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F I S C A L   I M P A C T   R E P O R T

 

 

SPONSOR:

Aragon

 

DATE TYPED:

03/08/03

 

HB

 

 

SHORT TITLE:

Net Metering for Electricity Self-generation

 

SB

686

 

 

ANALYST:

Valenzuela

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

NFI

 

 

 

 

 

 

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

SOURCES OF INFORMATION

 

Responses Received From

Office of the Attorney General

Public Regulation Commission (PRC)

Energy, Minerals and Natural Resources Department (EMNRD)

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 686 amends the Public Utility Act to require utilities to offer net metering to all customers who self-generate electricity.  The bill requires use of a single meter capable of registering flow in both directions.  If electricity used in a billing period exceeds electricity generated, the self-generator will be billed for the net difference at the same rate as other customers in the same rate class.  If electricity generated exceeds electricity used, the self-generator will be billed for the customer charge and the net difference will be reflected as a kilowatt-hour credit on the customer’s bill for the next billing period.  On January 1 of each year, any kilowatt-hour credit to a self-generator will be reduced to zero without compensation or credit.

 

     Significant Issues

 

Net metering regulations exist in New Mexico (see 17.9.571 NMAC); however, there is no specific law that enacts net metering.  The PRC promulgated net metering regulations based on its statutory authority through the Public Regulation Commission Act and the New Mexico Public Utility Act.  SB686 would require modification of the existing regulations by requiring the PRC to adopt rules in June 2003 and enforce them.  In general, SB686 would allow net metering grid interconnections that are more economically favorable to utility customers than are now possible under existing law.

 

The existing regulations have a maximum system capacity requirement of 10 kiloWatts (kW).  SB686 does not specify a maximum capacity (see Conflicts).

 

The existing regulations allow utilities to use their own energy rate for crediting net metering customers for any electricity generated in excess of the customer’s monthly usage. The utility energy rate is less than the retail rate applied to customer billing.  SB686 would require utilities to credit net metering customers at the same rate as they are billed, which acts as a stronger incentive for customer-generated renewable energy production.

 

Under certain conditions of the existing regulations, net metering customers must additionally pay for or conduct activities for billing charges, metering equipment, standards compliance, testing, controls, and liability insurance. SB686 prohibits utilities from taking the following actions:

 

 

FISCAL IMPLICATIONS

 

Senate Bill 686 does not contain an appropriation. The PRC reports that the bill will decrease the kilowatt hours utilities sell, which could have an impact on  gross receipts tax and on fee paid by utilities under Section 63-7-20, Utility and Carrier Inspection Fees and under Section 62-8-8, Inspection and Supervision Fees. However, until the market for self generation of electricity grows, the amount is not likely to be significant.

 

CONFLICT

 

The Attorney General reports the following conflicts:

 

Public Utility Act. The bill assumes the Public Utility Act will remain in effect.  Currently, the Act will sunset July 1, 2003, although various bills have been introduced to repeal the sunset.

 

NMAC §17.10.571. Net metering is currently governed by New Mexico Administrative Code §17.10.571 (NMPRC Rule 571), which was promulgated under existing sections of the Public Utility Act and the Public Regulations Commission Act.  Rule 571 limits net metering to “qualifying facilities,” defined as a cogeneration or small power production facility which has a maximum design capacity of 10kW and meets the criteria for qualification contained in 18 C.F.R. §292.203.  It allows different meters to be used to measure use and generation, which is necessary if the self-generator is billed under a rate structure that includes time-of-use energy pricing.

 

Rule 571 allows the use of the net kilowatt-hour credit method, as required in HB 686, but provides that unused credits shall be carried forward from month to month with no zeroing out and also provides that when a customer leaves the system, unused kilowatt-hour credits shall be paid to the customer at the utility’s energy rate.  Additionally, the rule allows the utility the option of crediting or paying the customer on the next bill for the net energy supplied at the utility’s energy rate.

 

The rule requires a separate load break disconnect switch except that the meter itself may in some instances, be used as a visible means of disconnecting single-phase photovoltaic facilities.  It also provides that the utility may require, with PRC approval, an isolation transformer for interconnection of facilities other than single phase photovoltaic facilities.  Additionally, the PRC may require a customer to obtain general liability insurance.  None of these safeguards appear to be permitted under the bill.

 

MFV/sb