Montana Legislature revisits net-metering regulations

Several net-metering bills got their first hearing in the Montana Legislature this week, setting off another session in which lawmakers will attempt to fine-tune how small electricity generators sell excess energy to the state’s electric grid.

“Net metering” refers to the credits that dispersed energy producers, including homeowners and businesses throughout the state, receive from utility companies that own the transmission infrastructure to distribute their excess power.

On Tuesday, a pair of bills introduced by Sen. Pat Connell, R-Hamilton, won the approval of utility companies operating in the state, while opponents testified the measures would effectively dampen the state’s growing sector of rooftop solar and other small electricity operations.

Senate Bill 1 would require dispersed generators to install “smart grid” technology that he said would improve the safety and reliability of the electrical grid, including electricity meters equipped with inverters and two-way communication systems to limit potential disruption to the grid.

“I am just suggesting that those folks in the exponential expansion of net metering need to be just as responsive to the protection of the grid and the supply of electricity for all of our constituents,” Connell said, noting that he supports the growth of independent generators in the state’s energy sector.

Renewable-energy advocates argued against the technology mandate, however. Orion Thornton, with the Montana Renewable Energy Association said the proposal is premature, given the absence of existing standards for the technology required by the bill.

“This bill is akin to requiring everyone to have a cellphone years before any cellphone towers are installed,” Thornton said. “To think about implementing this on a grid-wide campaign is almost laughable.”

Representatives from utility companies in the state spoke in support of the bill during Tuesday’s hearing before the Senate Energy and Telecommunications Committee. But they also noted they would likely be forced to issue “blanket waivers” for generators unable to meet the requirements by 2023, as proposed by the legislation.

“Quite frankly, it is very expensive to install and there’s still a debate as to whether the benefits of smart-grid technology outweigh the costs of smart-grid technology,” Northwestern Energy spokesman John Alke told the committee. He said the technology requirements were a good goal, but also characterized them as “aspirational” within the proposed timeline.

Another measure introduced by Connell, Senate Bill 7, would amend the state’s current net-metering law to require that those using net metering systems “may not be subsidized by other public utility customers who do not use net-metering systems.”

That proposal also received support from the state’s utilities. Alke said utilities currently can purchase electricity for about 3 cents per kilowatt-hour, but additional costs borne by the utilities push the retail rate to roughly 11.5 cents per kilowatt-hour. Net-metering customers receive credits on electricity equal to that higher retail rate, which he called an “inherent subsidy” that skews the electricity prices higher for other power customers.

Committee member Sen. Dick Barrett, D-Missoula, however, noted that electricity rates require averaging between customers in the same class who may have different actual costs of transmission. He said the effect of the bill would be to simply single out net-metering customers, while other energy users with more expensive transmission costs remain in the same customer class as those nearer to the electricity source.

“It’s the job of the [Public Service] Commissioners to determine whether those subsidies are unreasonable or not,” Barrett said. Senate Bill 7 “appears to remove the discretion of the Public Service Commission to overlook subsidization in this particular instance.”

Several other measures to address net metering are also working their way through the Legislature this session. They include legislation raising the cap on credits for power-generating government facilities, requiring a new customer class if independent generators supply at least 1 percent of the state’s electricity, requiring a cost-benefit analysis of net metering by the commission and allowing existing customer-generators’ rates to be “grandfathered” in if a new customer class is created.

Reporter Sam Wilson can be reached at 758-4407 or by email at swilson@dailyinterlake.com.