Net Metering and Distributed Energy Resources Policy

Over the past two decades, nearly every state has adopted Net Energy Metering (NEM) as an alternative to monopoly provided electricity, and also to compensate customers for excess electricity generated by small resources, such as solar panels, located on or close to a distribution grid. It has been a critical innovation.

Not unsurprisingly, the model has also come under greater scrutiny lately, such as in July when the FERC denied a petition from the New England Ratepayers Association (NERA) regarding the agency’s jurisdiction over NEM. While NERA was right to highlight potential inequities within NEM, the transactions are appropriately before the states, as the costs and benefits from NEM “predominantly accrue to the distribution system and retail customers.”

While NEM isn’t perfect, with more technology and visibility into the distribution system, distributed energy resources can be valued and compensated more appropriately for the value it provides to the system.