A shadowy Boston-based organization is sending renewable energy advocates across the country into a tizzy by challenging the logic behind one of the key subsidies that has been used to spur the growth of the solar power industry.
The New England Ratepayers Association, an organization whose financial backers are unknown, filed a petition with the Federal Energy Regulatory Commission on April 14 challenging a billing practice called net metering, which is used in 45 states, including Massachusetts.
Here’s how net metering works for a homeowner with solar panels on the roof. When the sun is shining, the homeowner produces electricity, which is used to run the lights, the TV, the refrigerator, and everything else that runs on power. When the solar panels don’t generate enough energy to meet the house’s power needs, electricity is brought in via the meter from the local utility. When the solar panels generate more power than is needed, the excess electricity flows out to the power grid and from there is distributed to other customers who need it.
Each month, these inflows and outflows of energy are netted out. If the homeowner uses more electricity than he produces, he pays his local utility for the energy he consumes just like any other customer. If he produces more electricity than he uses, the utility pays the homeowner for the energy that flows into the grid and is resold.
In most states, the utility pays the homeowner the retail price of electricity, which is the same price that the utility charges customers for the power it sells. The retail price includes the cost of the power itself, which is purchased from power plants via wholesale markets, as well as a lot of other charges related to transmission, delivery, billing, and a host of state-mandated assessments designed to promote clean energy development. The retail price of electricity in Massachusetts is around 20 cents a kilowatt hour, while the wholesale price – the cost of the power alone without all those other charges – ranges between 2 and 8 cents.
In its filing with the Federal Energy Regulatory Commission, the New England Ratepayers Association argues that homeowners with solar panels on their roof are essentially mini-power plants selling energy to the grid and therefore should be compensated at the much lower wholesale rate instead of the retail rate. “In these circumstances, energy is being delivered to the local utility for resale to the utility’s retail customers for compensation, making the transactions wholesale sales in interstate commerce,” the filing says, pointing out that the transactions should be regulated by federal, not state, law.
The filing has provoked an enormous backlash, with US senators, state attorneys general, hundreds of environmental groups, and the solar power industry pressuring FERC to deny the association’s petition. Attorney General Maura Healey is leading the charge, arguing in a press release issued on Monday that approval of the petition could deprive states of a vital clean energy program and place an estimated 240,000 jobs at risk.
“Net metering is a smart, consumer-focused program that saves customers money on their electricity bills, and supports our state’s thriving $13.2 billion clean energy economy,” Healey said in a press release. “We won’t allow this meritless petition from a shadowy lobbying firm to take away decades of precedent and undermine the progress our states have made toward meeting our climate goals and saving money for our ratepayers.”
Healey neglected to mention that net metering saves money primarily for ratepayers who have solar panels on their roofs. Ratepayers without solar installations probably end up paying higher electric bills because utilities are allowed to recover the cost of net metering from all of their customers.
Ashley Brown, executive director of an electricity policy group at Harvard’s Kennedy School of Government, describes this effect of net metering as “Robin Hood in reverse” in a report attached to the New England Ratepayers Association filing.
Many of those opposing the challenge to net metering are attacking the New England Ratepayers Association as much as the position it is espousing. The advocacy group Public Citizen said in its filing with FERC that the organization appears to be a corporate trade association representing 12 unidentified companies. “NERA appears to be using a mask of ratepayer advocate to conceal the true financial interests behind the petition,” Public Citizen says.
The association’s executive director, Marc Brown, is a New Hampshire resident who works as director of government affairs at a lobbying firm called Advantage Government Affairs, according to Roll Call. Brown told CommonWealth in 2013 that he founded the association to fight the false promises of alternative forms of energy. He opposed Cape Wind, backs natural gas development, and, according to the CommonWealth story, runs an ice cream shop in Kingston, New Hampshire.
“We use a lot of electricity in what we do,” said Brown in 2013. “Some of these policies are just plain bad for businesses like mine. There comes a point when you just have to ask, ‘When is enough enough?’”
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