There are few better examples of Robin Hood-in-reverse policies than the travesty known as “net-metering.” Under this scheme, which has now been implemented to some degree in 45 states, homeowners wealthy enough to afford solar power generators can get paid up to three times the standard rate for the “green” energy they produce. Typically, the cost for this outsized compensation is borne by struggling families unable to afford installing these generators.
The data on this is undisputed; residential solar adopters have household incomes roughly 50 percent higher than non-solar households. Harvard Electricity Policy Group executive director Ashley Brown notes that, as a result of this large income disparity, net-metering results in “a wealth transfer from less affluent ratepayers to more affluent ones.”
A petition by the New England Ratepayers Association (NERA) to the Federal Energy Regulatory Commission (FERC) to assert jurisdiction over these programs, and price them in accordance with federal law, may mean that ratepayers can potentially breathe a sigh of relief.
Federal laws currently provide guidance for the pricing of sales in the wholesale energy market, but FERC thus far has chosen not to intervene. Given that, under net-metering, households produce electricity that is then sold into the grid. This is a wholesale transaction similar to those made by a solar or wind farm and should be priced accordingly. As noted in the petition: “The law is incontrovertible. The FPA [Federal Power Act] draws a bright line between state and federal jurisdiction over energy sales. Sales of energy at wholesale are subject to the exclusive jurisdiction of this Commission. Sales of energy at retail are subject to the jurisdiction of the states. The sales at issue in this Petition are wholesale sales because the energy is being sold to the utility for resale to the utility’s retail load … and therefore the Commission is required to exercise its rate jurisdiction over them.”
FERC asserting its jurisdiction would have a number of immediate benefits. Firstly, it would provide relief to poorer households who would no longer be forced to effectively cross-subsidize those richer than they are. In many states, the current “residential retail rate” mandated by state authorities is approaching, or in some cases even exceeding, 20 cents per kilowatt hour. In contrast, wholesale prices typically average between 2 and 6 cents per kilowatt hour. The difference between these prices needs to be made up somehow, and the brunt is typically borne by the poor as well as smaller businesses already struggling to make ends meet in these difficult times.
In addition, FERC asserting jurisdiction would pave the way for a fair and level playing field. Under the current system, rooftop solar owners get an unfair offer not extended to any other electricity provider. Not only does this increase power bills, it results in distortionary and discriminatory practices in which different classes of energy sellers are treated differently than others. As a result, capital investment is shifted to one class of seller at the expense of others, which may be more efficient or competitive under a more equalized system. Paradoxically, this may lead to less environmentally friendly solutions over the long-term, as the subsidization of inefficient products will lead to fewer funds available for more efficient alternatives and reduce the overall amount of renewable energy generated.
It makes far more sense from an environmental perspective for federal law to treat different classes of energy equally, instead of unfairly privileging one class above others.
Furthermore, such actions would not impinge on the rights of states to set their own policies (despite disingenuous pleas from crony capitalists suggesting otherwise). States would still have control over many aspects of their net-metering programs, such as eligible technology, system size caps, program caps, and customer types, just to name a few. Meanwhile, the federal government would maintain its traditional role of overseeing prices in a national electricity grid.
American households deserve a fair and just system for purchasing electricity instead of unfair and inefficient net-metering schemes. The NERA petition seeks to implement a system in line with current statutory mandates which will help poorer households and create a more equitable regulatory framework with the long-term effect of increasing renewable energy output. For the good of ratepayers and businesses across the country, we hope it succeeds.
– The Center Square
* This article was originally published here
HELP STOP THE SPREAD OF FAKE NEWS!
SHARE our articles and like our Facebook page and follow us on Twitter!
0 Comments