Author: Municipal Finance Legal Guidance
This month's Ask DLS features frequently asked questions concerning the treatment of net metering credits. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
What is the general rule about accounting for money received by a city, town or district officer or department?
All money received or collected by a city, town or district from any source is credited to its general fund and can only be spent after appropriation unless a general or special law provides for an exception and different treatment, i.e., a general or special law expressly reserves the revenue stream for expenditure for a particular purpose or allows expenditure by a municipal or district department or officer without appropriation. G.L. c. 44 § 53.
Has a general or special law allowed special fund treatment of net metering receipts?
No, no special fund treatment has been permitted.
May a community establish a revolving fund under G.L. c. 44, § 53E1/2 for net metering receipts?
Revenue from the net metering credits cannot be placed into a revolving fund. In such a case, there is no municipal receipt from a self-supporting program or activity. Further, there is no match between specific program expenses and revenues attributable to a fiscal year and no direct connection or nexus between the fee and the program or activity.
A departmental revolving fund is a special fund that only permits a community to reserve certain fees, charges or other receipts to pay, without appropriation, for the cost of departmental programs or activities from which the fees, charges or other receipts were derived. For further details on Departmental Revolving Funds, see IGR-2021-23.
Other than the general fund, is there another possible treatment of the net metering receipts?
Revenue from net metering could be handled as dedicated revenue to a stabilization fund pursuant to G.L. c. 40, § 5B. For further details on stabilization funds and dedication of a revenue stream to a stabilization fund, please see IGR-2024-12.
While net metering credits cannot be placed into a departmental revolving fund, can a departmental revolving fund be used for electric charging station receipts (or in the case of a school into a revolving fund pursuant to G.L. c. 71, § 71E)?
Possibly. If the receipts are used for the upkeep and costs of the electric charging station, then it would seem that departmental revolving fund treatment would be appropriate. In such a case, the activity would be self-supporting, there is a match between specific expenses and revenues, and there is a direct connection or nexus between the fee and the activity. However, if the receipts are used for a purpose unrelated to the cost of operating the charging stations, then it does not seem that departmental revolving fund treatment would be appropriate.
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| Date published: | December 4, 2025 |
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