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PURA Draft Decision Specifies How Retailers Must Reimburse Net Metering Customers

November 30, 2016 By Cheryl Kaften

On November 18, Connecticut’s Public Utilities Regulatory Authority (PURA) released a draft interim decision based on the results (Docket No. 15-09-03) of an investigation into “Net Metering Kilowatt-Hour Banking.”

If adopted, the decision would revise the current rules on how retail suppliers are required to reimburse net metering customers.

Why change the rules?

Prior to 2008, the authority noted, the state’s two large utilities, United Illuminating and Connecticut Light & Power (Eversource) administered net metering tariffs by reimbursing customers for net production that remained at the end of each billing cycle at the average monthly avoided cost of wholesale energy, an energy-only reimbursement.

However, Section 50, Public Act 07‑242, passed by the Connecticut General Assembly in 2007, stated that,“any plan … shall … include a requirement that the owner of the peaking generation [shall be] compensated at cost of service plus [a] reasonable rate of return .”

Instead of being reimbursed for net production each month, based on an energy-only wholesale value, Public Act 07‑242 allowed customer-operators with a capacity of up to 2 megawatts (MW) to “bank” any monthly net kilowatt-hours ( kWh) and to use banked kilowatt-hours  to offset future electric consumption on a kWh by kWh basis, over a 12-month period.

For example, the authority noted in its investigative report that, in 2008, United Illuminating’s residential energy charges totaled in excess of 20¢/kWh – or two to four times the monthly average avoided cost of wholesale energy being paid at that time.

In 2015, the PURA saw an increase in net metering complaints. Specifically, some UI customers expressed concern over the amount being paid for banked kilowatt-hours when they switched electric suppliers before the end of the annual net metering period.

These customers were unaware that UI was required to clear their kWh bank and pay for banked kilowatt-hours at the avoided cost of wholesale power when switching suppliers.  Once cleared, the banked kWh were no longer available to reduce the electric bill. 

This docket was established to review the current net metering rules.

The new mandate

In September 2015, PURA announced it had begun to review the net metering credit banking policy – including when and how generated kilowatt-hours were to be accrued, banked, used, priced, and reimbursed – particularly when customers move from supplier to supplier.

Under the proposed interim decision just released this month, the authority has mandated that:

  • United Illuminating will no longer cash out the net metering kWh bank when a customer switches electric suppliers;
  • Suppliers will not cash out the net meter kWh bank when a customer switches electric suppliers;
  • Suppliers serving customers at the end of the annual net meter banking period will be required to reimburse those customers for net kWh at the wholesale cost;
  • Suppliers will not be obligated to serve net metering customers;
  • One annual net meter banking period, that begins in October, will be added for all projects;
  • A working group will be reinstated to address discrepancies between the Independent System Operator of New England settlement and utility billing processes, to allow for direct assignment of net energy to load-serving entities and to address other issues identified.

The electricity distribution companies must submit a report and the recommendations of the working group to PURA no later than May 15, 2017. PURA will participate in the working group to facilitate the group’s efforts and progress.

The authority will issue a final decision in August 2017 that will address any ISO issues based on the working group’s report.

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