FERC on Thursday rejected a request by a purported ratepayer group that could have ended net metering for rooftop solar generation, prompting relief among state regulators and renewable power advocates (EL20-42).

The commission unanimously rejected the New England Ratepayers Association’s (NERA) petition for declaratory order asking it to essentially outlaw net metering by ruling that FERC has exclusive jurisdiction over sales of rooftop solar power.

NERA asked FERC to assert jurisdiction over energy sales from rooftop solar facilities and other distributed generation located on the customer side of the retail meter whenever their output exceeds the customer’s demand or the energy from such generators is designed to bypass the customer’s load.

The association said such transactions were wholesale sales in interstate commerce, which should be priced at the utility’s avoided cost of energy if the sale is made under the Public Utility Regulatory Policies Act of 1978 or a just and reasonable wholesale rate if the sale is made pursuant to the Federal Power Act. Making such sales subject to the FPA might have required individual homeowner-generators to have a rate on file with FERC, a mandate that critics said would virtually eliminate net metering.

The commission said it was using its discretion in declining to address the issues raised by the petition. “We find that the issues presented in the petition do not warrant a generic statement from the commission at this time,” it said, adding that the petition “does not identify a specific controversy or harm that the commission should address in a declaratory order to terminate a controversy or to remove uncertainty.”

FERC also said NERA did not meet the requirements for an enforcement action under PURPA because such actions are limited to electric utilities and qualifying small power production and cogeneration facilities.

Widespread Opposition

Thousands of individuals and groups filed comments urging FERC to reject the petition. State officials and others alleged it would upset two decades of legal precedent supporting state and local policies used by 2.3 million net metering participants in 49 states. (See Thousands Oppose Bid to Undo Net Metering.)

Other commenters complained NERA was a front for investor-owned utilities and the fossil fuel industry and said its funding made it akin to a trade group.

Only a handful of groups — Americans for Tax Reform, Californians for Green Nuclear Power, CAlifornians for Renewable Energy, Citizens Against Government Waste, Competitive Enterprise Institute and the Heartland Institute — supported the petition.

Questions over Net Metering Remain

Although the commission was unanimous in rejecting the petition on procedural grounds, Commissioners Bernard McNamee and James Danly issued concurrences expressing concern over the substantive issues raised.

“The commission’s order is not a decision on whether the commission lacks jurisdiction over the energy sales made through net metering; nor is it a decision on the merits of the issues raised by and contained in the petition,” McNamee said. “I also note that, as a general proposition, I think it is best to decide important legal and jurisdictional questions, like the ones raised in in the petition, when applying the law to a specific set of facts, such as in a Section 206 complaint, or through a rulemaking proceeding.”

Danly said the petition raised “difficult legal questions,” including the rate treatment for excess generation and the boundary between federal and state jurisdiction.

“I have yet to reach any conclusion regarding either rate treatment or jurisdictional boundaries, but I am certain that these are questions of profound importance and the commission will eventually have to address them,” Danly said. “I am concerned that dismissing the petition on procedural grounds may well result in a patchwork quilt of conflicting decisions if the questions raised in the petition are instead presented to federal district courts across the country. While the federal courts are more than capable of adjudicating pre-emption claims, they are not steeped in the history of the Federal Power Act nor in matters of national energy policy. Confusion, delay and inconsistent rules — some of which will apply to individual states or parts of states — will be the inevitable result.”

NERA President Marc Brown said while he was disappointed by FERC’s decision, he agreed with McNamee’s and Danly’s comments. “We will review the decision to determine the appropriate course of action we will take in order to ensure that ratepayers are protected from the billions of dollars in cost-shifts unwittingly and unfairly paid by ratepayers to support the rooftop solar industry,” he said in a statement.

States, Renewable Supporters Rejoice

State officials and solar power backers nonetheless rejoiced at the ruling.

“This decision is a victory for state regulators and for anyone with a vested interest in net metering policy,” said Mississippi Public Service Commissioner Brandon Presley, president of the National Association of Regulatory Utility Commissioners. “The timing of this decision is also excellent, as NARUC and our members can prepare for next week’s National Policy Summit knowing that we have been able to uphold a core principle of state utility regulation.”

“FERC made the right call,” said Joseph L. Fiordaliso, president of the New Jersey Board of Public Utilities. “New Jersey has relied on FERC precedent for 20 years as we’ve advanced our net metering programs. As we explained in our pleading, net metering is a retail billing method.”

“As the leader of a coalition of conservative groups, solar advocates, state regulators and elected officials from both sides of the aisle in opposition to this petition, [the Solar Energy Industries Association] applauds FERC’s unanimous decision to dismiss this flawed petition,” said SEIA CEO Abigail Ross Hopper. “We are grateful to the state utility commissions and many other partners who strongly opposed this petition. We will continue working in the states to strengthen net metering policies to generate more jobs and investment, and we will advocate for fair treatment of solar at FERC where it has jurisdiction.”

Gregory Wetstone, CEO of the American Council on Renewable Energy, said moving net metering from state to federal jurisdiction “would have severely limited its appeal by lowering participants’ compensation rate.”

“While we are gratified that today’s decision respects the Federal Power Act, we will continue to stay vigilant about protecting forward-looking state energy policies that deliver the pollution-free renewable power Americans want,” Wetstone said.

“Had FERC taken up NERA’s arguments, it would not only have upended the legal basis for net metering programs but would also have severely hampered ongoing efforts by numerous states to develop programs that value [distributed energy resources] with greater accuracy,” the Institute for Policy Integrity at New York University School of Law said.