What is NET Metering?

Thursday, May 28th, 2009

Net metering programs adopted in many states offer the potential for businesses to realize financial benefits from installing renewable energy systems. Net metering allows consumers to offset the cost of electricity they buy from a utility by selling renewable electric power generated at their businesses back to the utility.

In essence, a customer’s electric meter can run both forward and backward in the same metering period, and the customer is charged only for the net amount of power used. By definition, true net metering calls for the utility to purchase power at the retail rate and use one meter. States have adopted a number of variations on this theme.

As part of the Energy Policy Act of 2005, all public electric utilities are now required to offer net metering on request to their customers. Utilities have three years to implement this requirement.

Net metering is a financial incentive for customers who install renewable energy systems.

• Customers tend to see lower bills with net metering. The payment system does not have to be disrupted as the utility company does not have to account separately for electricity produced by customer-generators. In general, net metering customers do not produce more electricity than they consume during billing periods; the customer only pays a reduced bill.
• Net metering participants are more aware of energy consumption, and tend to consume less energy than is generated. Studies, including some sponsored by utilities, have shown direct, measurable benefits for having generation located close to the end user.

Merchant power, where the power is generated for sale to the ‘grid’ and sold at a wholesale rate, is typically done on larger wind facilities, rather than servicing local point loads. In New England, this wholesale rate is about $.055 per KwHr, which is the ISO’s ‘avoided cost’.

You can find specific information about net metering in your State on the Interstate Renewable Energy Council website www.irecusa.org/index.php?id=90