PORTLAND, Maine — Maine utility regulators on Tuesday suggested gradually lowering the credits household and other small solar generators receive for power they put back onto the grid, engaging a debate that boiled over from the last legislative session.
The most common users of the policy, called net metering, are homes or businesses with solar panel installations.
For those customers, net metering allows a customer to receive credits equal to the retail price of power for times when their system generates more power than it uses, sending electricity back onto the grid.
That credit has two parts: the price of electricity and the price paid to the utility for using its power lines, or the transmission and distribution charge.
The centerpiece of regulators’ new proposal gradually removes the transmission and distribution portion of that bill credit, reducing the amount a small solar generator receives by 10 percent each year, for 10 years, starting with net-metering customers who sign up in January 2017.
The reduction would affect new customers while locking in existing net-metering customers to their current arrangements for 15 years. After that, the plan would shift those customers to getting bill credits only for the electricity supply portion of their bill.
At least 2,000 Maine homeowners have sunk thousands of dollars into solar power arrays. For those retaining connections to the power grid, net metering most often was a factor in determining when a homeowner would recover the cost of installation.
The rulemaking also could open a big question into that portion of the credit, tied to the price of energy. Currently, net-metered customers receive a credit for the retail price of power, set annually by regulators as the standard offer.
Maine Public Utilities Commission Chairman Mark Vannoy said he would like to hear comments from parties in the case about whether the final rate, at the end of 10 years, should continue to be tied to that retail rate or to the wholesale price other electric generators receive.
Exact details of the proposal are still limited to commissioners’ verbal descriptions of the draft rule and a news release from the commission. A written version of the draft rule is expected Wednesday, and PUC spokesman Harry Lanphear said such rulemakings typically take three to four months.
Tuesday’s order sets off rulemaking that will rankle the solar industry and environmental advocates who petitioned regulators not to tinker with the current system in order to give lawmakers another chance at revising the policy.
“It will be complicated, and it will be controversial, and it will take four months, and we didn’t have to go through any of that,” said Dylan Voorhees of the Natural Resources Council of Maine.
While regulators set the stage for a short-term battle over the policy, legislative leaders have said they intend to revisit the issue, after a failed attempt during the last session.
Lanphear said the commission hopes to conclude its rulemaking before the next legislative session begins.
Voorhees said he felt commissioners did not adequately justify why they proposed changes to net-metering rules, and he had hoped the commission would go into deeper detail to assess the costs and benefits of the policy.
Behind PUC’s move is the idea that non-net-metering customers foot an unfair share of the bill for the poles and wires delivering electricity, as net-metering customers receive credits that include those costs and as installation costs for solar systems fall.
Utilities, the Governor’s Energy Office and other parties raised concerns about that cost shift in testimony about the net-metering case.
Voorhees and solar industry advocates have argued the opposite, that small solar generators are not compensated enough.
That’s based partly on a PUC study, updated in July, showing that a solar installation generating electricity for 25 years would deliver power worth much more than the retail rate, at about 27.2 cents per kilowatt-hour. That price aims to account for avoided costs of building transmission lines and the value of environmental benefits from reducing emissions.
Vannoy said Tuesday that he hopes the process is “constructive” in revising the rule.
“In light of changes in the technology and costs of small renewable generation, particularly solar PV, we felt that opening a rulemaking process to consider changes to the rule was the prudent course of action to ensure that all ratepayers are treated fairly,” Vannoy said in a prepared statement.
The proposed rule goes beyond just changing the credit amounts, also calling for raising the size of solar array that can qualify, from 660 kilowatts to 1,000 kilowatts.
The changes also specify that customers who can’t install solar panels on their own home or building can buy into community projects where the solar power generation and net energy credits are shared. But the proposed rule did not include raising a cap on the number of customers that can sign up for community solar projects, capped at 10.
Net metering was destined for this kind of review.
Regulators intended that system to sustain the solar industry through its earliest days, calling for the policy to come under review when solar generation hit 1 percent of peak annual electricity consumption. Central Maine Power Co. asked for that review in January.
The new rule proposes a higher threshold for review, which would subject the rules to another review when net-metered generation resources hit 4 percent of peak annual electricity consumption.
The PUC held off on its net-metering case through the spring, while lawmakers grappled with a policy that would have kept net metering in place for existing customers and set up a new market-based approach to compensating future solar generators for the power they put back onto the grid.
The proposal was a compromise between utilities, the in-state solar industry, environmental groups and consumer advocates, but it was derailed by a veto from Gov. Paul LePage and fell short of an override vote.
Maine outpaced the region and country for growth in solar power generation in 2016, though the state’s relatively low capacity made it easier to grow quickly.
After the bill to replace net metering with new incentives failed, solar installers said keeping net metering is crucial to maintaining that growth.
The decision by the PUC is the latest move in a debate playing out across the country over how to value electricity from small generators and solar energy, in particular.
That issue has become heated, particularly in states where regulators have sought to tie net-metering credits to the ever-fluctuating wholesale price of power rather than the standard retail rate.
“I encourage parties to weigh in with constructive, useful information and assist us on further improving our terms,” Commissioner Carlisle McLean said. “There are many ways to improve the rule.”