NorthWestern Energy opposes net-metering cap increase

The Legislature should allow government entities to produce five times more solar energy for credit, according to one Republican’s bill.

Rep. Daniel Zolnikov, R-Billings, got a little excited as he tried to overcome NorthWestern Energy arguments against House Bill 34, which would increase the net-metering cap to 250 kilowatts from 50 kW for solar projects by government entities such as schools or prisons.

Energy customers who can produce their own power through solar, wind or hydro equipment get credit from utility companies for excess power they provide to the electrical grid in a process called “net-metering.” The 1999 Legislature unanimously passed a law that approved net metering but set the limit at 50 kW. This will be the third Legislature with bills seeking to up the cap.

Net metering is good for solar-panel owners, but electric companies don’t like it for a myriad of reasons, not the least of which is lost revenue.The original bill would have also allowed churches and non-profit organizations, suchto get the higher cap, but they were removed in an interim-committee compromise, Zolnikov said.

But as a result, NWE argued HB 34 gave the government a larger subsidy compared to regular customers.

“A cost shift is not a subsidy. Net metering is not a subsidy,” Zolnikov said, his voice rising. “I think we should get rid of (tax credits) and let it be very competitive. Why? Because (an electrical company) is a monopoly. You cannot easily compete with a monopoly. This is the only way to compete with a monopoly in a somewhat functional manner.”

On Monday, Zolnikov presented two of 13 net-metering bills slated so far for the House Federal Relations, Energy and Telecommunications committee. The first, House Bill 52, would allow those who already have solar setups to have their current net-metering rate grandfathered, in case another bill or the Public Service Commission reduced the rate in the future. No one rose to oppose that bill.

It was HB 34 that caused NorthWestern Energy lobbyist John Alke to rise in opposition, claiming that 250 kW-worth of credit was too much and that the resulting “subsidy” due to the cost shift wasn’t fair to those who don’t have alternative energy.

“Who has solar? It’s middle- and upper-echelon people because of the tax credit,” Alke said. “Low income people and people of modest means, they don’t care about tax credits. The subsidy associated with solar is heavily disproportionately paid by the people who are least able to pay.”

NorthWestern Energy representatives for years have argued against net-metering increases, saying that providing service to net-metering versus regular costumers costs the same. Since those with net-metering aren’t paying as much, regular costumers have to pay more, according to NWE.

Alke stepped the committee members through the calculations that NWE makes when forecasting its rates. NWE can’t factor in energy provided by solar customers because it’s not predictable and not available during the time of peak demand, which for Montana is cold winter evenings, Alke said.

Currently, about 1,900 Montanans have small net-metering systems while only 85 have projects producing more than 50 kW. By his calculations, Alke said a net-metering customer with a 4.5-kW system - that's about the size of most rooftop systems - saves about $485 a year. If the cap jumped to 250-kW, large net-metering projects would save as much as $27,000 per year, a hefty "subsidy," Alke said.

However, Jeff Fox of Renewable Northwest said the Montana Renewable Energy Association did a rough cost/benefit analysis and calculated that regular customers got a benefit worth about $3,000 a year.

Jim Baerg of Livingston said he found a scientific review of 16 studies nationwide that also found benefit for regular customers of about 16-cent per kW.

Eleven people spoke in support of the bill, including representatives from the Department of Environmental Quality and University of Montana students.

Zolnikov said insufficient data exist to prove cost shifts exist or go one way or the other, based upon information presented to the energy interim committee. He had pushed for the PSC to undertake such a study and was frustrated his suggestion was ignored.

Even if cost shifts do exist for net-metering, Zolnikov said, utilities don’t oppose the cost shifts – situations where one consumer group pays more than another – found in many other arenas. Examples include: a person who uses a cabin only in the winter pays less than people who occupy a house year-round; it costs more to service isolated rural users than densely packed urban dwellers; and growing communities cost more than stable communities because of the need to add service.

“The question of the existence of a cost shift will have to be answered someday. But with this uncertainty, will moving forward be negative or positive? Will we look at protecting monopoly interest and stifle innovation? Or should we move to advance energy choice, small business opportunities and technological deployment?” Zolnikov said.