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OLR Research Report


March 2, 2009

 

2009-R-0125

NET METERING LAWS IN CONNECTICUT AND MASSACHUSETTS

By: Kevin E. McCarthy, Principal Analyst

You asked for a comparison of net metering laws in Connecticut and Massachusetts.

SUMMARY

Connecticut and Massachusetts both have net metering laws that require electric companies to provide a billing credit to their customers who produce power using on-site generation. In both states, the maximum generating capacity of the generating system is limited to two megawatts (MW). (A megawatt is a million watts; commercial power plants typically have a capacity of 500 to 1,000 MW).

Massachusetts has a broader definition of the resources eligible for net metering and the states' laws differ in how the credit is calculated. In Massachusetts, both renewable and non-renewable resources can be used for small and medium size generating facilities, although the credit is less for systems that use resources other than wind or solar power. Massachusetts also allows net metering for residential customers on a neighborhood basis. Massachusetts' law caps the total amount of net metering each electric company must allow and has several additional provisions not covered by Connecticut's law.

CONNECTICUT (CGS 16-243H)

Connecticut requires electric companies and competitive electric suppliers to give a credit for any power generated by a customer from a Class I renewable energy source or a hydropower facility that has a nameplate capacity rating of 2 MW or less. Class I resources include, among other things, solar power, wind power, fuel cells, and some types of biomass systems. The electric company providing distribution services to these customers must make the interconnections needed for this purpose.

An electric company, at the request of a residential customer, must install metering equipment that (1) measures power consumed by the customer from the company's facilities, (2) deducts from the measurement the amount of power produced and not consumed by the customer, and (3) registers the net amount of power produced for each billing period.

If a customer's renewable energy system produces more power in any billing period than the customer uses, the electric company or supplier credit the customer at its retail rate for the excess power. (In effect, the company or supplier must run the meter backwards.) The credit is applied to the customer's bill for the next month. The electric company or supplier must carry over the credits earned from month to month, and the credits accumulate until the end of the billing year. At the end of each billing year, the electric company or supplier must compensate the customer for any excess power generated, at its cost of wholesale power.

A customer who generates power from a generating unit with a capacity of more than 10 kilowatts (kW) must pay certain charges which pay for conservation and renewable energy programs, among other things, based on the total amount of power the customer consumes from the electric company's facilities without netting the power the customer produces. A kilowatt is the amount of energy used by ten 100-watt light bulbs; residential renewable energy systems typically have a capacity of less than 10 kW.

MASSACHUSETTS (164 Mass. Gen. Laws. Sec. 138 et Seq.)

Massachusetts has three categories of net-metering facilities. “Class I” facilities are renewable or non-renewable resources systems of up to 60 kW in capacity. “Class II” facilities are generally defined as systems greater than 60 kW and up to one megawatt (MW) in capacity that generate power from agricultural products, solar energy, or wind energy. “Class III” facilities are generally defined as systems with between one and two MW of capacity that generate power from agricultural products, solar energy, or wind energy. For class II and III facilities that are owned or operated by a municipality or other governmental entity, the limits apply per facility rather than per customer. For example, if a municipality owned ten wind turbines, each with a capacity of 1 MW, they would be collectively treated as a single class II facility.

The credit for most net metering customers is based on the electric company's retail electric rate. But, unlike Connecticut, the credit for all customers excludes the conservation and renewable energy components of the rate. The credit for Class III facilities, other than those owned or operated by governmental entities, excludes the distribution component of the rate. Class I facilities that use non-renewable resources, or renewable resources other than solar and wind, only receive the electric company's cost of wholesale power.

Credits may be carried forward to the next month indefinitely, and credits from Class I and Class II wind and solar facilities may be transferred to another customer of the same utility. Credits from Class III facilities may be transferred to other customers with the company's permission.  

Unlike Connecticut, Massachusetts also allows “neighborhood net metering” for Class I, II, or III facilities that are owned by, or serve the energy needs of, a group of 10 or more residential customers in a single neighborhood that is served by a single company. If a neighborhood facility has net generation at the end of a billing period, the credits are awarded to designated neighborhood customers that have an ownership interest in the facility. The amount of net generation attributed to each customer is determined by the allocation provided by the neighborhood net metering facility. Credits may be carried forward to the next month indefinitely.  

Unlike Connecticut, Massachusetts caps the amount of net metering by utility. The total capacity of net metering each utility must allow is limited to 1% of the utility's peak load.

The electric company must aggregate the distribution portion of any net metering credits and the delivery charges displaced by net metering facilities and bill them to all customers on an annual basis through a uniform per kilowatt-hour surcharge.

The electric company must impose tariffs, as approved by the Massachusetts Department of Public Utilities, on necessary interconnection studies and the type, costs, and schedule for installing metering and distribution system upgrades to accommodate net metering facilities.  The tariffs must require all installations to maintain adequate insurance. But the companies may not impose special fees on Class I facilities, such as backup charges and demand charges, or additional controls or liability insurance, as long as the facility meets the other requirements of the interconnection tariff and all relevant safety and power quality standards.

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