NOTE: On February 2016, the PA Public Service Commission (PUC) issued a final rulemaking order amending net metering regulations to provide clarity and to comply with the statutes. Changes include clarifying provisions for meter aggregation, increasing system size limit to 200% of annual on-site use, and other minor amendments. The documents associated with the case can be accessed at Docket L-2014-2404361.
As of Feb 19, 2016, this final regulation from the PUC is currently being reviewed by the PA Independent Regulatory Review Commission (IRRC). The rules will only be adopted after the IRRC approves of the proposed changes. The final decision from the IRRC is expected around March 2016.
On May 2016, the IRRC rejected the 200% net metering system cap established by the PUC. The PUC may rescind the regulation or resubmit it to IRCC for another review within 40 days.
In 2006 the PA Public Utilities Commission (PUC) adopted net-metering rules and interconnection standards for net-metered systems and other forms of DG, pursuant to the Alternative Energy Portfolio Standards (AEPS) Act of 2004. In 2007, H.B. 1203 amended the Pennsylvania AEPS and also expanded net metering. Revised rules consistent with these amendments were adopted by the Pennsylvania Public Utilities Commission (PUC), effective November 29, 2008. The PUC updated the net-metering rules (Docket No. M-2011-2249441) in 2012 approving the use of third-party ownership models (i.e., system leases or retail power purchase agreements).
Eligibility and Availability
In Pennsylvania, investor-owned utilities must offer net metering to residential customers that generate electricity with systems up to 50 kilowatts (kW) in capacity; nonresidential customers with systems up to three megawatts (MW) in capacity; and customers with systems greater than 3 MW but no more than 5 MW who make their systems available to the grid during emergencies, or where a microgrid is in place in order to maintain critical infrastructure. It is important to note that electric generation suppliers (EGSs) in Pennsylvania are permitted but not required to offer net metering. Thus, customers who choose an electricity supplier other than their utility must check with the supplier to see if it offers net metering service. Net metering is available when any portion of the electricity generated is used to offset on-site consumption. The size of the net metered systems is capped at 200% of the customer generator's annual on-site electricity needs.** For existing accounts, this cap shall be based on the previous 12 months electric usage, and for new accounts, it shall be based on the building type, size, and anticipated electric usage.
Systems eligible for net metering include those that generate electricity using photovoltaics (PV), solar-thermal energy, wind energy, hydropower, geothermal energy, biomass energy, fuel cells, combined heat and power (CHP), municipal solid waste, waste coal, coal-mine methane, other forms of distributed generation (DG) and certain demand-side management technologies.
If a net-metered customer’s self-generation results in a 10% or higher reduction in the customer’s purchase of electricity for an annualized period, the customer must pay for its share of stranded costs to prevent inter-class or intra-class shifting.
Net excess generation
Net metering is achieved using a single, bi-directional meter that can measure and record the flow of electricity in both directions at the same rate. Net excess generation (NEG) is carried forward and credited to the customer's next bill at the full retail kilowatt-hour rate, which include generation, transmission, and distribution charges. Customer-generators are compensated for remaining NEG at the utility's "price-to-compare" at the end of the year. The price-to-compare includes the generation and transmission components -- but not the distribution component -- of a utility's retail rate. In order to reconcile net metering with Pennsylvania's broader renewable energy goals, the "year" referenced above is defined to coincide with the compliance year (June 1 - May 31) used for Pennsylvania's Alternative Energy Portfolio Standard (AEPS).
The utility must provide this meter if a customer’s existing meter does not meet these requirements. If a customer agrees, a dual-meter arrangement may be substituted for the bi-directional meter. Utilities must provide net metering at nondiscriminatory rates identical with respect to rate structure, retail rate components, and any monthly charges to the rates charged to non-net-metered customers. Utilities may not charge net-metered customers any fees or other charges that do not apply to non-net-metered customers, except that are specifically authorized by the PUC. Furthermore, utilities may not require customers to install any additional equipment or carry liability insurance.
Customers retain ownership of alternative-energy credits (commonly referred to as “renewable-energy credits” or "RECs" when associated with renewable energy) unless there is a contract with an express provision that assigns REC ownership to another entity, or unless the customer expressly rejects REC ownership. If a net-metered customer chooses to take ownership or transfer ownership of alternative-energy credits, then the customer is responsible for installing metering equipment required to measure alternative-energy credits.*
Pennsylvania’s rules allow meter aggregation on properties owned or leased and operated by the customer generator. This primarily benefit farms and businesses that are multiple buildings with separate electric meters but under one account. Aggregation is limited to meters within the same electric distribution company’s service territory that are located on properties within two miles of the boundaries of the customer generator’s property. All of the electric meters to be aggregated must belong to the same individual or legal entity. In order to qualify, the customer generator must have an on-site electric load at the location of the generating facility. A generation system without an on-site load are not eligible to aggregate meters that are off-site; without an on-site independent load, the system would not qualify for net-metering and be could be treated as a merchant generator.
The utility must provide the necessary equipment for physical meter aggregation, but the customer must pay the costs. In addition, "virtual meter aggregation" is allowed for properties owned or leased and operated by a customer and located within two miles of the boundaries of the customer's property and within a single utility's service territory. For virtual meter aggregation, the customer is responsible only for any incremental expense involved in processing the account on a virtual meter aggregation basis. The virtual net metering participants are limited to 200% of cumulative consumption across all qualifying meters.
*In November 2008, amended rules for the Pennsylvania Alternative Energy Portfolio Standard (AEPS) took effect. These rules exempt PV systems of 15 kW or less from a requirement that alternative energy credit (AEC) certification be verified by metered data, and instead provide a more general instruction that it be verified by the system administrator. Thus, despite the reference to "required" equipment that remains in the net metering rules, small solar facilities may not be required to install additional metering equipment in order to generate AEPS eligible credits.
**Anaerobic digesters used by farms to comply with the Chesapeake Watershed Implement Plan or the Nutrient Management Act are exempt from this system size cap.