State Government Leadership Foundation Releases Study on Controversial Net Metering Practices

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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 when 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.

“Net metering continues to perpetuate an unfair marketplace through large subsidies to the ‘haves’ at the ‘have not’s’ expense,” said SGLF Deputy Executive Director Casey Dietrich. “It should be a priority for every legislator with constituents impacted by this disadvantage to remedy the issue and balance the unfair market. The SGLF is committed to highlighting and supporting common-sense solutions to ensure hardworking Americans are given the opportunities they deserve for their everyday use of utilities.”

The 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 performs a closer review of the net metering issue in key affected states, including: Arizona, Arkansas, California, Indiana, Oklahoma, and Wyoming.

This study concludes that net metering policies should be reformed, and finds 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.