New Hampshire Governor’s Veto Helps Majority of Ratepayers
Last month, New Hampshire Governor Chris Sununu vetoed a bill related to the state’s net metering program. By vetoing the bill, Governor Sununu helped the average ratepayer in New Hampshire avoid paying higher electricity bills.
Explaining his veto of Senate Bill 446, Governor Sununu stated that the bill would “cost ratepayers at least $5 to $10 million annually and is a handout to large-scale energy developers.” Additionally, he stated, “New Hampshire has some of the highest electric rates in the country, placing financial strain on the elderly, those on fixed incomes and in the business community.”
Net metering is a program run by electric utilities that allows customers to produce their own electricity, usually with solar panels, and sell excess electricity back to their utility providers. The energy is sold at the retail rate which is the rate consumers pay to buy electricity from their utility. Other generators are paid the wholesale rate which is lower than the retail rate.
Senate Bill 446 would have greatly increased the size of New Hampshire’s net metering program. Current New Hampshire state law prohibits generators producing more than 1MW from taking part in net metering. SB 446 would have raised that limit to 5MW. In essence, it would have paid more, larger generators of electricity the retail rate instead of the wholesale rate.
Net metering suffers from a critical problem. It stems from the fact that net metering consumers are paid the retail rate for the electricity they generate. Typically, when a utility buys electricity, it pays the generator a wholesale rate for the electricity they produce. The utility then sells that electricity to customers at the retail rate. The difference between the rate received by generators and the rate customers pay helps cover the cost of constructing and maintaining the grid, something both net metering and non-net metering consumers use.
Net metering customers in New Hampshire currently receive an above-market rate for the electricity they generate. As a result, as utilities make up for lost revenue, they shift the costs of maintaining the grid onto customers who do not participate in net metering. Customers who generate electricity through net metering should be treated like all other generators and receive the wholesale rate for electricity they produce, not an artificially high rate.
ALEC has published a study on reforming net metering policy to make it more equitable. It concludes that “Current net metering policies should be reformed, and prices set fairly and reasonably. As rooftop solar and other DG systems become more developed, net metering policies and rate structures should be updated so that everyone who uses the electric grid helps pay to maintain it and to keep it operating reliably at all times.” ALEC’s Updating Net Metering Policies model resolution provides states with a framework to start reform and urges them to “Update net metering policies to require that everyone who uses the grid helps pay to maintain it and to keep it operating reliably at all times.”
An amendment to eradicate this problem was proposed to the bill by Rep. Michael Harrington. It would have changed the payment policy so that customers generating over one megawatt of electricity would have received the wholesale rate. Unfortunately, this amendment did not make it to the final bill draft that was sent to Governor Sununu for his signature and is likely one of the reasons he vetoed the bill.
The intent behind net metering is not bad. If a household wants to install solar panels or other types of distributed generation, they should do so, but they shouldn’t expect to be paid a price so high as to burden consumers who do not want to take part of net metering. When net metering mandates that the retail rate be paid, it functions as a subsidy for solar panels and other distributed generation sources of energy. Governor Sununu’s decision to veto the net metering expansion bill is a step in the right direction, but New Hampshire should switch to paying net metering customers to wholesale rate.