Missouri joins list of states showing net benefit in cost-benefit study of net metering

Posted by Laura Arnold  /   February 27, 2015  /   Posted in Net Metering  /   No Comments

Study finds net metering to be a net benefit in Missouri

(Photo by Rob Rudloff via Creative Commons)

A cost-benefit study of net metering in Missouri recently arrived at the same conclusion as similar studies in Vermont, New York, Texas and Nevada: for utility customers, net metering is a net benefit.

While utilities often argue that net metering amounts to ratepayers subsidizing solar installations for a handful of customers, the Missouri Energy Initiative found otherwise.

Even accounting for increased utility administrative costs and the shifting of some fixed expenses, the MEI study found that in each year from 2008 through 2013, customers overall came out ahead.

The study “was meant for policymakers and rate-makers to dive into with an open mind and open eyes, and to know what key questions to ask,” said MEI’s executive director, Josh Campbell.

MEI is a non-profit organization with a board that includes representatives from utility companies as well as, academics, researchers and policymakers. The organization’s website says it aims “to be Missouri’s trusted source for information and solutions about innovative, reliable, clean and sustainable energy for Missouri and the world.”

The net metering study comes just a few months before a statewide committee is scheduled to produce a report offering a vision for Missouri’s energy future. In 2014, Missouri Gov. Jay Nixon signed an executive order calling for the development of the state’s first comprehensive energy plan, due by May 31.

Campbell said the net metering study got underway before the state energy plan, and was launched “because the growth of net-metered systems was increasingly drastically and a large debate centered around the impact of net metered units to non-net metered units, as well as the overall grid.”

Currently, about 6,000 Missouri electric customers net-meter their power use and production. The vast majority of them are customers of the state’s two largest investor-owned utilities, Ameren Missouri and Kansas City Power & Light.

Campbell hopes the study’s findings will provide lawmakers and regulators “the basic information they can build on and make better policy decisions that, hopefully, will result in less legal fighting, more collaboration and better policy for everyone.”

As it has elsewhere, distributed generation has been the subject of much dispute in Missouri. Although the state passed a renewable portfolio standard in 2008, Ameren and KCP&L in 2013 and 2014 announced that they had met a state cap for spending, and received permission from Missouri’s Public Service Commission to stop paying rebates. A lawsuit against the commission is pending.

Missouri’s other investor-owned utility, the Empire District Electric Co., got a bill passed in May 2008 that would exempt it from any solar rebates. On Feb. 10, the Missouri Supreme Court overturned that law.

The Missouri Energy Initiative’s study waded into the murky and turbulent net-metering waters by putting dollar values to two costs and two benefits of net metering. One cost is the expense for the utility to set up solar customers in a new type of account, estimated at $187 per account. The other is the amount of fixed costs no longer paid by solar customers – and thereby shifted to customers without solar panels.

Using previous net-metering studies as guideposts, Campbell said his board chose to estimate that the typical solar customers pays 20 percent less towards fixed costs as a result of generating some solar energy.

The benefits quantified in the study are the reduced power required due to less customer demand, and the reduced greenhouse gas emissions. The utilities provided estimates of money saved by reduced power purchases. Campbell put the value of avoided greenhouse gas emissions at $15 a ton based on trading in global carbon markets.

Although there are a number of other costs and benefits associated with net metering, Campbell said he chose to focus on areas where he could get reliable data, and on issues like cross-subsidization, that raised questions among customers and utilities.

And while the report found that net metering provided a benefit to all ratepayers, it didn’t put a dollar figure to that outcome.

In light of the variables and assumptions that went into the study, Campbell said, “We didn’t feel comfortable enough to put a hard number in there. But we did feel comfortable that everything is in the public domain, and that if you accept the assumptions we made, it was a positive outcome.”

Authors of cost-benefit assessments in a couple other states felt no such reservations. A 2013 study in Vermont calculated that a 4-kW fixed system provides a 4.3-cent net societal benefit per kWh generated.

A New York state study put the figure at between 15 and 40 cents per kWh generated by customers.

A 2014 study done for the Nevada Public Utilities Commission concluded that, “The macroeconomic impacts of NEM installed through 2016 in Nevada are likely positive, but will be very small relative to the size of the Nevada economy.” It also said that obtaining renewable energy through net metering is “moderately more costly” than obtaining it through utility-scale installations.

Neither the conclusion nor the methodology of the Missouri study sat well with the state’s two largest utilities, both of which expressed objections in a message appended to the end of the report:

“…the Utilities believe the Net Metering white paper is incomplete, too reliant on a single study from Vermont, and should be updated to accurately reflect the current conditions and significant investments made in Missouri….we cannot support the opinions and conclusions offered in this document. Further, the fact that Utility data is used in the report should not imply that this data is accurate for regulatory purposes, comparisons to other net metering related filings, or reflective of any formal Utility data presented to the MPSC.”

Quantifying the costs and benefits of net metering is fraught with limitations, said Jurgen Weiss, a principle with the Brattle Group, a consulting firm headquartered in Cambridge, Massachusetts.

“The problem is that there are some things you can measure relatively straightforwardly, like the electrical production from solar systems that are connected (to the distribution network.)” However, he said, there are others — like the extent to which solar installations reduce the need to invest in more generation or distribution hardware – that are much more slippery.

While questions abound about about the impact of net metering on customers, the utility and the larger society, Campbell said it’s essential to continue developing a better understanding of it.

“I think everyone realizes that distributed generation is here,” he said. “Making sure we deal with it in a practical and managed way is important.”

DOWNLOAD the Missouri net metering study HERE>

Net Metering in Missouri 2015 1

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