On April 11, 2016, Massachusetts Governor Baker signed into law Chapter 75 of the Acts of 2016, “An Act Relative to Solar Energy,” legislation that raises the Massachusetts net metering program caps – but includes a number of changes to the net metering program aimed at reducing costs to ratepayers.
The Act provides for an increase in the cap on “private net metering facilities” and “public net metering facilities” in the territory of each Massachusetts distribution company. The private facility cap rises from 4% to 7% of the utility’s historic peak load; the public facility cap rises from 5% to 8%. While largely good news for solar stakeholders in Massachusetts, the existing waiting list for private net metering facilities in National Grid’s service territory (current cap status available here) is expected to absorb nearly all of the approximately 153 MW AC private facility cap increase in that territory. As a result, the Act is expected to facilitate the construction of private net metering facilities on the National Grid waiting list but will likely not allow for resumption of early stage development of larger solar projects in National Grid territory (comprising 175 Massachusetts cities and towns).
The Act provides that “new” private solar net metering facilities after a “date of notification” will receive “market net metering credits” with a value 40% less than ordinary net metering credits. Net metering credits will still be calculated using the same four components: the default service, distribution, transmission and transition kilowatt-hour charges. However, a market net metering credit will only be 60% of the total amount of those charges.
The new “market net metering credit” will not apply to:
- “public” solar net metering facilities (those facilities with a public entity “host customer” and all public entity offtakers);
- small solar net metering facilities;
- solar net metering facilities that are already operating or otherwise not “new”; or
- non-solar net metering facilities (e.g., wind net metering facilities, anaerobic digester net metering facilities)
Existing private solar net metering facilities eventually will also be subject to the reduction in net metering credit value but not until the 25th anniversary of the facility’s date of authorization to interconnect.
As a first step in the transition to market net metering credits for new private net metering facilities, the Act requires that the Massachusetts Department of Energy Resources (DOER) certify to the Massachusetts Department of Public Utilities (DPU) that 1600 MW of solar net metering facilities have been qualified under the SREC I and II programs. In view of the emergency regulation DOER issued on April 8, 2016 expanding the SREC II program, it is likely that DOER will be able to readily provide this certification.
Once DOER provides its certification, the Act requires that DPU announce a “date of notification” after which all “new” solar net metering facilities will only generate market net metering credits. That date of notification could be as early as May 11, 2016. (See note below on delayed effective date of this transition section of the Act.) At the same time, the Act does not provide any further clarification on when the date of notification will be or what private net metering facilities will be considered “new” for purposes of determining which net metering credit regime applies.
DPU is expected to provide information on the implementation of the cap increase soon and may provide additional details on the transition period as well. Stay tuned.
While Massachusetts distribution companies already had the ability to request that DPU approve rate changes, the Act expressly allows distribution companies to submit proposals for a “monthly minimum reliability contribution” to be paid by customers who receive net metering credits. If such proposals are submitted and approved following a formal adjudicatory proceeding, such minimum charges would likely prevent net metering credit recipients from using net metering credits to zero out their monthly electricity bill.
The Act also directs DOER to develop a new solar incentive program that, among other things, “promotes the orderly transition to a stable and self-sustaining solar market at a reasonable cost to ratepayers.” (DOER had already begun development of a new solar incentive program by the time the Act was passed.)
Important Note: The Act gives DOER broad discretion as to what form the new incentive program may take. The current SREC programs sprung from DOER’s statutory authorization to create a carve-out for certain technologies within the Massachusetts RPS program. A new solar incentive program could be another SREC or other REC-based program but it could also have an entirely different mechanism such as a utility tariff.
The Act includes an “emergency preamble” that allows the law to take effect immediately upon signature by the Governor. While the net metering cap increase takes effect immediately, the increased caps are not expected to be reflected in the net metering program until DPU implements the cap increases through an emergency regulation. In addition, the Act delays until May 11, 2016 the effective date of the provision providing for the transition to the market net metering credit rate for new private net metering facilities.
For further information about these matters, please contact Jonathan Klavens at email@example.com or 617-502-6281 or Courtney Feeley Karp at firstname.lastname@example.org or 617-502-6284.
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