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Distribution includes the equipment and work the utility does to carry and deliver electricity to its customers.
The other main part of customers’ bills covers electricity generation. If the utility is not the generation provider, it transmits payment to the electrical services company.
The PUCO’s recent decision holds that customers who provide excess electricity to the grid are entitled to the full value that would be charged under the electricity part of their bills.
Most of that charge depends on the market value of energy, which fluctuates. The rate also reflects a fixed “capacity” price, which is determined from annual auctions by the grid operator, PJM.
“It’s about 15 percent of the generation portion of the customer’s electric bill,” said FirstEnergy spokesperson Doug Colafella.
The utilities say customers producing excess electricity should only get the energy part of the electricity rate, and nothing for capacity. That’s how things have been handled so far, Colafella said. “We’re saying let’s follow the original rules that were put in place.”
“If a customer generates excess power, essentially they would be credited just for the energy that they produced and didn’t need,” Colafella explained. Including capacity would require larger payments.
“The PUCO is now saying that we would have to credit that kind of customer an average of about 15 percent more,” Colafella observed.
Utility company filings cite a 2002 Ohio Supreme Court case, which held that customers providing excess electricity to the grid should not get reimbursed for amounts covered by the distribution portion of the bill.
“The court stated that the net-metered customer did not contribute to the cost of PIPP [low-income support] charges, transmission, distribution, etc.,” explained Dan Sawmiller at the Sierra Club’s Beyond Coal campaign. “Inasmuch as the Court holding said that customers were entitled to the full generation rate, that would include capacity and energy.”
The PUCO said that its rulemaking decision complies with both the 2002 court case and the Ohio statute.
“[E]lectricity supplied to a customer-generator includes components such as capacity, demand, and energy,” the PUCO wrote. Its July decision confirmed rulings on the issue in January and May.
The PUCO also noted that Ohio law bars utilities from charging higher retail rates to net-metering customers than they would pay without their own generation.
Not compensating for part of the electricity charge could result in a different rate.
“The net metering rules require utilities to provide net metered customers compensation for electricity delivered to the grid at the same price that the utility would charge (including capacity and energy) for delivering electricity to the customer,” said Lawrence Friedeman, vice president for regulatory affairs and compliance at IGS Energy in Dublin, Ohio. The company promotes the development of distributed generation projects.
“IGS supported the Commission’s net metering rules because they provide reasonable compensation to distributed generation resources and enable them to compete on more level footing with traditional power plants,” Friedeman said.
Encouraging distributed generation with reasonable compensation for electricity going into the grid is “good public policy,” Friedeman stressed. “Distributed generation projects are on-site, reliable and local, energy efficient, and are cleaner than traditional power plants.”