Net Metering

NOTE: A.B. 3723 enacted in May 2018 includes several changes to the net metering law, including- i) increase net metered aggregate capacity to 5.8% of the total annual kWh sold in the state, ii) establishes pilot community solar program, and other minor changes. 

Eligibility:

New Jersey’s net-metering rules require state’s investor-owned utilities and energy suppliers (and certain competitive municipal utilities and electric cooperatives) to offer net metering at non-discriminatory rates to residential, commercial and industrial customers. Systems that generate electricity using solar, wind, geothermal, wave, tidal, landfill gas or sustainable biomass resources, including fuel cells (all “Class I” technologies under the state RPS), are eligible. In January 2010 A.B. 3520 removed the individual system size cap of 2 MW formerly contained on the Board of Public Utilities (BPU) rules, and the necessary rule changes were made effective in July 2010. System size of renewable energy facility is limited to that needed to meet annual on-site electric demand. A.B. 3723 enacted in May 2018  authorizes Board of Public Utilities (BPU) to limit net metering to 5.1% of the total annual kWh sold in the State by each electric power supplier during prior one year period. The legislation instead of providing a firm aggregate limit on net metering, it authorizes the BPU to cease offering net metering if this capacity is reached.  BPU may continue to allow net metering even if this threshold is reached. 

Aside for public buildings (see below), the renewable energy facility should be located within the property boundaries or be located geographically next to each other. Each of the renewable generation facility can only be net-metered with one customer.

Net Excess Generation:
A single metering arrangement is preferred. According to the statute, customer-generators have several compensation options for net excess generation (NEG), as listed below. The latter two options were added by S.B. 2936 in January 2008.

• Customer-generator receives month-to-month credit for NEG at the full retail rate and is compensated for remaining NEG at the avoided-cost of wholesale power at the end of an annualized period.
• Customer-generator is compensated for all NEG on a real-time basis according to the PJM power pool real-time locational marginal pricing rate, adjusted for losses by the respective zone in the PJM.
• Customer generator may enter into a bilateral agreement with their electric supplier or service provider for the sale and purchase of NEG. Real-time crediting is permitted, subject to the applicable PJM rules.

In addition to the real-time crediting options described above, S.B. 2936 also: (1) expanded the list of eligible customers to include industrial and large commercial customers; (2) extended net metering to all systems that generate electricity using “Class I” renewable-energy resources; and (3) allowed utilities to recover the costs of “any new net meters, upgraded net meters, system reinforcements or upgrades, and interconnection costs” either through their regulated rates or from net-metered customers.

A separate rule making proceeding completed in March 2009 allows customer-generators to select any month of the year to begin their annualized period. This rule applies to all net metering customers, regardless of whether they began net metering prior to March 2, 2009 when the rule took effect. The choice of an annualized period is generally permanent unless the utility voluntarily accepts the customer’s choice of a new annualized period.

Renewable Attributes:
Customers eligible for net metering retain ownership of all renewable-energy credits (RECs) associated with the electricity they generate. Utilities are required to report net metering enrollment reports to the BPU twice annually, one covering January – June and other covering July – December. The reports must contain information detailing estimated customer generation supplied to the distribution grid, estimated grid electricity supplied to net metered customers, the number of customer that received payments for annual NEG, and the total dollar amount paid to net metering customers for annual NEG by month.

Meter Aggregation:

In July 2012, New Jersey enacted legislation (S.B. 1925) requiring electric utilities to allow public entities such as state and local governments, local agencies and school districts to engage in “net metering aggregation” of solar facilities. However, the rules implemented do not meet the definition of aggregate net metering as typically defined.  In order to qualify for net metering aggregation, the solar facility must be on property owned by the customer, be owned and operated by the single customer, and with the exception of state entities, be located within the customer’s territorial jurisdiction. For state entity projects, all facilities must be located within 5 miles of one another. In addition, for all customers all facilities must be located within the territory of the same electric utility, be served by the same basic generation service provider or electric power supplier, and all facilities must be within the same customer class of the applicable electric utility tariff. The customer-generator (or host meter) receives credit for excess generation at the retail rate; meters other than the host customer are credited at the wholesale rate at the end of a designated annualized period. Third party meter aggregation is allowed.

A.B. 3723, enacted in May 2018, directs the Board of Public Utilities (BPU) to develop a process for public entities to serve as host customers for remote net metering projects. Public entities hosting remote net metering projects may allocate net metering credits to other public entities in the same service territory.