On July 23, 2008, the Public Utilities Commission of Ohio (“PUCO”) released for public comment proposed “net metering” rules.1

These rules will greatly impact the ability of energy consumers to economically generate their own power on-site, particularly from renewable resources such as solar or wind power. Specifically, the rules state that the utilities will be required to develop and implement a net metering tariff for customer generators of electricity that satisfy the qualifications set forth below.

Initial comments on the rules were due from interested parties on August 12, 2008. Reply comments on the rules are due August 29, 2008.2

Key Provisions of Net Metering Rules

As established in SB 2213 and replicated in these rules, a qualifying customer generator is defined as a generator whose generating facilities are:

  1. Fueled by solar, wind, biomass, landfill gas, or hydropower, or use a microturbine or a fuel cell;
  2. Located on a customer generator ’s premises;
  3. Operated in parallel with the electric utility’s transmission and distribution facilities; and
  4. Intended primarily to offset part or all of the customer generator’s electricity requirements.

There are three key revisions proposed by the Commission staff to Ohio’s current net metering rules, which may be of interest.4

The first revision removes the one percent peak demand cap on the net metering tariff. As a result, the generating facility’s rated capacity will no longer be counted toward the utility’s one per cent customer peak demand limit. This means that any customer-generator that qualifies for the net metering tariff as explained above will be able to take net metering service from its utility.

The second revision relates to the interplay between customer’s use and self-generation of electricity. The value of the excess generation produced by the customer generator will be applied to the customer’s next monthly bill, with any remaining credit for the previous 12 months to be refunded to the customer at the end of the calendar year. This is a change from the current rule which allows a credit to accumulate until netted against the customer’s bill or until a customer generator requests in writing a refund for excess generation/credits accumulated over a 12-month period. In contrast, the proposed provision requires a refund to the customer without requiring a written request.

Finally, the third revision incorporates hospital specific net metering provisions. The provisions state that each electric utility must develop a separate tariff for net metering for hospitals. A qualifying hospital is defined as a hospital customer generator whose generating facilities are (1) located on a customer generator’s premises and (2) operated in parallel with the electric utility’s transmission and distribution facilities.5 The hospital specific provisions also credit excess generation to the customer’s next bill, with any remaining credit to be refunded at the end of 12 months.

Additionally, Rule 4901:1-21-13 addresses net metering contracts between customers and Certified Electric Services Companies providing Competitive Retail Electric Service. The proposed rule eliminates many of the current rule’s provisions. These deletions appear to have been made to reduce duplication of the provisions located in 4091:1-20-28. Rule 4901-21-13 also incorporates hospital specific net metering provisions into the proposed net metering contracts rule.

Initial Comments from Interested Parties on Proposed Rules

The following parties submitted comments: The Interstate Renewable Energy Council; The Ohio Consumer And Environmental Advocates; Duke Energy Ohio; Constellation NewEnergy and Direct Energy Services, LLC; Integrys Energy Services, Inc; Northeast Ohio Public Energy Council; Ohio Advanced Energy; Ohio Home Builders; Columbus Sourther Power Company; Ohio Power Company; Ohio Farm Bureau Federation; The Greater Cincinnati Health Council; Dayton Power and Light Company; NAIOP-Ohio; Kroger (stating no comments); Dominion Retail; The Ohio Environmental Council; Ohio Edison Company; The Cleveland Electric Illuminating Company; The Toledo Edison Company; Interstate Renewable Energy Council; Industrial Energy Users-Ohio; Interstate Renewable Energy Council; American Municipal Power-Ohio; The Ohio Hospital Association; and COSE.

We have summarized below the initial comments made by various interested parties regarding proposed revisions to the net metering rules as received by the PUCO:

  • Avoid utility discretion in filing appropriate netmetering tariffs allowing for a third party netmetering model to take hold in Ohio. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Cogeneration systems such as combined heat and power should be added into the fuel sources and processes that a customer can install to qualify as a customer generator and qualify for the net metering tariff. (Comment made by the Ohio Environmental Council and Ohio Advanced Energy)
  • When a customer installs self-generation equipment, the customer’s billing demand components should be re-calculated to reflect reductions in demand produced by installation of such equipment. (Comment made by Ohio Advanced Energy)
  • A customer-generator should be credited for its contribution to the distribution system and the provider of last resort (“POLR”) obligations of the utility. Any generation related riders should be viewed as part of the generation service displaced by the self-generating customer and should also be credited to the customer as part of the value provided to the utility. (Comment made by Ohio Advanced Energy)
  • Competitive Retail Electric Service Providers should be required to develop and offer net metering contracts to their customers. (Comment made by Ohio Advanced Energy)
  • Lend specificity to the term “market value” for hospital net metering.
  • Compensation for hospital contributions must be fair and predictable. (Comment made by The Ohio Hospital Association)
  • The hospital should only get market rates from excess generation, insulating other customer classes from subsidizing the hospital rate class. (Comment made by The Ohio Consumer & Environmental Advocates)
  • The market value should be calculated on the spot market value posted at the time it is needed. (Comment made by the Greater Cincinnati Health Council)
  • Meter capacity
  • Utility should be required to inform net-metering customer if their meter is not capable of measuring the flow of electricity in two directions so they are made aware of the need for a new meter in order to obtain credit. (Comment made by The Ohio Consumer & Environmental Advocates)
  • If meter is found to operate outside standards, it should be replaced at customer’s expense. (Comment made by the Dayton Power and Light Company)
  • Progressive net metering and interconnection procedures should be a key component of a demand response program. Requirement for an external disconnect switch on inverter-based systems should be dropped. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Credit excess generation at the end of a billing period on a one-for-one kWh credit. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Refund to a customer-generator for net-positive generation should be at the customer’s request, not at the end of a time period. (Comment made by the Dayton Power and Light Company)
  • Remove insurance provisions and naming utilities as additional insureds. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Remove the option for standby charges for solar and wind facilities. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Allow third party ownership of generating facilities. (Comment made by The Ohio Consumer & Environmental Advocates)
  • Electric utility should be required to deliver notification of a circuit’s status to the respective county, township and/or municipal government whose jurisdiction coincides with the circuit’s location and service area. (Comment made by the Ohio Farm Bureau Federation)
  • Net metering definitions should be expanded to recognize any possible new technology that could provide on-site generation capabilities. (Comment made by the Ohio Farm Bureau Federation)