Modified Net Metering To Take Place In Mississippi
Mississippi will become the 46th state to implement net metering for owners generating renewable electricity with solar panels or wind. However, the new policy comes with rate limitations that favor utilities.
Briefly, net metering is the process by which individual utility customers who use solar panels or other renewable energy generators can sell back their excess power to utilities. The electricity the customers produce can be placed back on the electric grid to offset what they otherwise would pay on their power bill.
In states like California, existing net metering policies have been strongly opposed by utilities, claiming it costs too much to shareholders.
In early January of 2011, the Mississippi PSC initiated a study of the costs and benefits of net metering. Based on study results, on December 3, the new net metering policy went into effect.
This is all well and good, but according to pv-magazine, net metering refunds or payouts are limited in their financial scale: “…despite the findings of a study ordered by the commission which found that net-metered solar produces value higher than the retail rate, Mississippi decided to credit excess electricity produced by its customers at the wholesale electricity rate plus US$0.025 per kilowatt-hour (kWh).”
So much for the idea of a retail rate for distributed energy suppliers. The Mississippi PSC opted for this perspective from Mississippi Power:
“Mississippi Power agreed with the approach taken by the Mississippi PSC in addressing renewable net metering rules for the state. As reflected in our filings during the rulemaking process, the company believes a net metering rule should ensure that all customers pay their fair share for the availability and use of the electric grid so that non-renewable energy producing customers don’t bear an unfair portion of the cost. Supporting a reasonable net metering rule is the latest in Mississippi Power’s continued efforts to support of responsible renewable energy.”
The utility added its commitment to renewable energy was already evident in its more than 100 MW of cost-effective utility-scale solar project, which would make Mississippi Power the largest purchaser of solar energy produced in the state.
Under the new net metering policy, Mississippi distributed energy system owners will be credited for excess generation at the wholesale rate plus 2.5 cents per kilowatt-hour, with an additional 2 cent bonus for the first 1000 customers.
Residential solar projects up to 20 kW in capacity will be eligible for net metering, plus non-residential projects up to 2 MW. The aggregate capacity eligible to participate is limited to 3% of total system peak demand.
Mississippi net metering applies to customers of Entergy Mississippi and Mississippi Power Company. The Tennessee Valley Authority, which supplies power to the northern part of the state, has its own program and isn’t subject to the new rule. Cooperatives will have nine months to propose their own rules or adopt the commission’s rules.
A number of solar advocates were disappointed by the policy, stating it was overly complicated in favor of utility shareholders.
Mississippi River image via Shutterstock
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
CleanTechnica Holiday Wish Book
Our Latest EVObsession Video
CleanTechnica uses affiliate links. See our policy here.
Is this really net metering, where you pay for the difference between what you produce, and consume, or is this something else?
Net metering is all about what you are credited for any power that causes your meter to run backward, if there were no policy, you would effectively be credited at the same retail rate you are paying. If you have time of use rates it becomes complicated as the value of what you are sending out depends on when you send it. If a utility does not permit your meter to run backward
I get the whole meter run backward forward thing. I saw this in the article “wholesale rate plus 2.5 cents per kilowatt-hour” If this is for when your meter runs backwards then you are buying and selling electricity, not netting it.
So does “credit excess electricity produced” mean excess over 12 months or are they taking a two meter approach. So every milli-sec you make more than you use, it is excess.
One big question over the next decade will be whether utilities commissions represent consumer interests or industry interests. In Mississippi, apparently the PSC represents utilities and not consumers.
Distributed power doesn’t get put onto the grid in wholesale quantities and doesn’t traverse the transmission or distribution networks. That means it should be credited at something close to retail.
If time-of-use metering is in play, a slight discount (say 10-15%) off retail might make some sense, but as long as metering is done on a flat rate basis, crediting at full retail is more appropriate, since excess solar gets pushed onto the grid when real-time prices are at their highs.
The sad part is that their focus on net metering will be futile for them regardless of the outcome. Utilities don’t seem to understand that if net metering goes away, the big winners will be the battery/storage companies not utilities. Utility lobbyists are funding a fight that’s likely to pay off handsomely for somebody else.
“Distributed power doesn’t get put onto the grid in wholesale quantities and doesn’t traverse the transmission or distribution networks. That means it should be credited at something close to retail.”
It does not take a lot of end-user solar online to greatly reduce the wholesale cost of electricity. We’ve seen that happen in Germany. All one needs is enough end-user solar to replace the high cost “peaker” power that has to be purchased/provided.
Look at the graph below. The top price line is before solar. Prices rise as people get up in the morning and start using more electricity and stays high until they go to bed. The bottom price line is with solar. Prices rise as before but then collapse to late night levels as solar starts producing. There’s a second price bump when the Sun sets.
Net metering requires that utilities accept low value/low cost electricity and pay it back with electricity which costs them a lot more during mornings and evenings.
It doesn’t really matter whether the utility is for profit (owned by shareholders) or a non-profit. What net metering requires is that the utility to lose money on the end-user solar they accept for “trade”. If the utility is losing money in the middle of the day then they will need to increase the rate for non-solar owners to make up for the loss.
And, yes, end-user solar uses the distribution system. You send your excess solar to houses down the street via distribution lines owned by the utility.
Net metering will go away. It’s a flawed system. Will that drive solar owners to install batteries? That’s a harder call. Most likely utilities will be able to install storage for a much better price than end-users. It may be that end-user solar systems will become smaller and cover only the house’s use during the sunny hours. Or a modest amount of storage might be installed, enough to deal with evening needs.
Utilities won’t be hurt. What they lose to end-user solar and storage will be replaced with EV charging demand.
@Bob – When the US gets close to Germany levels of solar, then sure, we can re-evaluate. Although again, if excess solar causes real-time price drops as in Germany, time-of-use metering and demand response would help a lot. Personally, I can’t fathom why everyone isn’t moving toward time-of-use, but that’s another matter.
As for distribution costs, it’s a long stretch to equate the few hundred feet of wire needed for a rooftop solar owner to feed a neighbor to the infrastructure needed to condition and deliver bulk power from far away.
Utilities have people who spend all their time planning and figuring. They know that they need to oppose net metering early on as it would be hard to remove it once established. They are very aware of what has happened in Germany and why offering net metering is a trap for them.
The distribution system is the distribution system. It cost a lot of money to build and costs significant money to maintain. We don’t price kWh by the distance they travel, that would be too difficult. We charge averages.
It’s not surprising that utilities are fighting so hard against net metering because it, like other intelligent grid technologies, helps knock down peaks and level out demand. That’ll reduce their profits and I don’t blame them for not liking that.
OTOH, the argument that rooftop solar owners should pay the same proportion of transmission and distribution costs as a bulk power generator is entirely unpersuasive. No one is suggesting charging infrastructure use on a distance basis, but anyone who knows this business knows that the costs of integrating 5-10% of solar into the mix in the last mile of the distribution infrastructure is darn near zero.
The cost of integrating solar is something different from the cost of distributing electricity.
Integration costs are things like having to burn more fuel in gas plants. Solar and wind don’t cause more gas to be burned. (Large thermal plants do.)
@Bob – You’re being somewhat pedantic.
We’re talking about the final leg of the distribution system and in that context, the concept of integration is more nuanced.
Wouldn’t you agree that the marginal cost for utilities to distribute excess rooftop solar production is near zero? Also, wouldn’t you also agree that the proportional costs of the infrastructure that these kwhs travel across is also near zero?
My sense is that your disagreement is really around how the construction and operational costs of the transmission and distribution system are allocated.
You believe rooftop solar owners get a free ride with net metering because they sell their power at retail and don’t have to chip in toward transmission and distribution infrastructure costs (even though utilities don’t use these resources to get the net metered kwhs to their nearby destination).
My point is that paying rooftop solar owners only wholesale essentially lets utilities double dip. That approach let’s utilities charge the rooftop solar owner’s neighbor for transmission and distribution system allocation that the neighbor didn’t actually use, while at the same time, discounting the power that the roof top solar owner provides as though it were provided in bulk dozens or more miles away.
“Wouldn’t you agree that the marginal cost for utilities to distribute excess rooftop solar production is near zero?”
The cost to distribute excess rooftop solar is exactly the same as distributing electricity from a coal or gas plant. The distribution system has to be built and maintained.
“You believe rooftop solar owners get a free ride with net metering because they sell their power at retail and don’t have to chip in toward transmission and distribution infrastructure costs (even though utilities don’t use these resources to get the net metered kwhs to their nearby destination).”
It’s worse than that. Net metering requires utilities to purchase low value electricity and pay it back with high cost electricity.
It’s like requiring the grocery store to take the excess tomatoes you grow in your garden in the summer and then pay you back in the winter with tomatoes which cost them 3x, 5x higher.
“My point is that paying rooftop solar owners only wholesale essentially lets utilities double dip.”
There’s no double dipping. You want utilities to pay far more for end-user solar than they would have to pay for electricity from another source.
If we want to subsidize end-user solar then we need to do that with taxpayer money, not force businesses to finance.
And you might want to look up the meaning of pedantic.
“The cost to distribute excess rooftop solar is exactly the same as distributing electricity from a coal or gas plant. The distribution system has to be built and maintained.”
This is roughly analogous to saying FedEx should charge the same amount to ship a package across town as they charge to ship it across the globe, since FedEx’s global distribution network has to be built and maintained. Don’t you see how ridiculous that is?
“Net metering requires utilities to purchase low value electricity and pay it back with high cost electricity.”
On this point, we have some common ground. I’d prefer that net-metering took into account the relative real-time value of the energy was produced and consumed by rooftop solar owners.
Using average pricing for a commodity whose cost of production varies by 3x to 5x over the course of a day is an inefficient historical relic that the grid inherited from the last century.
Price signaling works! The better we can design tarrifs to incorporate the true costs of production into prices, they better off we’ll be.
“This is roughly analogous to saying FedEx should charge the same amount to ship a package across town as they charge to ship it across the globe, since FedEx’s global distribution network has to be built and maintained. Don’t you see how ridiculous that is?”
No, it costs more to drive additional miles, more fuel, more labor.
“I’d prefer that net-metering took into account the relative real-time value of the energy was produced and consumed by rooftop solar owners.”
That’s not net-metering. That’s establishing a fair market value for electricity bought and sold.
“Using average pricing for a commodity whose cost of production varies by 3x to 5x over the course of a day is an inefficient historical relic that the grid inherited from the last century.”
Yes, our mechanical electricity meters did not support anything more than a total use measurement. With smart meters we can bill (and sell) based on current market prices.
“No, it costs more to drive additional miles, more fuel, more labor.”
Sure, that’s why I said roughly analogous. The key is that a customer sending a package across town isn’t charged for the capital cost of FedEx’s fleet of aircraft.
I suppose I could have used the old phone company long-distance tariff system as another analogy, but I’m sure you can see the point, even though you apparently don’t agree.
The key is that designing a compensation system for excess rooftop solar generation that doesn’t take into account that it can be delivered to end users for a nearly zero marginal cost and uses a proportionally trivial allocation of existing infrastructure is economically suboptimal and will mean a net loss of benefit to ratepayers.
Just because I understand what you are saying does not make what you are saying correct.
“The key is that designing a compensation system for excess rooftop solar generation that doesn’t take into account that it can be delivered to end users for a nearly zero MARGINAL cost is economically suboptimal and will mean a net loss of benefit to ratepayers.”
There is no additional cost for delivering the electricity you produce to someone five blocks away vs. to the house across the street. All the buildings on the grid have to be connected to the grid in order
to receive electricity.
The utility is not spending more money or less money when they take electricity you produce and distribute it to someone else compared to any other source on the grid.
Similar to FedEx’s fleet of aircraft, the grid is built out to handle a certain level of demand. If distributed generation results in a reduction of overall demand on the transmission and distribution infrastructure, we’ll need less of it. Any economics 101 student can easily understand this.
Did you take Econ 101?
It costs money to fly an airplane. It costs almost nothing to send electricity down an existing wire, within reasonable limits the distance sent has no impact on cost.
The infrastructure we’ve already built has to be paid for, but reducing the need to build and expand the existing infrastructure with well designed FiTs is where the ratepayer savings come from.
Solar prices will continue to drop and advances in batteries will reinforce the trend toward a tectonic shift toward distributed generation. When the dust settles in a couple of decades, consumers will be using significantly more kwhs (mostly for EVs), yet the transmission and distribution infrastructure will be sized roughly as they are today (maybe more transmission interconnect). The infrastructure that didn’t need to get built to deliver all the extra kwhs consumers will use to charge their cars means huge savings for ratepayers.
“When the US gets close to Germany levels of solar, then sure, we can re-evaluate.”
It think it is better to have a strategy ready beforehand and to define clear criteria for the time-point when the net metering can start to be gradually replaced by a more market based system.
The thing is the value of PV power without storage gradually decreases with increasing penetration level. Furthermore the prices of PV systems keep dropping. So at some point the net metering will become a big loss for utilities and at the same time and unnecessary large subsidy for PV system owners. When this happens the vested interests will use this to get PV strangulated. This has happened in Germany. (Also in Spain, but there PV was oversubsidised to start with.)
To say it in the scouting way: be prepared!
I understand that this is a real concern. I’d be fine with these agreements having built-in sunsets (no pun intended) even for folks already tied in so the econonmics can be re-evaluated periodically.
I know folks like Solar City will not like this, but it’s essential for regulators to treat rooftop solar owners as energy investors first, and ratepayers second. Any FiT design needs to assure that future market risks stay with rooftop solar owners and don’t get transferred to ratepayers.
My question is if I use 20,000 kwhs and only produce 15,000 over a year what am I going to be charged for the over run of 5000 kwhs? Since I only produce during the day when demand is higher will only be charged for off hour pricing or what?
You need to take a look at how your utility bills. You could have a flat rate system, tiered rate where you pay larger amount when you use more, or time of use (TOU) billing where you get charged more at different times of day.
Solar will most benefit those who can avoid very high overall rates (Hawaii, for example), use a lot of electricity thus buying a lot of highest tier electricity or pay a lot more for electricity during the sunny hours.
TOU but That is the time I would produce also!
What sort of purchase deal for your extra production does your utility provide? Do they buy the electricity at a fixed rate, do some sort of exchange/net metering program?