April 17, 2016

Massachusetts House Passes Bill Lifting solar Net Metering Cap

The Massachusetts House on Wednesday passed a bill that would raise the cap on solar net metering while lowering reimbursement rates for solar energy.

The bill, H.4173, passed the House by a vote of 152 to 1.

State Rep. Thomas Golden, D-Lowell, chairman of the Joint Committee on Telecommunications, Utilities and Energy and a member of the conference committee, said the bill "finds a balanced solution between the rates that would keep our solar industry thriving and moving forward, while still staying cognizant of the rates our constituents, the ratepayers, pay on a daily basis."

The lone dissenter was State Rep. Jonathan Hecht, D-Watertown, who warned that the bill would slow the growth of the solar energy industry. "I'm afraid if we do lower net metering rates by that large amount, it means many solar projects simply will not get built," Hecht said. "I remain deeply concerned that this legislation takes us down the wrong path on solar policy and once in place it will prove difficult to correct."

The bill has been in negotiations by a House-Senate conference committee for months, and its impending passage would clear the way for lawmakers to deal with the next big energy debate: an omnibus bill that is expected to pave the way for greater use of hydropower and offshore wind.

"I think solar has gotten more than the fair share of the debate so far, but quite frankly, people want us to talk about, they want to hear more about offshore wind, they want to hear more about hydro," said House Speaker Robert DeLeo, D-Winthrop.

The net metering bill was released from a committee of House-Senate negotiators Tuesday evening. 

Currently, the cap on net metering, the practice by which someone can generate solar energy and receive a financial credit for energy they generated but did not use, has been stalling solar energy projects around the state.

The bill would lift the cap on solar net metering by 3 percent for both public and private projects. It would decrease the reimbursement rate paid to most solar energy producers by 40 percent.

Solar net metering compromise lifts cap, cuts reimbursement

The compromise bill, which will be voted on this week, received a mixed reaction from the solar industry.

The lower rate would not apply to small residential projects, like a solar panel installed on a homeowner's roof, or to government-owned projects. It would apply to larger commercial and residential solar projects and to community shared solar, which are solar projects that an entire community can buy into. Existing projects could keep the old rate for 25 years.

The bill would allow the Department of Energy to charge customers a minimum monthly charge. It directs the Massachusetts Department of Energy Resources to craft a new version of an incentive program, referred to as SREC, in a way that provides a financial incentive for low-income solar projects.

The compromise bill has its critics. John Regan, executive vice president of government affairs for Associated Industries of Massachusetts, a business trade group, wrote in a letter to legislators that the compromise bill "lacks any real reform" and will cost ratepayers $8 billion over the next decade. The business group argues that the cut to reimbursement rates is not significant enough and applies to only a small portion of projects. It called the maintenance of higher rates for governmental projects "a sad case of 'taking care of your own' while others pay."

"We may not be killing the goose that's laid that golden solar egg, but we are certainly starving that goose."

Non-profits representing low-income individuals said the bill perpetuates income inequality by keeping the higher reimbursement rates for homeowners but not for projects that benefit lower income individuals, which are generally large-scale projects that are shared by a community or built in affordable housing complexes.

But overall, criticism was more muted than it has been for previous iterations of the bill. Solar companies urged lawmakers to pass the bill in order to lift the cap and end the bottleneck of stalled projects, even as they expressed concern that the new cap would be hit in 2017. The utility National Grid said it was pleased with the resolution, even as it urged lawmakers to develop a long-term strategy for limiting the cost of solar to other ratepayers.

Golden called the compromise a great bill. "I think that people should be very happy with it. We're lifting the caps, we're moving solar forward," Golden said.

Solar net metering bill could worsen income inequality in Mass., advocates say

A group of non-profits is warning that the solar net metering bill could harm poor people while benefiting middle class and wealthier homeowners.

One concern is that the cap will be hit again within a year. "The slight increase of 3 percent is immediately necessary, but it means we'll have to come back here very shortly once again to debate raising the net metering cap," said State Rep. Frank Smizik, D-Brookline.

Golden brushed off those concerns. "Having a cap and deciding where we're going to go a year from now or a year-and-a-half from now is at the discretion of the House and the Senate," Golden said. "The decision of what will happen tomorrow, we'll figure that out a year from now."

Some lawmakers said they only reluctantly voted for the bill in order to lift the cap. "We may not be killing the goose that's laid that golden solar egg, but we are certainly starving that goose or putting it on a restricted diet," said State Rep. Denise Provost, D-Somerville.

The Senate is expected to consider the bill Thursday. If it passes, it will go to Gov. Charlie Baker, who is likely to sign the bill.

Baker spokesman Billy Pitman said, "Governor Baker believes the conference committee's report is an encouraging step toward building upon the continued success of the Commonwealth's solar industry and ensuring a viable, sustainable and affordable solar market for ratepayers as the administration continues its balanced approach to diversifying a renewable energy portfolio that includes cost-effective, hydropower generation."

If the net metering bill becomes law, lawmakers will turn their attention to an omnibus energy bill, which is still being drafted by a legislative committee.

That bill is likely to include a version of a proposal introduced by Baker that would require utilities to solicit long-term contracts for hydroelectric power. It is also likely to address the expansion of offshore wind.

DeLeo said he anticipates debate on the larger energy bill in May or June. He called it "one of the top priorities" of the House.

One remaining loose end related to solar energy is a decision by the Massachusetts Department of Energy Resources on how to fashion a new incentive program for solar energy. The current incentive program, referred to as SREC, an acronym for Solar Renewable Energy Certificates, has reached its cap. Administration officials were waiting to see what the Legislature passed related to net metering before they released their proposals for a new SREC program.

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