TESTIMONY FOR NEW HAMPSHIRE HB1116

February 12, 2016

FROM: Harold Turner, PE

REPRESENTING: NH CleanTech Council, as Advisory Board Member
NH Center for Economic Policy, as Chairman of the Board

EXECUTIVE SUMMARY
Net Metering remains an important mechanism for the development of vital distributed
energy resources in New Hampshire. Net Metering is the connection point for selfgenerators to tie into the electrical distribution grid within each utilitys territory. Each
distribution grid is a monopolized business regulated by the NH Public Utilities
Commission (PUC). The energy that flows over the grid is no longer monopolized, and
is made up of both large and small energy providers competing in the open retail
marketplace. The exception is Eversource electric who, at least for near term, stills
owns some of the electrical generation projects that supply energy to its customers in
their service territory. Small self-generation installations are now emerging in the
marketplace as competitive alternatives for customers to generate some or all of
their own electrical power needs.
The original 50MW cap on net metering, set by legislation some 17 years ago, has been
reached in 2016. This legislation is required to increase the cap in order for selfgeneration to continue to be developed within New Hampshire. It is a vital and
necessary step to allow for the expansion of electrical energy resources, at a time when
significant amounts of aging generation in the region is scheduled to be
decommissioned. New generation is required not to increase grid capacity, but rather to
replace old generation that will soon disappear. Small distributed self- generation is
now a competitive alternative to large centralized power plants that require both
transmission and distribution lines to service the customer. The utility grid of the future
will have significant amounts of small, decentralized power resources on it. These
distributed resources already reduce peak power resource demands on the ISO-NE
grid.
The NH PUC will determine new, appropriately valued, credits to compensate selfgeneration customers for the energy they send into the grid at times when their
generation output exceeds their own consumption. Much misinformation has been
disseminated about how net metering works, the value that generators are credited for
their excess power, and the fairness to all customers on the grid. All of these issues will
be resolved when the NH PUC conducts its rate studies and issues their findings. The
PUC process will engage all stakeholders.

Meanwhile, during the interim period, this legislative bill will permit customers to
continue to install their own electrical generation equipment as an alternative to buying
all of the electrical energy needs from 3rd party grid suppliers or from their local utility
under default service. It will continue under the currently established methodology and
rates, until the PUC has completed its work. It is vitally important to all classes of
ratepayers, and the New Hampshire economy, that New Hampshire gets this right and
we don't stop adding distributed energy resources because of arbitrarily set caps. If we
get it wrong, we will be left behind all of our border states, who have progressed much
further and faster than we have in New Hampshire. We cant afford to get it wrong.
The legislative recommendations offered at the end of this testimony are
advanced in that spirit of getting it right.

HOW NET METERING ACTUALLY WORKS

Currently, self-generators sized <100kW receive an equal 1.00 kwh credit on their bill
(not a payment) for every 1.00 kwh they put into the grid. Thats really why its called
net metering. If your site generates less that 100kW under current NH law, your meter
tracks and nets out what you produced from the total of what your building actually
consumed during the month .. and you simply pay for the net number of kwh on the
meter at the utilitys full retail rate. Most residential projects are sized less than 10kW. If
however, your net energy is negative for the month, the kwh credit rolls over into the
next month and you pay a fixed service charge for the current month. Once a year, after
net metering for 12 months, your utility gives you the option (if your current credits
exceed 600kwh) to receive a check instead. The check is paid at the wholesale (energy
only) value of electricity, which is about 40% of the full retail value. All installations sized
above 100kW are credited at just the wholesale energy rate.

BASIC ARGUMENTS FOR CAP SIZE AND VALUATIONS

New Hampshires current cap of 50MW is approximately 1.5% of the systems peak
load. Vermonts current cap is 15% of peak load (10 times higher). Massachusetts
current cap is 9%, plus all their small projects (less than 25kw) are excluded from the
cap, which virtually excludes all residential sized projects, plus all projects predating
2013 are also excluded as well effectively making the cap much higher than 9%.
Maine has no cap at all.
The discussion on net metering must be broken into two distinct groups in New
Hampshire, delineated by two arbitrarily set project sizes:

Small projects sized below 100kW are credited at so called retail rates,
and includes all utility costs (energy costs, distribution system costs, transmission
system costs, system benefits costs, stranded investments costs, etc.)
associated with electrical power.
1)

Larger projects >100kW but < 1000kW are credited against the energy
only costs, otherwise commonly referred to as the so called wholesale level.
2)

Currently, disputes about the valuation of net metering rates in NH pertain to

projects sized <100kW. Existing NH law credits power at the full retail rate, as it was
established in most all the other states that initially established net metering tariffs.
Some New Hampshire utilities, as well as some special interest groups, would like to
see all net metering rates changed to wholesale rates, or some fixed capacity costs
added to retail rates to simulate a value between the two choices of retail and
wholesale.
Unfortunately the current net metering system cap of 50MW applies to all projects, not
just projects sized <100kW. There is simply no economic justification for limiting
projects sized >100kW under a cap of any size, for all exiting or future projects, since all
power delivered is credited against the energy only default service rates or wholesale
level. Group net metered projects compete on the distribution system of each
regulated utility. They compete against the costs of the utilitys default service rate, as
well as the prices offered from other much larger 3rd party suppliers of energy. The host
utility receives full compensation for all other normal charges (distribution,
transmission, etc.) for every kwh produced by the group net metered power
producers, that is sent to their customers on their system. Group net metered power is
a growing form of customer choice options in every distribution system. For example,
the University of New Hampshire in Durham currently is soliciting (USNHUMKT-100100)
for a Group Net Metering Purchase Agreement at their campus.
A strong argument can be made that all projects (regardless of size or class of
customer) that generate power to meet their own energy needs (with no external retail
sales to 3rd parties under group net metering) should be net metered as retail rate
customers. In New Hampshire the retail rate project size limit is set at 100kW, but
should be higher. In Vermont (up to 500kW), Maine (up to 660kW) and Massachusetts
(up to 1000kW), that is exactly what happens. New Hampshire is already at a
disadvantage compared to all its border states on that customer opportunity.

Any cap, either now or after the future PUC rate order required by this legislation,
should only pertain to projects priced on the retail rate side of the equation.
Currently, that demarcation is set at 100kW. Any cap put on wholesale level projects,
which are sized >100KW, simply restricts commerce and artificially keeps electrical
energy prices higher than they should be.

MYTHS & MISINFORMATION ABOUT NET METERING RATES

Myth #1- Self Generators Get Paid Retail Rates: As articulated above, net metered
customers sized <100kW dont get paid full retail rates. They actually trade power back
and forth on the distribution system at retail rates. If you ever get paid a check for
excess power to the grid, it is at wholesale rates. The average offer for the past 3 years
on my own net metered home, located on the Unitil system, was 7.0 cents/kwh for the
sale of energy.
Myth #2- Net Metering Results in Cost Shifting to Other Customers: Some people
just assume, and some utilities continue to push the myth, that power generated by net
metering customers is only worth the wholesale cost of power. Customer generated
power is created from technology that is installed throughout the distribution system with
customer capital, not the utilitys. Further, when considering the amount of Net Metered
power that is put into the grid from projects sized >100kW at wholesale rates, the total
sum of all net metered power in New Hampshire is likely to be under-compensated at
the two different credit methods of full retail (<100kW) and wholesale (>100kW) rates.
The following information will serve to further better clarify the economic compact that
currently exists on the grid:
Smart Grid Today reported on January 28, 2016 :
A New Hampshire PUC staff attorney approved the amount Until Energy Systems wants to recover as
distribution revenue displaced by net metering generation, the attorney said in a letter to the PUC filed
in the docket yesterday. The utility on May 14 filed a petition to recover a total of $41,628
$15,261 for 2013 and $26,367 for 2014, said the petition.
If the recovery is approved, the result would be an incremental rate increase of 0.003/KWH about
a 2 increase to the current, average monthly residential bill of $140.23, the Unitil said.

The Concord Monitor reported on January 14, 2016 regarding the SB333 hearing:
Eversource Distributed Generation Manager Rick Labrecque told the Energy and Natural
Resources Committee that existing solar customers in Massachusetts cost the company
as much as $4 million compared with similar customers without solar power, equivalent
to about one half of a percent of the rate structure."

As shown above, Utilities already have the opportunity to apply to the PUC for revenue
recovery if they can demonstrate that net metered power on their distribution network
causes them to under-recover their profits. However, cries of large cost-shifting doesn't
ring true under the exacting eye of the PUC. Below are numerous studies conducted to
determine the appropriate value of distributed self-generation on the grid. Our PUC will
conduct its own evaluation to determine the appropriate methodology and value on
each utilitys distribution system.

Greentech Media reported on Nov 16, 2015 :

Since solar is primarily developed as a distributed energy resource, externalized costs are
lower than centralized generation, but they often arent reflected in pricing. This point is
reflected in a recent analysis of 11 studies (BY Environment America Research & Policy
Center) showing that rooftop solars median value was 17 cents per kilowatt-hour, while
the average U.S. retail electricity rate was 12 cents per kilowatt-hour.

Maine PUC Distributed Solar Valuation Study-March 1, 2015*

*-Study did not include value for T&D, nor did it factor in a value of peak period generation
Lowest Valuation
1 st Year Avoided Market Cost - $0.090/kwh
1 st Year Avoided Market Cost & Societal Costs - $0.182/kwh
Highest Valuation (25yr Life)
25 yr Levelized Valuation Avoided Market Cost - $0.138/kwh
25 yr Levelized Valuation Avoided Market Cost & Societal - $0.337/kwh

Acadia Center Value of Distributed Generation- October, 2015

25 Year Levelized:

19-24 cents/kwh Grid Value

+7 cents/kwh Societal Value

Under this legislation, the NH PUC is charged with determining the appropriate value of
self-generation on the distribution systems of each of the states investor owned utilities.
From the above information, one can extrapolate that our PUCs findings might
approximate a number closer to the current (full retail) rate, which will then have to be

applied to all net metered projects without discrimination of project size. Currently we
have two different rates for two classes of projects one being at full retail <100kW
and one being at wholesale >100kW. In asking for a change from the two current
simple applications we have today, dont be surprised to find that collectively the true
rate to be applied in the future to all projects will result in even greater compensation
to self- generators going forward. Should the PUC or Legislature elect to keep things
simple with a higher rate for small projects and a lower (wholesale) rate for large
projects, it is likely that the small projects will actually stay at the same full retail rate
levels we have today, in order to account for the under-compensated larger projects at
the wholesale rate.

THE PROPER ROLE OF THE PUBLIC UTILITIES COMMISSION

So what should this legislation accomplish today?
First and foremost, this legislation should set an interim cap high enough (or set no cap
at all) so that an arbitrary limit will not be reached prior to the NH PUC issuing a rate
order. The order may or may not change the value of the power that is currently
exchanged at full retail rates. It should not automatically be presumed that the new rate
would be less that the current retail value, or if it is, that it won't be much closer to the
current retail value than any other benchmark. The information provided above tells you
that the rates produced will ultimately reflect the methodology used by the NH PUC. The
Maine PUCs study resulted in a max rate of $0.33/kwh, based upon a 25 year levelized
analysis that included societal benefits. Most people would agree that rates ordered
into service by any state PUC, at least for the foreseeable future, will never exceed the
retail rates. Consequently, all the other societal related value that is calculated above
the retail value will actually be provided free of charge to all of the states stakeholders.
Given the strong evidence above, that little or no cross-subsidy or cost-shifting
actually exists, we argue that it would be highly imprudent to set any cap that would
artificially restrict business growth, slow job creation, or prevent consumers from
investing in their own resources to cut costs during the time it takes the PUC to
complete a rate order. Additionally, as explained above, all projects >100kW do NOT
factor in the (cross-subsidy) debate, and are actually undervalued. Therefore those
projects >100kW should in no way be included under a net metering cap
because there is no economic justification for it. Artificially set caps only
restrict competition and increase prices, and are counter to all ratepayer interests.

WHAT ARE SOME OF THE CONSEQUENCES IF NEW HAMPSHIRE DOES NOT

RAISE ITS CURRENT NET METERING CAP?
Cleantech businesses, and their employees, who are currently
providing Net Metering and Group Net Metering energy installations in the state
will need to go to other states to survive and/or reduce their existing NH
workforce. Cleantech jobs are growing faster than the current state and national
GDP job growth rates.
1)

2)
All customer classes will be denied the ability to undertake optimally
sized self-generation installations on their own property to reduce their
electrical energy bills and receive the appropriate credits for their power that
flows onto the grid at any time of day. Real time excess generation (ex.- solar
PV) that occurs during expensive daytime peak periods would only be credited at
the wholesale grid level, or even valued at zero, which is what occurs now on the
Liberty distribution system.
3)
Industrial class customers, who currently have the 5th highest rates in
the country, will have one less option to control their costs in order to stay in NH.
4)
Municipalities who own stand alone generation will not be able to net
meter their power output to their own municipal buildings (ex.- City of Nashua)
(Note: Also requires raising the project size limit from 1MW to 5MW)
5)
Utility companies in NH, who currently use net metered distributed energy
resources (DER) on their system to help meet their renewable portfolio
standards (RPS) requirements, will have to buy out of state power instead.
6)
The output from all small power assets associated with the future sale of
Eversource NH will have to be sent out of state to ISO-NE. This also
undervalues the assets being sold, and reduces in-state resources that
currently serve to meet RPS requirements. (Note: Also requires raising the
project size limit from 1MW to 5MW)
7)
New Hampshire will be at a competitive disadvantage compared to all
its border states in terms of overall job creation, attracting needed younger
workers who are more attracted to clean energy policies and jobs, and creating
new energy projects that will keep energy dollars inside NH.
8)
Utility companies in NH will have to buy EXTRA energy out of state, to
cover the estimated 5% transmission and distribution line losses, in order to
serve the same customer who could have added their own self generation.

9)
Utility companies in NH will have to turn to other methods (and costs) to
improve grid resiliency.
10)
Utility companies in NH will have to turn to other means (and costs) to
comply with Federal Clean Energy mandates.
11)
All customers will lose the benefit of the downward pressure on energy
pricing that comes from a vibrant and competitive distributed generation
marketplace in state.
12)
All customers will lose the benefits of the numerous societal benefits
(reducing greenhouse gases, air pollution, etc.) that are not reflected in energy
rates, but none the less come with increased use of renewable energy.
13)
All customers will lose the benefits of increased price stability that
comes with increased use of renewable energy. Fossil fuels, as a commodity, will
always be at risk to volatile pricing from supply and demand.
HOW DO NH ENERGY RATES COMPARE TO OUR BORDER STATES?
Customer Class

NH

VT

MA

ME (cents/kwh)

Residential

16.07

17.01

14.91

14.66

Commercial

13.36

14.32

13.84

11.53

Industrial

11.83

9.98

12.57

7.98

Customer Class

NH

VT

MA

ME (US Ranked)

Residential

6th

5th

9th

10th

Commercial

8th

5th

6th

12th

Industrial

5th

9th

4th

13th

Customer Class

NH

VT

MA

ME

Residential

35.3%

43.2%

25.5%

23.4%

Commercial

32.4%

41.9%

37.2%

14.27%

Industrial

77.36%

49.6%

88.5%

19.64%

(> US ave)

What clearly stands out, by comparing rates in our border states, is that New
Hampshire industrial rates are not competitive with our border states of Maine
and Vermont by a wide margin.

LEGISLATIVE RECOMMENDATIONS

Immediately exclude all projects >100kW from the rate cap, as these
projects already compete on the wholesale energy side of the utility business
under group net metering and should not have a cap at all.
1)

Immediately increase the current cap from 50MW to 100MW to prevent a

cap from stopping the growth in small projects (<100kW) prior to the PUC issuing
a new rate order.
2)

Immediately increase the single project size for group net metering from
1MW to 5MW to match existing QF standards and promote industrial rate relief.
3)

Once the PUC has issued a new rate order for net metering customers as
required by this legislation:

Increase the cap to 15% percent of peak load (like Vermont) or completely
eliminate the cap (like Maine), for all non-group net metering* projects.
4)

Increase the single project size for non-group net metering* from 100KW
to 500kW (like Vermont), at the new retail adjusted rates to be established by
the PUC, to provide equal benefits to all three customer rate classes.
5)

*- Generation must be used behind the fence with no 3rd party retail sales.

FUTURE LEGISLATIVE INITIATIVES:

In addition to completing the process of expanding the Net Metering cap (if any),
increasing the size of Net Metering projects, and completing a new rate order at
the PUC for net metered customers, there are more steps that should be taken to
increase the amount of distributed energy resources in New Hampshire which
will also serve to relieve pressure from the high costs (5th in the US) of
industrial energy rates for New Hampshire manufacturers who we need for job
creation and living wages:

Legislatively re-authorize the rights of QF generators <5MW in the state to

wheel power across utility distribution lines to a maximum of 3 retails customers
under the existing 1978 NH LEEPA law. Wheeling costs to be the exact same
costs as the current wheeling costs to send that existing power to ISO-NE.
1)

2)
Allow industrial rate customers to include 50% of their total capital costs to
install self-generation at their own facilities as eligible expenditures for the NH
R&D tax credit, or pass new legislation specific to energy resources, that allows
them to do the same thing.