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FERC Ruling: Win for Net Metering, for Now!

07/16/20

  07:11:00 am, by Jim Jenal - Founder & CEO   , 1119 words  
Categories: Net Metering

FERC Ruling: Win for Net Metering, for Now!

We have been writing about a petition before the Federal Energy Regulatory Commission (FERC) filed by a shadowy organization calling itself the New England Ratepayers Association (NERA) seeking to gut net metering throughout the United States.  (See my prior posts here and here.)

Well we just learned of the ruling issued yesterday by the FERC, and while it is being widely touted as a big win for net metering, the reality of the decision is far less comforting than the victorious proclamations suggest.  Here’s our take…

Net Metering Survives…

The bottom line of the 3-0 Order Dismissing Petition for Declaratory Order is that NERA’s petition was dismissed by the FERC, with all three Commissioners in agreement.  But this was no full-throated defense of net metering, or even an assertion that the FERC has no business regulating how utilities deal with their rooftop solar customers.  After going back over the petition in painful detail, the order identifies the responding parties, and the arguments advanced in support and opposition to the petition.

One of the more interesting points raised in opposition challenged NERA’s refusal to disclose its members, who pay annual dues in the range of $5,000 to $20,000, which makes them a very special class of ratepayers!  Certainly not an organization of regular Janes, paying their electric bill. 

Noted commenter Public Citizen:

NERA does not disclose its constituent members or the interests it represents; therefore, NERA has not demonstrated that it will be subject to harm based on the outcome of the Petition or that it has an identifiable interest in the proceedings.

And the Pennsylvania Public Utility Commission asserted that

[T]he net metering regulatory scheme is already well established and the Petition fails to identify a specific state net metering scheme that is at issue, even though the Commission requires a concrete case or controversy with limited exceptions… [and the]  Commission’s net metering precedent is sound and there is no controversy or uncertainty to resolve.

That, of course, is a jurisdictional argument – nothing new had occurred to warrant the petition, and the case law that they relied upon was a decade old!  And that is how the Commission decided to resolve this non-dispute:

Declaratory orders to terminate a controversy or remove uncertainty are discretionary.  We find that the issues presented in the Petition do not warrant a generic statement from the Commission at this time. Therefore, we exercise our discretion to decline to address the issues set forth in the Petition, and, accordingly, we dismiss the Petition.

The manner in which the Commission addresses a petition for declaratory order depends on the “specific facts and circumstances” presented to the Commission. NERA in its Petition makes general assertions that Net Energy Metering policies adopted by various states improperly intrude on the Commission’s authority under the FPA and PURPA. NERA states that “it is in the public interest for the Commission to address this Petition promptly so that the pricing of [Net Energy Metering] sales becomes settled and affected parties can make appropriate decisions.” NERA further states that the Petition “focuses on the more common form of [Net Energy Metering] described above, as that was the subject of the Commission’s prior rulings…” The Petition, however, does not identify a specific controversy or harm that the Commission should address in a declaratory order to terminate a controversy or to remove uncertainty… For this separate reason as well, we decline to issue the requested order. 

If you were hoping for a clear signal of support for the concept of net metering, you won’t find it here!

…For Now

To the contrary, what you find in the two concurrences filed with the order is cause for alarm.  Commissioner McNamee noted:

[T]he Commission’s Order is not a decision on whether the Commission lacks jurisdiction over the energy sales made through net metering; nor is it a decision on the merits of the issues raised by and contained in the Petition. I also note, that as a general proposition, I think it is best to decide important legal and jurisdictional questions, like the ones raised in in the Petition, when applying the law to a specific set of facts, such as in a Section 206 complaint, or through a rulemaking proceeding.

That is what you call a roadmap for future filings.  Either repackage your petition as a Section 206 complaint, or bring it up in the next appropriate rulemaking.  But just a petition to end net metering out of the blue was a bridge too far. 

However, McNamee’s view may not matter as his term ended last month, so he will likely go back to his law practice “primarily representing electric and natural gas utilities before state public utility commissions."  Surprise, surprise.

The second concurrence, from Commissioner Danly (whose term does not expire until 2023!) is even more troubling.  He wrote:

The petition for a declaratory order filed by New England Ratepayers Association (NERA) raises difficult legal questions regarding the regulatory treatment of facilities (like rooftop solar) used by retail customers primarily, but not exclusively, to serve their own electricity requirements. These questions not only include the rate treatment for excess generation but, more importantly, the boundary between federal and state jurisdiction to address such rate treatment.

I have yet to reach any conclusion regarding either rate treatment or jurisdictional boundaries, but I am certain that these are questions of profound importance and the Commission will eventually have to address them.

I am concerned that dismissing the petition on procedural grounds may well result in a patchwork quilt of conflicting decisions if the questions raised in the petition are instead presented to federal district courts across the country. While the federal courts are more than capable of adjudicating preemption claims, they are not steeped in the history of the Federal Power Act nor in matters of national energy policy. Confusion, delay and inconsistent rules—some of which will apply to individual states or parts of states—will be the inevitable result.

Nevermind that the Commission has addressed the jurisdictional question before and determined that it lacked jurisdiction over state-operated net metering programs.  And is net metering really a “matter of national energy policy"?  Whether a PWP customer gets full retail value for the energy they sell back to the grid has zero impact on the ratepayers of New England, except, of course, to the extent it reduces the value of their stock holdings in the oil and gas industry.  But that’s really none of FERC’s concern.

So, bottom line, we live to fight another day, and that’s a good thing.  But net metering continues to be under attack, and this order provides no shelter from that coming storm.

Want to do something?  Join CALSSA (or your state’s solar/storage association) or the Solar Rights Alliance - they need your support to fight back.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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