The Maine Legislature’s committee voted in favor of a bill that deems front-of-the-meter projects ineligible for net-energy billing.
Maine is progressing one of the several net-metering bills its state legislators are discussing this session, which aims to change the credits solar subscribers and owners receive for the energy sent to the grid.
Maine’s Energy, Utilities and Technology Committee voted in favor of LD 1777, which makes front-of-the-meter projects ineligible for net-energy billing.
Maine’s net-energy billing (NEB) program offers credits that offset utility bills to both those with small-scale renewable energy projects, such as rooftop solar installations, and through a subscription to front-of-the-meter projects, such as community solar projects. (Maine calls its net metering policy “net-energy billing,” which is not to be confused with “net billing.”)
LD 1777 requires the Governor’s Energy Office to develop a successor program for front-of-the-meter NEB projects. The Public Utilities Commission (PUC) would then need to approve the plan, ensuring the tariff rate is “just and reasonable” for ratepayers. As introduced, the rate would not be able to exceed 1.5 times the average of the rates set by other states in the region for a similar distributed generation source.
Under Maine’s current law, NEB customers’ tariff rate is tied to the standard-offer-supply rate plus a fixed portion of the transmission and distribution rate.
Rep. Sophie Warren (D) said when this structure was originally enacted, it was based on what were then relatively stable and moderate market conditions.
“However,” she said, “the unprecedented volatility in natural gas markets driven by global supply disruptions and post-pandemic demand, compounded by storm recovery costs have caused Maine’s standard offer rate to soar to record levels and stranded costs to rise.”
Opponents of LD 1777 say fossil-fuel volatility and rising transmission costs are behind Maine’s electric prices, which are among the highest in the country.
The committee’s Republicans opposed the bill saying it doesn’t go far enough, while solar advocates say it goes too far. The GOE and the PUC have taken the middle road, testifying they are neither in support nor against the legislation.
In its testimony, the Governor’s Energy Office noted its previous work with the committee on prior net-metering proposals, saying it was an acknowledgment that the program has merited additional work over the years.
“However,” the Governor’s Energy Office said, “our testimony has also noted that proposals pushing full repeals or broad, retroactive modifications to the core mechanisms for determining compensation to the program made without due consideration for the investments that have been made by both project developers and offtakers have so far been irresponsibly blunt.”
The Governor’s Energy Office said it “believes focusing efforts on the tariff rate program, and most specifically the original tariff program, is likely where the greatest opportunities for cost reductions exist.”
Maine’s tariff rate program has costs that exceed benefits with a benefit-cost ratio of 0.76, according to an analysis prepared for the Public Utilities Commission by Sustainable Energy Advantage. Comparatively, the kwh credit program was found to have benefits exceeding costs, with significant net benefits for behind the meter projects.
“We expect that the Commission—and certainly impacted entities—will want additional guidance regarding the range of rates and the frequency the Commission might adjust rates as certainty is key,” the Governor’s Energy Office said. “Would the Commission be regularly adjusting the tariff to not exceed 1.5 times the current regional average rate? Or would it be adjusted once based on the regional average today, or in some earlier year between now and 2019 that approximates when the bulk of affected projects made their investments?”
Both the Governor’s Energy Office and the PUC said they are concerned with the LD 1777’s requirement for the rate be determined by the average tariff rates of other states.
“If the goal is for these new rates to be just and reasonable, a comparison to rates in other states in the region may add an unnecessary layer of complexity,” the PUC said. “Additionally, programs in other states are unique and it may be difficult to compare when engaging in this analysis.”
The Governor’s Energy Office pointed to Massachusetts’ SMART program, which has base compensation rates without adders in 2022 beginning around $0.13 to $0.17 and declining in subsequent blocks over time.
“SMART participants know their compensation rate when they begin projects before committing significant [capital expenditures],” it said, “while Maine projects would have assumed the Maine rate at the time of investment.” The Governor’s Energy Office said, “These variations should be adequately considered when evaluating whether aligning Maine project compensation rates with regional rates would provide a Maine developer with a reasonable opportunity to earn a fair profit as the bill proposes.”
Kate Daniel, Northeast regional director of The Coalition for Community Solar Access (CCSA) said the coalition was incredibly disappointed in the committee’s decision to advance the bill.
“This bill represents a serious breach of trust with Maine ratepayers, communities, and the clean energy businesses that have invested hundreds of millions in the state,” Daniel said in a statement. “This bill is not a moderate, compromise reform — it is a backwards — looking rollback of Maine’s clean energy leadership that threatens to dismantle a successful market and set a dangerous precedent for the region.”
Daniel said retroactive changes to project economics “throw the entire future of distributed energy development in Maine into question.”
Daniel previously told pv magazine USA over 110,000 Maine customers depend on net metering bill savings to help manage energy costs and make ends meet.
According to the Solar Energy Industries Association, 2.78% of Maine homes have solar, ranking the state 34th for solar capacity and 27th per capita in the solar residential sector.
