Net Metering

Net metering helps people produce their own electricity by giving them full credit for making electricity that offsets their use. It allows electrical meters to roll backward as well as forward, so that the times when people are using more electricity than they generate can be balanced by times when they generate more than they use.

Net metering is important for renewable energy because renewable technologies often generate electricity based on conditions that can’t be controlled. As a result, patterns of energy generation may not exactly match patterns of energy use.

Wisconsin’s current net metering policies vary by utility throughout the state and have a lot of room for improvement. Unifying and improving these policies (by, for example, raising the “cap” on how large net-metered systems can be) could have great benefits for our economy and our environment.

Key Points

  • Net metering ensures that everyone gets full credit for producing their own electricity by allowing meters to spin backward as well as forward.
  • Wisconsin’s current net metering policies are inconsistent and are a barrier for farmers, homeowners and businesses interested in investing in renewable energy.
  • Improving net metering policies would encourage investment in renewable energy, like helping Wisconsin farmers save money while turning manure into a clean source of power.
Clean Wisconsin's Work

Clean Wisconsin is working to improve the state’s net metering policies. We believe that standardizing policies statewide, increasing the system size cap, and making other commonsense changes to our net metering policies could have a significant positive impact on our state’s environment and economy.

Clean Wisconsin Media and Materials

Questions and Answers

What is net metering?
Net metering is a policy that ensures that everyone can get full credit for the electricity they produce by effectively allowing electricity meters to run backward as well as forward. This allows people to balance out times when they are generating more electricity with times when they are using more electricity, like saving rollover minutes on a cell phone.
Net metering applies when an electrical utility customer installs a form of energy generation (e.g. solar, wind or biogas power) and connects this power source to the utility grid. A bi-directional meter measures the amount of electricity the customer produces from this source as well as the amount the customer consumes from the utility grid. Then, at the end of the billing cycle, the customer only pays for the net amount of electricity they consume (total consumption minus amount of energy they generated).[1]

What is a bi-directional electrical meter?
An electrical meter is a technology that measures the flow of electricity. It is what allows utilities to track electricity use from a home, business, farm or office for billing and other purposes. A bi-directional meter is an electrical meter that is able to measure electricity flow in two directions. In this way, the bi-directional meter can be used to measure the electricity a customer uses as well as the electricity a customer generates and feeds into the electricity grid.

What is the value of net metering to a customer?
Electricity use patterns of an electrical customer do not always match the generation patterns of an on-site energy system. For example, while households use electricity after dark, a roof-top solar power system only generates energy during the day. Net metering allows customers to offset their electricity use with on-site generation, without concern about the time when electricity was generated or used over a billing period. It allows customers to make up time for when they use more energy than they produce by producing more than they are using at other times.
While there are other policies with similar goals, net metering is both simple and commonsense; it lets people offset their energy use with energy they generate. Net metering also has the benefit over other policies of feeding through the utility’s meter, so there is no need to install extra metering technology or hardware. [1][2]

How does net metering affect the utility involved?
Net metered projects provide a variety of benefits to utilities. With net metering projects, because the customer owns and maintains the equipment, the utility avoids a variety of costs associated with electricity generation, maintenance and delivery. The utility can also avoid extra technology and development costs and even environmental costs and pollution control costs.[3] These benefits can more than make up for any lost revenue from electricity sales, especially for utilities that are looking to expand renewable energy in their service territories.

What are some key aspects of net metering policies?
There are a number of factors that determine how successful net metering policies are. Some of the most important are the size of the electricity generation systems that can be net metered (often called the “system size cap”); how to manage differences between when electricity is generated and when electricity is used (“true-up”); how to handle electricity generation that is above and beyond the energy used on site (“net excess generation”); whether or not customers with multiple electrical meters can count them all together (“aggregation”); and the amount of fees and other hurdles that customers face (“administrative costs”).
Net metering policies also outline the rate at which excess generation will be credited (i.e. retail rate or avoided cost rate) and the procedures for handling this excess generation. Excess generation amounts can be paid for every bill cycle or every year, credited to a next bill, paid for when they reach a certain dollar limit, etc.

What does a good net metering policy look like?
The best net metering policies for encouraging renewable energy are those that:

  • Have a high system size cap (2 megawatts or larger) so that customers with large energy demands and resources (like farmers) can generate as much electricity as they need;
  • Have true-up and net excess generation rules that allow customers to carry a positive balance on their electricity bill;
  • Allow customers that have a number of meters on their property, like farmers, to aggregate their meters so that they can simply install one generation system for their property instead of trying to design a set-up with many smaller ones; and
  • Keep administrative costs like fees and insurance requirements to the smallest reasonable level.

What are the net metering policies in Wisconsin?
Investor-owned and municipal utilities in Wisconsin have allowed net metering since 1982. In that year, the Public Service Commission issued an order requiring those utilities to allow net metering statewide for systems up to 20 kilowatts in size (the Public Service Commission does not have jurisdiction over electrical cooperatives in Wisconsin). However, the specific policies to allow net metering vary widely by utility. In many cases, utilities give farmers, businesses or homeowners less credit for the energy they create than they charge them for the energy they use.
Most current utility policies also place artificial caps on the size of a net metered system, creating a disincentive for farmers to make the investment in technologies like digesters. Stronger and more consistent net metering policies would allow for more distributed energy generation in Wisconsin.[4] [5]

How does Wisconsin’s net metering compare to other states?
Wisconsin has some of the lowest system size limits for net metering, often as low as the minimum 20kW allowed by the Public Service Commission of Wisconsin, which greatly limits the potential for renewable energy in the state.

How do Wisconsin utilities handle true-up generation and use?
In most cases, when an electricity customer produces more energy than they consume in a given billing cycle, the extra generation is credited to the customer’s next bill. This allows customers to size systems to meet their full energy requirements without worrying about differences in timing between generation and use, for example, letting people get credit for solar energy they generate during sunny months that they can apply toward their bills during less sunny months.
When there is a long-term mismatch between generation and use, utilities reconcile the net excess generation by paying customers at their retail rate for renewable sources (the price a utility charges consumers for electricity use) and at their “avoided-cost” rate for non-renewable sources (the amount it would cost the utility to produce the same amount of energy from their large power plants). [4][5]

What types of energy generation technologies are eligible for net metering in Wisconsin?

  • Solar thermal electric
  • Photovoltaics
  • Wind
  • Biomass
  • Biogas
  • Hydroelectric
  • Geothermal electric
  • Municipal solid waste
  • CHP/Cogeneration
  • Small hydroelectric
  • Other distributed generation technologies

How could Wisconsin improve its net metering policies?
Wisconsin’s net metering policies would be improved by being standardized throughout the state. This would reduce complexity and confusion, and make sure that no ratepayers are at an unfair disadvantage relative to others. The system size cap for net metered systems should also be increased, to allow larger customers such as farms to take advantage of their onsite generating potential. Similarly, customers should be allowed to aggregate multiple meters to allow them to net meter their entire facility.

 

Quick Facts
  • Net metering programs represent a simple, low-cost and easily administered method for encouraging direct customer investment in small-scale renewables.[1]
  • In 2011, there were over 225,000 customers participating in net metering programs nationwide,[6] representing all 50 states.[7]
  • Anyone who wants to generate their own electricity may take advantage of net metering, including farmers, businesses and homeowners. The amount of net-metered electrical capacity grew by over 60% nationwide from 2010 to 2011 (from 1,646 MW to 2,688 MW)[6]
  • A good net metering policy is especially important for farmers in installing anaerobic digesters.
  • The amount of net-metered electrical capacity grew by over 60% nationwide from 2010 to 2011 (from 1,646 MW to 2,688 MW)[6]
  • As of July 2012, 43 states had state-level net metering policies.[4]
    • Only 2 of those states (North Carolina and North Dakota) were given scores lower than Wisconsin’s “D” grade by the Interstate Renewable Energy Council.[8]
  • Net metering policies vary across Wisconsin by utility, causing confusion as well as creating inequity.
    • For Alliant, WE Energies and most municipal utility customers, there is a cap on system size of 20 kilowatts.
    • In WPS, MGE and Xcel’s service territories, the system size caps for net metering are 100 kilowatts.[5]
  • A recent study found that statewide benefits of net metering to all electrical customers (both those participating and those not participating in net metering) can outweigh costs.
    • It was estimated that when California meets the statewide cap on net metered systems of 5%, the total annual savings will be $92 million.[9]
Wisconsin Data, Trends, and Legislation

Strengthening Wisconsin’s net metering policies would eliminate unfair practices that hurt ratepayers who create their own electricity, break down barriers for farmers and businesses who want to install clean energy systems like digesters, and create a consistent statewide policy that reduces complexity and confusion.

  • In 2010, the most recent year for which data are available, there were under 600 homes using net metering in Wisconsin – less than one in 4,000 residential electrical meters.[10]
    • For comparison, Colorado, which is slightly smaller in population than Wisconsin, had nearly 10 times that many, and one in 366 residential customers took advantage of net metering.
    • In California, which leads the nation in on-site renewable energy systems, there were well over 100 times as many total net metered homes as in Wisconsin; one in every 158 residential meters are taking advantage of net metering in California.
  • One of the renewable energy technologies with the most potential to take advantage of net metering policies in Wisconsin is anaerobic digesters.
    • Digesters are a win-win for farmers because they produce energy while creating a solution to waste disposal.
    • Currently, farmers can’t take full advantage of net metering because the system size caps are too small: whereas utilities currently allow net metering of systems up to 20 or 100 kW, the average dairy digester in Wisconsin was 663 kW as of 2009.[11]

 

2013 Net Metering Rates for Wisconsin Electric Investor-Owned Utilities: [12]

Utility WEPCO
(proposed 2013)

WPSC

Xcel, MGE

Alliant

System size cap

20 KW

100 KW

100 KW

20 KW

REC ownership

Not Specified

Not Specified

Customer

Not Specified

Rate structure

Retail up to customer’s load; zero credit for additional kWh

Two-tiered rate: retail up to customer’s load; avoided cost above that

Two-tiered rate: retail up to customer’s load; avoided cost above that

Full retail rate

Treatment of
any excess generation

Excess carried forward for 12 months, then zeroed out

Net determined each month; no carry forward of excess

Excess carry forward for 12 months, then netted

Excess carried forward until $25 limit is reached

 

Current Law

In January 1982, the Wisconsin Public Service Commission issued an order requiring all regulated utilities to provide a net metering option for customer generating facilities up to 20kW capacity. There are a variety of orders associated with this topic, including:

  • Docket Nos. 05-ER-11,05-ER-12, and 05-ER-13 filed in June of 1983.[13][14]
  • PSCW Order, Docket 05-EP-6 enacted September 18, 1992. [4]
  • PSCW Order 6690-UR-107 effective January 1, 1993. [15]
  • PSCW Order, Docket 4220-UR-117 enacted December 22, 2011

The Wisconsin Public Service Commission has not adopted administrative rules for net metering.

 

Cited Resources
  1. Net Metering: New Opportunities for Home Power (Thomas J. Starrs, Renewable Energy Policy Project, September 1996)
  2. Net Metering is a Win-Win for Utilities and Local Communities (Colorado Renewable Energy Society, by Mona Newton April 2007)
  3. Not Drama: Evaluating the Costs and Benefits of Net Energy Metering (Tom Beach, Crossborder Energy, 2013)
  4. Net Metering (Database of State Incentives for Renewables & Efficiency, n.d.).
  5. Customer-Sited Electrical Generating Facilities (Wisconsin Public Services Commission)
  6. U.S. Energy Information Administration, Electrical Power Annual 2011 (January 2013).
  7. U.S. Energy Information Administration, Electricity Monthly Update (January 2013).
  8. Interstate Renewable Energy Council. Freeing the Grid 2012 (November 2012).
  9. R.T. Beach and P.G. McGuire. Evaluating the Benefits and Costs of Net Energy Metering in California. Prepared by Crossborder Energy for the Vote Solar Initiative (January 2013).
  10. Based on data from U.S. Energy Information Administration, Form EIA-861, “Annual Electric Power Industry Report.”
  11. Joe Kramer, Energy Center of Wisconsin. Wisconsin Agricultural Biogas Casebook December 2009 Edition. Prepared for Focus on Energy (2009).
  12. RENEW Wisconsin. Net metering in Wisconsin, by utility. (2012).
  13. Wisconsin Net Metering and Connection Standards, Authorizing Documents (Interstate Renewable Energy Council)
  14. Investigation on the Commission’s Own Motion Regarding Advanced Renewable Tariff Development, Comments of Renew Wisconsin and Clean Wisconsin (page 40)
  15. Net Metering State Activity Page (State Environmental Resource Center)

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