MA DPU Adopts Emergency Regulations on Net Metering

On May 11, 2016, 30 days after Governor Baker signed new solar net metering legislation into law (the “Act”), the Massachusetts Department of Public Utilities opened Docket 16-64 and issued an order adopting Emergency Regulations (“Emergency Regulations”) that amend the existing Net Metering Regulations (220 C.M.R. 18.00) to reflect the provisions of the Act. The Emergency Regulations do not provide all of the answers for which stakeholders had hoped. In fact, DPU itself has posed a series of questions for stakeholders that suggest the Department is actively considering whether and how the final regulations should differ from the Emergency Regulations in order to appropriately implement the Act. Interested parties should consider participating in the public comment period leading up to issuance of a final regulation. Public comments are due June 15, 2016 and DPU will also hold a public hearing the same day.

Cap Increase in Effect

The Emergency Regulations formally implement the statutory increase in the net metering caps for public and private net metering facilities. Projects that have already submitted a complete Application for Cap Allocation (“ACA”) and have been on a waiting list for a cap allocation should soon get an individualized notice from the MassACA System Administrator with an invitation to receive a cap allocation. Recipients will have 15 business days from receipt of the notice to pay the reservation fee and a project’s initial reservation period will start when that payment is made.

Implementation of Market Net Metering Credit

The Emergency Regulations attempt to implement the new statutory “Market Net Metering Credit” framework through the inclusion of new definitions and other provisions. The Emergency Regulations do not, however, provide satisfactory answers regarding which private solar net metering facilities will be subject to the new, lower-value market net metering credit.

The definition of “Market Net Metering Credit” generally mirrors the intent of the Act but indicates that it will apply to certain private solar net metering facilities that are “interconnected to a Distribution Company after the Notification Date” (emphasis added). This departs from the Act, which calls for establishment of “a date of notification after which all new Class I, Class II and Class III solar net metering facilities shall generate market net metering credits only” (emphasis added). Both SEIA and NECEC have submitted written comments to the Executive Office of Energy and Environmental Affairs advocating that new facilities subject to market net metering credits should be those that submit an ACA after the Notification Date. Drawing the line in a different manner would appear to yield inequitable outcomes out of step with the intent of the Act.

Note that the Emergency Regulations do follow the Act in providing full-value net metering credits for exempt small net metering facilities and for public net metering facilities. The Emergency Regulations also incorporate the 25-year transition period prescribed by the Act for private solar net metering facilities that will not immediately be subject to the market net metering credit.

The Notification Date itself has not been determined by DPU and cannot be determined until DOER has certified that 1600 MW (direct current) of solar net metering facilities have been qualified for the SREC I and II programs. DPU has indicated that it will not include that actual date in the final regulations but will instead announce the date in an order. What is not clear is whether DPU wait until the Emergency Regulations are replaced with final regulations to announce a Notification Date if DOER issues its certification prior to the closing of DPU’s public comment period. As noted below, DPU is seeking input from stakeholders on the timing of the Notification Date.

Allowance for Monthly Minimum Charge Proposals

The Emergency Regulations add a provision that allows electric distribution companies to propose a minimum monthly contribution from net metering customers.

While the Act allows for such proposals, it is striking that the Act expressly provides that such proposals may only be filed with DPU in “(i) the distribution company’s base distribution rate proceeding; or (ii) a revenue neutral rate design filing that is supported by appropriate cost of service data across all rate classes.” It is not clear what DPU’s intent may be by including aspects of the minimum contribution in the Emergency Regulations but the Department presumably does not intend to entertain minimum contribution proposals outside of the regulatory paths prescribed in the Act.

Note that the Emergency Regulations provide for DPU to receive and review proposals on minimum monthly contributions for net metering customers but did not include the clarifying language from the Act that “any such minimum contributions shall ensure that all distribution company customers contribute to the fixed costs of ensuring the reliability, proper maintenance and safety of the electric distribution system.” As noted below, DPU has invited comments on this topic.

Opportunity for Stakeholder Input

DPU has opened a public comment period with initial written comments due by 5:00 pm on Wednesday, June 15, 2016 and reply comments due by 5:00 pm on Monday, June 20, 2016.

There will also be a public hearing at the Department’s offices at South Station at 10:00 am on June 15, 2016.

In its order, DPU posed 10 specific questions or topics on which it is soliciting comments:

  • The process for Distribution Companies to calculate Net Metering Credits for Solar Net Metering Facilities that are interconnected prior to the Notification Date and seek to expand such facilities after the Notification Date;
  • Whether the Act permits Distribution Companies to provide payment to Class III Solar Net Metering Facilities receiving Market Net Metering Credits in lieu of a Net Metering Credit on an electric bill;
  • Whether the term “government entity” as used in the Act, Section 3, which states that “credits shall only be allocated to an account of a municipality or government entity,” should be interpreted to have the same meaning as “other governmental entity” as used in G.L. c. 164, § 139;
  • Whether including in the definitions of Class I Net Metering Facility and Class I Solar Net Metering Facility the phrase “is not a transmission facility” is appropriate; and if so, whether the definitions of Class II Net Metering Facility, Class II Solar Net Metering Facility, Class III Net Metering Facility, and Class III Solar Net Metering Facility also should reference that the facility is not a transmission facility;
  • At what time and under what circumstances the Department may consider proposals for a monthly minimum reliability contribution;
  • What process should the Department use to consider the monthly minimum reliability contribution;
  • Whether the Department should exempt or modify a monthly minimum reliability contribution for low-income ratepayers;
  • Whether the Department should exempt any class or sub-class of net metering facilities that were in service before December 31, 2016;
  • What would be a reasonable amount of time between (a) the Department of Energy Resource’s (“DOER”) determination that the aggregate nameplate capacity of Solar Net Metering Facilities qualified under G.L. c. 25A, § 11F(g), is equal to or greater than 1,600 MW direct current and (b) the Notification Date to be established pursuant to Department Order following receipt of the DOER’s determination;
  • In defining the process for calculating Net Metering Credits in 220 C.M.R. § 18.04, should the term “Basic Service” be used rather than the term “Default Service.”

Further Information

For further information about these matters, please contact Jonathan Klavens at jklavens@klavenslawgroup.com or 617-502-6281 or Courtney Feeley Karp at cfeeleykarp@klavenslawgroup.com or 617-502-6284.

Disclaimer

This document, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Klavens Law Group, P.C. or its attorneys. Please seek the services of a competent professional if you need legal or other professional assistance.