State Government Leadership Foundation Releases Study on Controversial Net Metering Practices

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David James
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State Government Leadership Foundation Releases Study on Controversial Net Metering Practices

Expert Study Lays Out Solutions for Fairness in the Consumer Energy Marketplace

WASHINGTON — The State Government Leadership Foundation (SGLF) today issued its latest study about Net Metering, the practice whereby energy customers who use solar technology are reimbursed at the “retail rate” for the energy they generate by selling it back to a local utility provider. The funding used to reimburse these solar customers comes from the revenue generated by regular utility consumers, creating an unfair practice in the marketplace.

The fifteen-page study, authored by energy expert Tom Tanton, outlines the problem of regressivity on non-solar energy consumers, and common-sense solutions for ratemakers to incorporate in the states where Net Metering is common practice.  The study does a closer review of the Net Metering issue in key affected states, including:  Arizona, Alabama, Indiana, Kentucky, Maine, New Hampshire, Nevada, North Carolina, and South Carolina.

“Energy consumers should not have to pay for and subsidize another customer’s individual decision to install solar generating technology.  Effectively, net metering has created a back-door of cash flow from non-participating customers to those who elect to have this technology, and that is simply not a fair marketplace, and needs to be addressed by policy makers in our state capitals,” said Matt Walter, Executive Director of the State Government Leadership Foundation.

“The answer to the problem of current net metering practices is to advocate for analytic efforts—based on the principles of cost effectiveness and cost efficiency.  Public energy policy should be just and equitable based on true cost of service and transition away from bundled ratemaking altogether. Ratemaking policies should be technology and consumer-type neutral and instead seek to maximize the benefits to all consumers with reliable, affordable service,” added Tom Tanton, author of the SGLF study.

This study concludes that NEM policies should be reformed, finding that:

  • Most recent studies do not show net benefits for subsidizing consumer power generation through net metering pricing. Public benefits can often be achieved at less cost.
  • Net metering represents a significant cost shift from generating to non-generating consumers, raising the overall price of electricity generation, distribution, and transmission.
  • Net metering policies are deeply regressive, benefiting the well-off self-generating consumer at the expense of poorer non-generating consumers.
  • Utility investors and non-generating consumers are being unfairly disadvantaged, paying a large subsidy to generating consumers. NEM compensation structure does not benefit the grid’s reliability or reduce overall consumer costs.

Read the full study here: 

About SGLF

SGLF is a 501 (c)(4) social welfare organization and a strategic partner to the Republican State Leadership Committee (RSLC)—home to the Republican Lieutenant Governors Association, Republican Legislative Campaign Committee and the Republican Secretaries of State Committee. By supporting and advocating for state-level leadership and solutions, SGLF promotes good governance and the conservative principles of limited government, low taxes, less regulation, and individual liberty and opportunity for all. SGLF is dedicated to educating policymakers and the public about the benefits of smaller government, lower taxes, balanced budgets and efficient governing.