Among climate activists, so-called “net metering” has become a popular cause. Allowing operators of small, nonpolluting generators to export surplus power into local power networks and earn credits at the same rates as the usual electricity prices will help promote those generators, they contend. However, such a practice will also help enrich the owners of those generators.
Costs of service: If retail electricity were priced in the same way Brookline prices water, there might be few problems with net metering. Brookline’s water rates apply combinations of demand charges and usage charges. Demand charges vary with the capacities of connections to the water network and pay costs to maintain the network. Usage charges vary with the metered uses of water and wholesale water prices.
If retail electricity were priced similarly, operators of small, nonpolluting generators would pay demand charges based on capacities of their connections and could use the connections either to import or to export power. When they import power, they would accrue charges that depend on amounts used and on wholesale costs of power at points of use. When they export power, they would accrue credits at the same rates.
Such a practice could allocate costs of service fairly. Customers would pay to maintain local power networks in proportion to capacities of their connections, whether used for import or export. Customers who operate small, nonpolluting generators and export electricity to other customers would earn credits at the same rates as prices of conventionally generated power they displace, as figured at the points of use.
Retail billing: Many industrial and some commercial electricity customers are already covered by billing divided into demand and usage charges, but most residential customers are not. Instead, residential electricity rates usually lump costs of maintaining local power networks together with costs of wholesale electricity and long-distance electricity transport.
A residential electricity customer typically sees a single, composite billing rate applied to amounts of electricity used. If residential customers are allowed to export electricity at the same composite billing rate, credits they receive offset not only costs of electricity but also costs to maintain local power networks. Over time, such an approach to billing means that their shares of costs to maintain local networks will be paid by other customers attached to the networks.
Fair practices: Most subsidies to small, nonpolluting generators flow from the general economy through tax collections, which distribute the burdens partly on the basis of ability to pay. Burdens produced by net metering flow against those principles and tend to benefit people with higher incomes at the expense of people with lower incomes. The small, nonpolluting generators are largely owned by people with higher incomes, who can better afford major investments that they require.
As long as amounts of electricity generated by small, nonpolluting generators remain relatively minor, burdens of unfair billing from net metering also remain minor. As these generators become more common, unfair burdens grow apace. The more fortunate few, with higher incomes, tax the many less fortunate, with lower incomes, forcing them to pay excess shares of maintaining local power networks.
If net metering of electricity is to be expanded–while defending a just society–then fair practices need to be applied in retail billing for electricity. Residential electricity bills need to be separated into accurately assessed demand charges and usage charges, as Brookline water billing now does. Net metering needs to apply the rates for usage charges. Climate action can support social justice.
– Craig Bolon, Brookline, MA, December 21, 2015
Eddie Ahn, ed., Social justice groups advocate expansion of solar through net metering, Brightline Defense Project (San Francisco, CA), March 9, 2015
Matthew C. Whitaker (professor of history, Arizona State University), Net metering and its potential impact on low-income consumers, Atlanta Blackstar (Atlanta, GA), July 2, 2014