On October 7, 2019, Ohio’s newly promulgated net metering rule[1] takes effect. This concludes a rule revision process dating back to 2012, although another iteration is possible after the conclusion of a pending Ohio Supreme Court appeal.[2] For now, the Public Utilities Commission of Ohio (PUCO) has resolved a number of important issues regarding net metering[3]:

  • Sizing: Existing law requires a net metering system to be “intended primarily to offset part or all of the customer-generator’s requirements for electricity.” Ohio Revised Code (ORC) 4928.01(A)(31). The new PUCO rule provides more definite parameters in applying that provision, stating that a system must not exceed 120% of the customer’s “requirements for electricity at the time of interconnection[],” based on the customer’s average annual usage over the prior three years or another “reasonable consumption estimate.” Previously, Ohio utilities would not allow a customer to net meter if their system produced more than 100% of annual usage at any time.
  • Location: Ohio law (ORC 4928.01(A)(31)) requires a “net metering system” to be “located on a customer-generator’s premises.” Under the new rule, “premises” may include “a “contiguous lot . . . regardless of easements, public thoroughfares, transportation rights-of-way, or utility rights-of-way,” if that approach “would not create an unsafe or hazardous condition pursuant to the interconnection standards.”
  • Role of competitive suppliers: While electric distribution utilities (EDUs) will remain obligated to offer a net metering tariff under ORC 4928.67(A)(1), the new rule states that competitive suppliers “may offer” their own net metering contracts under any terms agreed to by customers. Meanwhile, the EDUs must offer a net metering tariff to any customer-generator even if that customer receives generation service from a competitive supplier, either individually or through an aggregation.
  • Compensation for excess generation: Effectively codifying existing net metering tariffs – and reversing a prior PUCO stance on this issue – the new rule provides that EDUs should credit customers for excess generation based solely on the energy component of the EDU’s standard service offer, excluding any capacity-related compensation.

Of course, questions remain as to how exactly this rule will be implemented under utility tariffs and, potentially, through net metering contracts with competitive suppliers. Some notable examples:

  • Sizing: Will EDUs stick to determining eligibility for net metering at the time of interconnection (as the PUCO seems to have envisioned), or continue to remove customers from net metering tariffs if their system later produces significant excess generation? And will EDUs require customer justification for sizing a system at greater than 100% of annual usage in order to meet the “intended primarily to offset” element of the definition of a “net metering system”?
  • Location: For a customer trying to install a project on a contiguous lot, what will the utility consider “an unsafe or hazardous condition”?
  • Role of competitive suppliers: As Ohio utilities roll out advanced meters and associated IT infrastructure that can support PJM settlement based on actual individual customer load rather than a generic load profile, will competitive suppliers actually offer net metering contracts in the marketplace?
  • Compensation for excess generation: The administrative rationale for eliminating EDU compensation for the capacity value of excess generation was that “customer-generators may generate electricity at times of peak demand, and with advanced meters capable of measuring hourly interval usage data, these peak load contributions should be incorporated into a customer-generator’s bill” to produce bill savings. Will EDUs that have deployed advanced meters in fact structure net metering tariffs to reward excess generation that lowers peak system load and mitigates capacity costs?

With the net metering rule now final, Ohio EDUs will soon be filing updated net metering tariffs, and some of these questions will be answered. For others, only time will tell.