Michigan bill aims to revive solar compensation

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In late April, Michigan lawmakers introduced legislation that would allow DG customers with systems under 500 kW to qualify for retail net metering. Electric providers are permitted to apply for an alternative rate that compensates such customers via a bill credit for “the value to the electric provider, its customers, and society.” The alternative rate would apply to interconnections occurring after the date of PSC approval.

If passed, the MPSC must conduct a proceeding on the proposed alternative rate and approve it if it meets the following requirements:

  •  Appropriately applies the specified methodology.
  •  Charges the customer for all electricity delivered to the customer at the same retail rate paid by customers in the rate class who are not in the DG program.
  •  Credits the customer at the alternative rate for all electricity not utilized by the customer for self-service and delivered to the local utility’s distribution system.
  • Rolls over unused credits, which are credited against “all the electric provider’s charges.” If the customer has a positive balance after the 12-month period ending January 31, the electric provider must pay the credit balance to the customer at the alternative rate.

The PSC would be required to establish a DG value methodology within one year of the effective date of this bill and consult with stakeholders during its development. The DG value methodology must include an analysis of the costs and benefits that accrue over a period of at least 20 years.

The alternative rate would have to be recalculated every two years and the PSC would be forbidden from authorizing an alternative rate that is lower than the electric provider’s applicable retail rate until 3 years after the initial approval of a provider’s alternative rate.

Shortly before the introduction of this bill, the PSC issued an order that will erode the value of net metering for new DG customers. In brief, the PSC approved an Inflow/Outflow billing method which will require customers to pay the full retail rate for electricity imports from the grid and compensate them for all outflows to the grid at the utility’s avoided cost rate.