Net Metering

NOTE: On October 2016, the PA Public Service Commission (PUC) issued a second final rulemaking order amending net metering and Alternative Energy Portfolio Standards (AEPS) regulations. Changes include clarifying provisions for meter aggregation, revisions to the interconnection rules and other minor amendments. The documents associated with the case can be accessed at Docket L-2014-2404361.

In 2006 the PA Public Utilities Commission (PUC) adopted net-metering rules and interconnection standards for net-metered systems and other forms of distributed generation (DG) pursuant to the Alternative Energy Portfolio Standards (AEPS) Act of 2004. In 2007, H.B. 1203 amended AEPS and expanded net metering. Revised rules consistent with these amendments were adopted by the Pennsylvania Public Utilities Commission (PUC), effective November 29, 2008. The PUC updated the net-metering rules (Docket No. M-2011-2249441) in 2012 approving the use of third-party ownership models (i.e., system leases or retail power purchase agreements). On October 2016, the PUC updated the regulations for net metering and AEPS following more than two years of regulatory proceeding. Changes included clarifying provisions for meter aggregation, revisions to interconnection rules, and other minor amendments.  

Eligibility and Availability

In Pennsylvania, investor-owned utilities must offer net metering to i) residential customers that generate electricity with systems up to 50 kilowatts (kW) in capacity; ii) nonresidential customers with systems up to 3 megawatts (MW) in capacity; and iii) customers with systems greater than 3 MW but no more than 5 MW who make their systems available to the grid during emergencies, or where a micro-grid is in place in order to maintain critical infrastructure. Systems with name plate capacity of 500 KW must receive prior approval from the Public Utility Commission to net meter. 

Systems eligible for net metering include those that generate electricity using photovoltaics (PV), solar-thermal energy, wind energy, hydropower, geothermal energy, biomass energy, fuel cells, combined heat and power (CHP), municipal solid waste, waste coal, coal-mine methane, other forms of distributed generation (DG) and certain demand-side management technologies.

It is important to note that electric generation suppliers (EGSs) in Pennsylvania are permitted but not required to offer net metering. Thus, customers who choose an electricity supplier other than their utility or Default Service Provider (DSP) must check with the supplier to see if it offers net metering service. Net metering is available when any portion of the electricity generated is used to offset on-site consumption. The electric utility is not allowed to own or operate an net-metered alternative energy system. 

Utilities must provide net metering at nondiscriminatory rates identical with respect to rate structure, retail rate components, and any monthly charges to the rates charged to non-net-metered customers. Utilities may not charge net-metered customers any fees or other charges that do not apply to non-net-metered customers, except that are specifically authorized by the PUC. Furthermore, utilities may not require customers to install any additional equipment or carry liability insurance.

Net excess generation

Net metering is achieved using a single, bi-directional meter that can measure and record the flow of electricity in both directions at the same rate. Net excess generation (NEG) is carried forward and credited to the customer’s next bill at the full retail kilowatt-hour rate, which include generation, transmission, and distribution charges. Customer-generators are compensated for remaining NEG at the utility’s “price-to-compare” at the end of the year. The price-to-compare includes the generation and transmission components — but not the distribution component — of a utility’s retail rate. In order to reconcile net metering with Pennsylvania’s broader renewable energy goals, the “year” referenced above is defined to coincide with the compliance year (June 1 – May 31) used for Pennsylvania’s Alternative Energy Portfolio Standard (AEPS).

Environmental attributes 

Customers retain ownership of alternative-energy credits (commonly referred to as “renewable-energy credits” or “RECs” when associated with renewable energy), unless there is a contract with an express provision that assigns REC ownership to another entity, or unless the customer expressly rejects REC ownership. A unit of REC represents the environmental attributes of 1 MWh of electricity generated from a qualified alternative energy source. If a net-metered customer chooses to take ownership or transfer ownership of alternative-energy credits, then the customer is responsible for installing metering equipment required to measure alternative-energy credits.* Net metered customers may contact a third party aggregator who will bundle RECs from multiple customers to facilitate the sale of RECs in the market.   

Meter aggregation

Pennsylvania’s rules allow meter aggregation on properties owned or leased and operated by the customer generator. This primarily benefit farms and businesses that are multiple buildings with separate electric meters but under one account. Aggregation is limited to meters within the same electric distribution company’s service territory that are located on properties within two miles of the boundaries of the customer generator’s property. All of the electric meters to be aggregated must belong to the same individual or legal entity. In order to qualify, the customer generator must have an on-site electric load at the location of the generating facility. A generation system without an on-site load are not eligible to aggregate meters that are off-site; without an on-site independent load, the system would not qualify for net-metering and be could be treated as a merchant generator. 

The utility must provide the necessary equipment for physical meter aggregation, but the customer must pay the costs. In addition, “virtual meter aggregation” is allowed for properties owned or leased and operated by a customer and located within two miles of the boundaries of the customer’s property and within a single utility’s service territory. For virtual meter aggregation, the customer is responsible only for any incremental expense involved in processing the account on a virtual meter aggregation basis. 

*In November 2008, amended rules for the Pennsylvania Alternative Energy Portfolio Standard (AEPS) took effect. These rules exempt PV systems of 15 kW or less from a requirement that alternative energy credit (AEC) certification be verified by metered data, and instead provide a more general instruction that it be verified by the system administrator. Thus, despite the reference to “required” equipment that remains in the net metering rules, small solar facilities may not be required to install additional metering equipment in order to generate AEPS eligible credits.

**Anaerobic digesters used by farms to comply with the Chesapeake Watershed Implement Plan or the Nutrient Management Act are exempt from this system size cap.