Michigan utility customers who put surplus electricity they
generate back onto the power grid will be paid a lower, avoided-cost rate after
June 1.
The Michigan Public Service Commission (MPSC) issued an
order Wednesday replacing the state’s net metering policy with an avoided-cost
tariff based on how much utilities would pay to build the same amount of
generation themselves.
Liesl Eichler Clark, president of the Michigan Energy
Innovation Business Council, said the decision will create uncertainty for
customers and installers.
“I see this as complicated, unfair and costly to the
industry,” Eichler Clark said, noting that the new rate will vary depending on
the local utility.
In 2016, MPSC staff was tasked by the legislature with
studying a replacement for net metering that would better reflect the cost of
serving customers who produce their own electricity. Under net metering, excess
generation is credited at retail costs of electricity.
Under the “inflow/outflow” billing
mechanism adopted Wednesday, based on a February staff
report, customers buy electricity at retail rates and are credited for
surplus generation at the utility’s avoided-cost rate in the next billing
period.
The MPSC said in a statement the new model ensures
distributed generation customers are “assessed for their fair and equitable use
of the electrical grid.”
The billing mechanism must be included in utility rate cases
filed after June 1. Utilities are also allowed to file their own distributed
generation tariffs “if desired.”
Customers enrolled in net metering before the first DG rate
is approved after June 1 will be grandfathered for 10 years.
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