HOUSE BILL REPORT
HB 2352
As Reported by House Committee On:
Technology, Energy & Communications
Title: An act relating to net metering.
Brief Description: Modifying net metering provisions.
Sponsors: Representatives Morris, Hudgins and B. Sullivan.
Brief History:
Technology, Energy & Communications: 1/13/06, 1/20/06 [DPS].
Brief Summary of Substitute Bill |
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HOUSE COMMITTEE ON TECHNOLOGY, ENERGY & COMMUNICATIONS
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 11 members: Representatives Morris, Chair; Kilmer, Vice Chair; Crouse, Ranking Minority Member; Haler, Assistant Ranking Minority Member; Hankins, Hudgins, Nixon, P. Sullivan, Sump, Takko and Wallace.
Staff: Scott Richards (786-7156).
Background:
Net Metering
Net metering allows electricity customers to offset (over a predetermined time-period) their
consumption of purchased electricity with electricity generated by their own small scale
renewable system. Under net metering, the customer's small renewable energy system is
connected to a utility's electrical distribution system and electricity is fed back to the electric
utility over an applicable billing period.
As of September 2005, 35 states allow net metering statewide, including Washington. State
law varies on the amount of electricity that is fed into a utility's electrical distribution system
through net metering. Amounts can range from 10 kW to as high as 1 MW in California and
2 MW in New Jersey. Of the states that allow statewide net metering, 21 states have net
metering limits in the 25 kW to 100 kW range. Ohio does not place size limits on eligible
systems (except for microturbines – 100 kW), but stipulates that overall enrollment shall not
represent more than 1 percent of a utility's peak demand.
State law also varies in the amount of electricity that is fed back into an utility's system. Of
the 35 states with statewide net metering, 18 of those states place no cumulative limit on the
amount of electric that is fed back into a utility's distribution system. The majority of the
remaining 17 states place limits in the .05 percent to .5 percent range. Nevada, Ohio and
Vermont allow for 1 percent of an utility's peak capacity to come from net metering systems.
States vary in their approach to excess generation credits. Two states have no expiration date
for excess generation credit. Twelve states grant credits back to the utility at the end of a
12-month billing cycle. Two states grant credits back to the utility monthly. Some states
purchase credits at an avoided-cost rate at either the end of a 12-month billing cycle or
monthly.
Current Law
Under current law, a net metering system is defined as an electrical production facility that:
(1) is a fuel cell or uses solar, wind, or hydro power; (2) has a generating capacity of 25
kilowatts or less; (3) is located on the customer-generator's premises; (4) operates in parallel
with the electrical utility's distribution and transmission system; and (5) is intended primarily
to offset part or all of the customer's electricity requirements.
Current law requires electric utilities to offer net metering to eligible customers-generators on
a first-come, first-serve basis until the cumulative generating capacity of net metering
systems equals 0.1 percent of the utility's peak demand during 1996, of which not less than
0.05 percent shall be attributable to net metering systems that use as its fuel either solar,
wind, or hydro power. If electricity generated by the customer-generator exceeds the
electricity supplied by the electric utility, the customer-generator shall be (a) billed for the
appropriate customer charges for that billing period; and (b) credited for the excess
kilowatt-hours generated during the billing period, with this kilowatt-hour credit appearing
on the bill for the following billing period. At the beginning of each calendar year, any
remaining unused credits in excess of kilowatt-hours generated by the customer-generator,
shall be granted to the electric utility, without compensation to the customer-generator.
Summary of Substitute Bill:
Net Metering System
Current net metering law is amended so that the definition of net metering system has a
generating capacity of not more than 100 kilowatts.
Definition of Renewable Energy
"Renewable energy" means resources whose common characteristic is that they are
nondepletable or are naturally replenishable, existing or emerging non-fossil fuel energy
sources or technologies, and shall include but not be limited to the following: solar
photovoltaic or solar thermal electric energy; wind energy; ocean thermal, wave, or tidal
energy; fuel cells; landfill gas; incremental gains in energy production from capital
improvements in naturally flowing water and hydroelectric or run of river hydropower
generation; and advanced biomass power conversion technologies, such as gasification using
such biomass fuels as wood, agricultural, or food wastes, energy crops, biogas, biodiesel, or
organic refuse-derived fuel. The following technologies or fuels shall not be considered
renewable energy supplies: coal, oil, nuclear power or fuel gases excluding fuel gases that are
used in a combined heat and power plant designed to produce both heat and electricity from a
single heat source.
Cumulative Generating Capacity
An electricity utility shall offer to make net metering available to eligible
customer-generators on a first-come, first-serve basis until the cumulative generating capacity
of net metering systems equals 0.5 percent of the utility's peak demand during 1996, of which
no less than 0.25 percent shall be attributable to net metering systems that use renewable
energy. If one or more utilities are found to be approaching the maximum cumulative
generating capacity of net metering systems allowed, the Legislature may review the
generation thresholds.
Unused Kilowatt-Hour Credits
On April 30 of each calendar year, any unused kilowatt-hour credits accumulated during the
previous year shall be granted to the electric utility, without compensation to the
customer-generator.
Substitute Bill Compared to Original Bill:
The substitute bill:
Appropriation: None.
Fiscal Note: Not requested.
Effective Date of Substitute Bill: The bill takes effect 90 days after adjournment of session in which bill is passed.
Testimony For: (In support) Washington used to have the best in the nation net metering
law. Other states have surpassed Washington's standard in recent years. Current net
metering law has encouraged growth of systems net metered. Increasing to 100kW makes
sense and can be accommodated by utilities.
(With concerns) Allowing net metering systems equal up to 1 percent cumulative aggregate
demand seems reasonable, but may not need to go that high at this point. It may be worth
setting this amount a bit lower at 0.5 percent. At an 1 percent cap for net metering systems
connected a utilities system cost-shifting starts to occur, so it may be worth looking at lower
amount for right now. At 1 percent there could be some reliability problems related to circuit
loading if too many people connect in one area. The definition for renewable energy may
need to be expanded to include small biomass systems.
Testimony Against: Increasing the aggregate cumulative threshold is of concern to utilities. One percent of load coming from net metering systems would range from 0.5 percent of a retail rate increase to as much as a 1 percent increase to customers. A time adjusted threshold (an escalator) would be helpful to utilities in accommodating new net metering systems. As more net metering systems come on board, there needs to be a re-evaluation of the value of the power sold back to the utilities.
Persons Testifying: (In support) Toni Usibelli, Department of Community, Trade &
Economic Development.
(With concerns) Jay Gordon, Washington State Dairy Federation; Dave Warren, Washington
Public Utility Districts Association; and Mike Tracy, Puget Sound Energy.
(Against) Collins Sprague, Avista Corporation.