of installing and maintaining this equipment under net metering laws are paid by ratepayers in general rather than the customers or companies who have installed or operate distributed generation sources. Such cost-shifting is regressive, because rooftop-solar owners have generally higher incomes than others, so lower-income ratepayers end up subsidizing higher-income customers.
The bottom line here is that the state should stop subsidizing upscale rooftop solar owners by making everybody else pay those extra costs. I’ve been arguing for that for a long time.
John McClaughry is vice president of the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.