I. Net Metering Basics

II. Origins, Authority, and Eligibility for Net Metering

III. Net Metering Customers

IV. Engineering Questions about Net Metering

V. Net Metering and Billing

VI. Design and Development of Net Metering Facilities

I. Net Metering Basics

  • What is net metering?
    • Net metering allows customers of certain electric distribution companies (note:  check whether your company is listed below) to generate their own electricity in order to offset their electricity usage.  All customer classes are eligible for net metering.  Common examples of net metering installations include solar panels on a home or a wind turbine at a school.  These installations are connected to a meter, which will measure the net quantity of electricity that the customer uses (“retail meter”).  The retail meter spins forward when the customer uses electricity from the distribution company, and it spins backward when the customer generates excess electricity (thereby “exporting” electricity to the electric grid).  A special retail meter (also called the “net meter”) is required to allow for the “netting” of usage and generation, especially when there may be exporting of electricity.

 

  • Why would I want to get involved in net metering?
    • Net metering can lower a customer’s electricity bill by reducing the amount of electricity that the customer buys from the distribution company.  Net metering allows customers to receive credits for any electricity that they generate but do not use.  Some customers get involved in net metering because of an interest in the environment and renewable energy.

 

  •  What types of generating facilities are eligible for net metering?
    • To qualify for net metering, you can install any type of generating facility as long as it is smaller than 60 kilowatts (“kW”).  If the generating facility uses wind, solar, anaerobic digestion, or renewable energy at a farm, it may be up to 2 megawatts (“MW”) (or even larger for a public facility) and still qualify for net metering.

 

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II. Origins, Authority, and Eligibility for Net Metering

  •  How long has net metering been available?
    • Net metering has been available to customers in Massachusetts since the 1980s.  In 2008, new legislation: (1) - increased the allowable capacity (or size) of net metering facilities that use renewable resources to create energy from 60 kW to up to 2 MW, (2) - increased the value of the credits for electricity generated by these facilities from the wholesale rate to nearly the retail rate, and (3) allowed net metering customers to allocate net metering credits.  Additional legislation was passed in 2010 and 2012, which further modified net metering in Massachusetts, most notably raising the overall amount of allowed net metering projects.

 

  •  Does the Commonwealth regulate net metering?
    • Yes, the Department of Public Utilities (“Department”) has a set of regulations, 220 CMR 18.00 pdf format of 220 CMR 18.00 , to govern net metering in Massachusetts.  These regulations carry out state law requirements.  Also, the Department addresses questions and issues raised by the public in Department proceedings, and engages in informal problem‑solving with the electric distribution companies and net metering customers.

 

  •  What must I do to be eligible for net metering?
    • You must be a customer of certain Massachusetts electric distribution companies;
    • You must meet all of your electric distribution company’s requirements before you interconnect your generating facility;
    • The applicable net metering “cap” must have sufficient capacity remaining to accommodate your facility.

 

  • Am I eligible to receive net metering services if I am using a Competitive Electric Supplier (CES)? 
    • Under certain circumstances, a customer that uses a CES is eligible to receive net metering services.  It is important to keep in mind that all net metering rules and regulations apply.  For more information, please visit the Laws and Regulations webpage.  Furthermore, additional important rules to keep in mind are:
      1. The portion of the electricity bill that can be offset by net metering credits.
        • If a customer receives combined billing (meaning a CES bills a customer through the distribution company), net metering credits can be applied to the entire electricity bill including the supply portion of the bill.
        • If a customer does not receive combined billing (i.e. the customer receives at least two bills, one from the distribution company and one from the CES), the net metering credits can only be used to offset the bill from the distribution company.
      2. The net metering credit will be based on the distribution company’s basic service charge (not the supply charge of the CES).  For example, if Distribution Company X is charging 7 cents per kilowatt hour for basic service, but the net metering facility or customer is paying the CES 6 cents per kilowatt hour, the credit component is still 7 cents. 

 

  • Why are there different caps?  How much net metering is allowed in Massachusetts?
    • State law requires each distribution company to maintain separate net metering caps for public and private net metering facilities.  Each cap is equal to a percentage of each company’s highest historical peak load, which is the most electricity consumed by the distribution company’s customers at any one time. As of November 1, 2012, the caps are:

    • Distribution Company

      Private Net Metering Cap (3%)

      Public Net Metering Cap (3%)

      National Grid Massachusetts Electric Company

      153.93 MW

      153.93 MW

      National Grid Nantucket Electric Company

      1.224 MW

      1.224 MW

      NSTAR Electric Company

      149.34 MW

      149.34 MW

      Western Massachusetts Electric Company

      25.35 MW

      25.35 MW

      Unitil d/b/a Fitchburg Gas and Electric Light Company

      3.06 MW

      3.06 MW

      Once an electric distribution company fills its net metering caps, it can no longer allow customers to take service under its net metering tariff.  

 

  • What is a net metering tariff?
    • Like many other electric tariffs, the net metering tariff is a schedule of the rates, charges, terms and conditions that electric distribution companies must use when providing net metering or other distribution services to customers.  Stated another way, the net metering tariff specifies the way in which an electric distribution company must treat a net metering customer.

 

 

 

  • What is a neighborhood “net metering facility?”
    • A neighborhood net metering facility must: 
      • Only distribute net metering credits to customers that reside within the same neighborhood;
      • Distribute net metering credits to at least ten residential customers;
      • Not include the distribution charge in its net metering credits. 

 

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III. Net Metering Customers

 

  • What is a "Host Customer"?
    • The Host Customer is the customer of record with the electric distribution company.  The person or entity whose name appears on the account is the Host Customer of a net metering facility.  A simple way to determine the “customer of record” for a specific account is to find the identity of the recipient of electric bills from the electric distribution company.  The Host Customer is important because the Host Customer decides what happens to any earned compensation for excess generation (such as net metering credits).

 

 

 

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IV. Engineering Questions about Net Metering

 

  • What is the electric grid?
    • The electric grid is the system of electric distribution lines that electric distribution companies use to deliver electricity to their customers.  If a Host Customer generates excess electricity, it is exported to the electric grid.

 

 

 

  • What does it cost to connect a generating facility to the electric grid?

    • It depends.  The cost to interconnect generating facilities is highly dependent on several variables, including (a) the size of the generating facility, (b) the proposed location of the generating facility, and (c) the amount of electricity that could be exported to the electric grid.  The electric distribution company needs detailed information in order to determine the total interconnection cost.  Accordingly, there is no universal standard by which to calculate interconnection costs; each situation is unique.

 

  • Where would I buy equipment for net metering?

    • There are many different installers located in Massachusetts and the northeast states.  The design, installation and interconnection of a generating facility can be complex, and it is advisable to consult a professional.

 

 

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V. Net Metering and Billing

 

  • If I am net metering, how will I be billed for electricity?

    • Customers who net meter are billed for their net consumption of electricity.  Depending on whether the customer used more electricity than was generated on site, or exported more to the electric grid, the customer will either owe the distribution company money or earn a monetary credit for the excess electricity that was generated and exported.

      Net Consumption = (total electricity consumed) - (total electricity generated).
      If net consumption is positive, customer pays electricity bill.
      If net consumption is negative, customer receives credit on electricity bill.

      Example:  Imagine that you, a residential customer, install solar panels on the roof of your home.  Before daylight, your retail meter spins forward as you consume electricity from the electric distribution company to power appliances like a refrigerator or computer. During the day, the solar panels generate electricity.  If the solar panels provide more power than you use, your retail meter will spin in reverse while the excess electricity is sent to the electric grid.  At night, when the solar panels are not generating electricity, the retail meter will spin forward again as you consume electricity.  At the end of the billing period (approximately one month), you will pay for only your net consumption of electricity.

 

 

 

  • How can I determine the value of net metering credits for my excess electricity?

    • Net metering credits are calculated in a complex and detailed manner, as prescribed by state law.

      To help understand the calculation of credits, you can see a mathematical formula in 220 C.M.R. § 18.04 and in each distribution company’s net metering tariff.  The formula for the calculation of net metering credits is the same for all four electric distribution companies in Massachusetts.  Nonetheless, please note that the inputs for the formula include several variables that will vary between electric distribution companies and types of customers.

      Net Metering Regulations
      National Grid net metering tariff 
      NSTAR net metering tariff
      Western Massachusetts Electric Company net metering tariff 
      Unitil net metering tariff

      The formula includes several components, which may or may not be included in a credit, based on the type and size (class) of the net metering facility producing the credits.

      This table summarizes which rate components are included in credits resulting from net metering facilities of various types.

      Components for the Calculation of
      Net Metering Credits

      Units

      Class I

      Class I- Solar, Wind, AG, & AD

      Class II

      Class III

      Delivery

      		Distribution Charge

      ¢/kWh

       

      X

      X

      *

      Transmission Charge

      ¢/kWh

       

      X

      X

      X

      Transition Charge

      ¢/kWh

       

      X

      X

      X

      Supply

      		Basic Service

      ¢/kWh

       

      X

      X

      X

      GenerationAverage Monthly Clearing Price at the ISO-NE (Energy)

      ¢/kWh

      X

       

       

       

       

      		* Only applies to class III municipalities and governmental entities

       

      The following rates are never included in the calculation of net metering credits:  (1) fixed customer charges; (2) system benefit charges, including both the energy efficiency (also known as DSM charges) and renewable energy charges; and (3) demand charges (e.g., $/kW or $/kVa charges).

      Once you know which rate components are included in credits for excess generation produced by a facility, you can consult your electric distribution company’s current schedule of rates.  This will allow you to plug values into the credit formula and determine the value of a credit for each unit of excess electricity (in kWh) produced by your facility.  Be aware, however, that electric distribution companies’ rates change periodically.  For example, basic service rates for residential customers change every six months, based on the electric distribution company’s schedule for purchasing electricity supply in the marketplace.  Also, because each electric distribution company is purchasing electricity supply for its customers in a competitive marketplace, the basic service rate of one company will not necessarily be the same as the basic service rate of another company.  As a result, because basic service rates are a component of a net metering credit, the overall value of net metering credits can vary from one company to another.

      This table summarizes the net metering facility class sizes:

      Class NumberSize of Facility
      Class I Net Metering FacilityLess than 60 kW
      Class II Net Metering Facility60 kW to 1 MW
      Class III Net Metering Facility1 MW to 2 MW

 

  • Is the Energy Efficiency Reconciliation Factor (“EERF”) included in net metering credits?
    • No, the EERF is not included in the distribution rate component for the purposes of net metering.  Pursuant to G.L. c. 25, § 19., the purpose of the EERF is to fund energy efficiency programs.  G.L. c. 164, § 138 states that net metering credits shall not include energy efficiency and renewable energy charges.  Specifically, G.L. c. 164, § 138 states that net metering credits “shall not include the demand side management and renewable energy kilowatt-hour charges set forth in sections 19 and 20 of chapter 25.”  Section 19 refers to energy efficiency and all of the charges associated with energy efficiency.

 

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  • What can I be certain of regarding net metering credits?

    • Net metering credits for excess electricity generated by wind, solar, anaerobic digestion and other farm-based net metering facilities will always have a higher value than those for other types of generation (i.e., non-renewable resources smaller than 60 kilowatts).  The encouragement of renewable energy installations is a key policy idea behind the expansion of net metering in Massachusetts.

 

  • How can I track my net metering credits?

    • Net metering credits appear as a dollar amount on your electricity bill, and not as kilowatt-hours. These credits never expire.  These credits will continue to appear on your electricity bill until you use them.

 

  • How may I use my net metering credits?

    • A Host Customer can always use net metering credits to offset its bill from the electric distribution company.  Furthermore, as long as two basic conditions are met, a Host Customer may apply net metering credits to other accounts, even if the other accounts are not held by the Host Customer.  Pursuant to 220 C.M.R. § 18.05, the Host Customer can allocate net metering credits to other accounts as long as all of the accounts are:  (1) with the same electric distribution company; and (2) located within the same ISO-NE load zone.  (Check with your electric distribution company for this information.)   Accordingly, a Host Customer may keep net metering credits, allocate net metering credits, or do some of each. 

      A Host Customer decides how to apply the net metering credits to various accounts by completing and submitting a form called “Schedule Z” to its electric distribution company.  Schedule Z can be changed no more often than twice in one calendar year (check with your electric distribution company for more information about Schedule Z).

      If a net metering facility has a capacity of 1 MW to 2 MW (making it a Class III facility), the electric distribution company may decide to pay the Host Customer for the value of any credits from excess generation, instead of applying any credits to accounts.  Under state law, this decision is left entirely up to the electric distribution company, but the utility must decide before the facility becomes operational what it will do in this regard.

 

 

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VI. Design and Development of Net Metering Facilities 

 

  • What is the maximum capacity of a net metering facility?

    • A facility’s maximum capacity will depend upon whether it is a “public” or a “private” project.  If a net metering facility is designed for the private net metering cap, then the maximum capacity is 2 MW.  If a net metering facility is designed for the public net metering cap, then the maximum capacity is 10 MW.   A net metering facility designed for the public net metering cap may have multiple units, but the capacity of each unit cannot exceed 2 MW.

 

  • What constitutes a net metering facility?

    • A “facility” is defined as the capacity located on a single parcel of land, at a single interconnection point, with a single meter.  A customer may not qualify only part of a facility’s capacity for net metering.  Adding more meters or more interconnection points on a single parcel does not create additional facilities.  Subdividing one parcel into more parcels does not create additional facilities.  Having multiple owners or multiple recipients of net metering credits does not create additional facilities.  Also, a facility can have only one Host Customer.

 

  • What constitutes a unit?

    • A “unit” is a component of a public net metering facility.  Units are defined differently, based on the type of technology used in the public net metering facility. 
      • For wind public facilities, the number of turbine(s) will determine the number of units.  For anaerobic digestion public facilities, the number of engine(s) or turbine(s) will determine the number of units.  
      • Solar public facilities present a special case, and these facilities may self-designate their number of units, as long as there are at least as many inverters as the number of units.  
    • The capacity of a single unit for a public net metering facility must be at least 60 kW and cannot exceed 2 MW.  Adding more meters or more interconnection points on a single parcel does not determine its units.  Subdividing one parcel into more parcels does not create units.  Having multiple owners or multiple recipients of net metering credits does not create units.  Because a facility can only have one Host Customer, there cannot be a Host Customer for each unit.  The number and capacity of a public facility’s units do not affect the value of its net metering credits because the calculation will be the same for both Class II and Class III public facilities.

 

  • Which facilities belong in the public net metering cap?

    • Only Class II and Class III facilities may be included in the public net metering cap.  Class I facilities are automatically excluded from this cap by statute.  There are two tests for determining whether a Class II or Class III facility belongs in the public cap.  First, the Host Customer must be a public entity.  Second, all recipients of net metering credits must be public entities.  Both of these conditions must be met in order for a net metering facility to be in the public net metering cap.  If a facility cannot fully meet both of these tests, then the facility belongs in the private net metering cap.  A facility cannot be in both caps at the same time.

 

 

  • Who is required to obtain a classification from the Massachusetts Department of Public Utilities?
    • There are three different situations where a public entity (either municipality or other governmental entity) would need to obtain a classification number:
      • A public entity that wants to start net metering.  A public entity will not be able to create an account at www.MassACA.org if it does not have this classification number issued by the Massachusetts Department of Public Utilities. 
      • A public entity that is currently net metering.
      • A public entity that is going to receive net metering credits from a separate public entity.

 

  • What is the net metering “queue”?

    • The System of Assurance of Net Metering Eligibility, often referred to as the System of Assurance or the net metering “queue,” was created by the Massachusetts Department of Public Utilities:  (1) to track the aggregate capacity of all net metering facilities; and (2) to provide host customers and other stakeholders with an assurance, before beginning construction, that a facility will receive net metering services once it is able to generate electricity. 

  •  

 

  •  Why is the System of Assurance necessary?

    • The System of Assurance will facilitate renewable energy development by reducing uncertainties about the availability of net metering services.  For more information about the System of Assurance or to review the aggregate capacity of net metering facilities in each utility company’s service territory, please visit:  www.MassACA.org.

     

 

This information is provided by the Department of Public Utilities.