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Ohio electric utilities question net metering rule proposal

By: Michael Sanserino |

As the Pennsylvania Public Utility Commission continues to refine its rules for net metering, one electric utility in Ohio has appealed a proposed rule change on net metering to the Ohio Supreme Court.

The Public Utility Commission of Ohio (PUCO) proposed the rule change in January that would increase the amount of money that utilities would credit customers who generate more electricity — using alternative means such as solar or wind systems — than they use in a given month. Net metering allows customers to offset their demand with electricity they generate.

PUCO’s proposal is a win for proponents of alternative energy, who see higher payments for electricity generation as another incentive to invest.

Ohio law requires state agencies to review regulations every five years. This proposal came about as part of a review of Ohio’s net metering laws, which were introduced in 1999 and modified in 2008.

At issue is the definition of the cost of electricity. Under current rules, utilities are required to credit customers for the cost of electricity generation.

The new rules would redefine the cost of electricity to also include the capacity charge, which is part of the full retail price of electricity that is determined each year through an auction by grid operator PJM Interconnection.

After PUCO denied FirstEnergy Corp.’s third request for a rehearing on the issue, American Electric Power Inc., based in Columbus, appealed.

Any rehearing issue with the Ohio agency is directly appealable to the state Supreme Court, according to PUCO spokesman Matt Schilling. FirstEnergy, which is based in Akron and owns multiple Pennsylvania electric utilities including West Penn Power, is still evaluating its options. It has until Sept. 22 to decide whether to join AEP in the appeal. Several other Ohio electric utilities are also considering an appeal.

“We don’t believe customer-generators should be paid for more services/value than they provide, or else other customers would be forced to pay even higher subsidies to customer-generators,” Doug Colafella, a FirstEnergy spokesman, said in an email.

The rules are different in Ohio than in Pennsylvania. Here, net metering customers are reimbursed for generation and transmission costs, while customers in Ohio are reimbursed only for generation.

Pennsylvania’s PUC has not proposed adding capacity charges to its net metering equation. It is, however, in the comment phase of a recent rule proposal that would refine who is and is not eligible for net metering here.

FirstEnergy has not filed comments about that PUC proposal, but Mr. Colafella said the company intends to.

Pennsylvania altered its net metering rules in 2007, requiring utilities to reimburse net metering customers for the cost of both generation and transmission. Before that, customers received credit only for the cost of generation.

By including a capacity charge to what Ohio’s electric utilities would have to pay net metering individuals, PUCO is adding about 15 percent.

“It’s essentially the retail generation rate that a non-shopping customer would pay,” Mr. Schilling said.

But Mr. Colafella said the charges reflect “non-energy charges.”

“For most customer-generators, there is no way to ascertain whether they have contributed to a reduction in capacity costs — and if they don’t provide capacity, they should