An Insight into Net Metering


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While net metering is nothing new in the world of energy, for the past 20 years, more and more investor and state owned utilities have been expanding these policies to make it easier for consumer to become producers. Net metering policies blurs the line between consumers and producers, providing a microeconomic solution for the consumer, the utility, and the earth to the growing dirty energy problem. By utilities compensating customers at cost, credit, or retail rate, we can:

  • Reduce air emissions from dirty power production

  • Lower or eliminate costs of energy during peak periods

  • Avoid transmission and distribution losses

  • Avoid the need for batteries

  • Get paid when you produce more than you consume.

Net metering policies vary depending on both state and utility regulations. Some states, like New York, give their utilities a choice to either compensate their customers for a positive net supply of electricity to the grid at the NYISO average price for that quarter, or compensate customers at the retail rate of electricity. Other states, like Oregon, allow any excess electricity credits producers receive to go to helping low-income citizens afford electricity for their homes.

In California, all major utilities support some form of net metering. However, like California’s utility rates, the compensation mechanisms for net metering are also complex. For example, SDG&E and Southern California Edison both use what is called the “Net Surplus Compensation Rate,” which is calculated as a rolling 12 month average of CAISO prices. SDG&E uses the spot-market price; Southern California Edison uses the day-ahead market price. This means, depending on how much energy is trading for, you could be earning a check from the utility, opposed to the other way around.

Currently, 43 states (plus Washington D.C. and Puerto Rico) are participating in net metering programs. Many other utilities are voluntarily varying by utility, such as Texas. If you live in one, research your options, and see if you can benefit from net metering. If not, write to your State Legislature and/or Member of Congress, and tell them you want net metering in your state. States are frequently updating their net metering policies to maximize efficiency to the grid. Let your voice be heard! It could be extra money in your pocket.

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