"Every homeowner and every small business is a potential source of reliable, renewable electricity for their community," noted NNEC Executive Director Chris Cooper. "Smart utilities realize that we will have to tap all of these small sources to meet future demand."
Congress realized the vast potential of net metering when it mandated in the 2005 Energy Bill that every state consider adopting or expanding net metering programs by the end of 2007.
"The 2005 Energy Bill requires states to go back and try to fix the problems with their net metering programs," Cooper said. "In many states, on-site renewable electricity already can compete successfully with energy from dirty, centralized power plants. But, in many states, complex rules are designed to protect electricity monopolies and discourage homeowners and small businesses from generating their own clean energy."
By comparing regulations with customer participation rates, NNEC was able to identify which states had the best program and which states had the worst (and why). New Jersey ranked first out of 34 states with net metering programs. Indiana and Arkansas were profiled as states with "worst practices". Oklahoma ranked last.
"In Indiana and Arkansas, utilities successfully undermined state legislators by convincing the state utility commissions to adopt minor rule changes that destroyed the entire program," noted Cooper. "As a result, Arkansas registered no participating customers in the first two years of its program. And by 2004, Indiana only had six participating customers in the entire state."
"We found that when commissions tried to balance the economic interests of regulated utilities with the economic interests of customers, customers almost always lost out," said Cooper. "In many states, utilities used the phantom of lost revenue to justify higher electricity costs for other state industries.
"Utilities should not have a divine right to charge for electricity that customers can otherwise generate more efficiently and more cleanly on their own," he noted.
In New Jersey, the state's utility commission tried a different approach. The legislature made it a goal to attract more small-scale renewable technology companies to the state. So rather than try to balance competing economic interests, the state's utility commission tested proposed regulations based on whether they helped or hindered the state's ability to reach its goal. As a result, New Jersey adopted rules to streamline paperwork and rejected rules that unnecessarily restricted customer participation.
"Participation in New Jersey has skyrocketed by over 30,000 percent since 2002," noted Cooper. "It's amazing. The state utility commission is literally drowning in new applications. What New Jersey and other states (like Montana, California and Oregon) prove is that Americans are willing to invest in their own energy independence if regulations would only let them."
A team of researchers at Vermont Law School's Institute for Energy & the Environment used the information from NNEC's analysis to craft model state statutes for legislatures and model regulations for utility commissions. Both are included in the report along with a forward by the Institute's Director, Michael Dworkin.
Dworkin, a former state utility commission chairman, noted the urgency in finding new diverse sources of electricity generation:
"We face an 'Energy Trilemma' -- an energy world strained by the three forces of financial stress, environmental constraints and security risks. We need solutions now that help us on some or all of these fronts, without making others worse."
"So when we have the chance to recruit and encourage folks who will install their own small, clean generation, right next to the load that it will serve, the message should be: 'Many hands make lighter work; welcome to the task we all must face!"
