On February 15, 2024, the Massachusetts Department of Public Utilities ("DPU") issued a much-anticipated order in docket D.P.U. 21-100 that finally promulgates regulations (220 CMR 18.00) to implement 2021 statutory changes to the Net Metering Program. The Order: (1) permits municipalities and other governmental entities to enroll Class I facilities (those under 60 kW) to participate in the public cap; (2) allows for net metering credits to be transferred across different electric distribution company service territories; (3) makes certain Class II and Class III facilities (over 60 kW), that serve on-site load, exempt from net metering caps; and (4) removes the charge that recovers the cost of the net metering program from the value of net metering credits.
A Slow Road:
The 2021 Climate Act (St. 2021, c. 8, §§ 82-85 ) made changes 1 through 3 above to the Net Metering Program. However, those important changes have been in limbo while the DPU amended its regulations. Although the Climate Act became effective in June of 2021, the DPU did not open a rule making process to amend its regulations until July 2022, and stakeholders have been waiting for this Order since submitting comments in August 2022.
Notably, during that period the Legislature passed, and the Governor signed, another statute amending the Net Metering Program: the 2022 Clean Energy Act (An Act Driving Clean Energy and Offshore Wind, St. 2022, c. 179 , §§ 54, 55). The 2022 Clean Energy Act will require further revisions to the same regulation. Last week's Order does not implement or propose such revisions, so the Net Metering Program, as implemented, will remain out of synch with the statute.
Takeaways:
Allowing public entities to take advantage of the public cap for small projects was a logical expansion and required by the Climate Act. The news from the DPU Order is that this change will only be applied prospectively from the date the amended regulations become effective.
More significant for many stakeholders will be the ability to finally transfer credits across electric distribution company service territories. This change will open new opportunities for credit offtake. It also requires revisions to Schedule Z to the DG Interconnection Tariff, the form used to allocate credits from net metering facilities. The DPU has directed the electric distribution companies to revise their Schedule Z forms and file those changes for review along with information about timing for cross-service territory allocations, notice to customers of this option, validation of such allocations, and other topics. Some commenters urged the Department to also allow Schedule Z to be updated more frequently than is currently allowed. The Department agreed to require that Eversource and National Grid allow four updates a year, which is their current practice, but is more than the current tariff requirement of two times per year.
Making certain Class II and Class III facilities that serve on-site load exempt from net metering caps enables facilities that serve on-site load to participate in the Net Metering Program without needing available space under the applicable caps. This has the potential to encourage development of net metering facilities that serve behind-the-meter demand. To implement this change, the DPU adopted a definition of "on-site load" from the SMART Program and explicitly excluded battery energy storage systems from qualifying as on-site load for this purpose. In addition, the DPU set out a process for reclassifying existing facilities, set the price (the "avoided cost rate"), that will be used to buy out or discount credits at the end of an annual period using "Locational Marginal Prices" from wholesale markets, and described the process that should be used for customers to elect payouts of credits.
Removing the net metering charge from the calculation of the value of net metering credits is an effort to prevent a circular aspect to this charge and reduce overall program costs. For some electric distribution companies, this will mean presenting the cost of the net metering program as a separate line on customer bills.
Next Steps:
The process here is not done. In addition to the remaining need to implement the 2022 Clean Energy Act, the electric distribution companies will also need to file for approval with the DPU revisions to their net metering tariffs (to implement these new regulations) and to their DG interconnection tariffs (to revise Schedule Z). The DPU directed that these tariff filings be made within 45 days of the Order.
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