Blinded by the dazzle of solar power industry lobbyists, lawmakers in New Hampshire want to pass a bill that would make the poorest in the Granite State subsidize wealthy communities and businesses.
Early this June, Gov. Chris Sununu vetoed bill HB 365 that would raise the state’s cap on net metering from 1 Megawatt to 5 Megawatts. However, the bill passed the legislature’s House with a two-thirds’ majority and the Senate with a unanimous voice vote, thus raising the likelihood of a veto-override. If lawmakers pursue an override, rate payers may face hundreds of millions of dollars in higher electricity prices.
The basic concept behind net metering is simple. Homeowners or companies that generate electricity from rooftop solar panels are able to sell any excess energy they produce to their utility company. That way, the energy doesn’t go to waste and property owners reduce their electricity bills. While the idea of net metering is attractive, its practical implementation at this point can prove harmful to consumers.
Most net metering customers in New Hampshire are credited for the power they sell to electric utilities at the full retail rate, and a part of the distribution charge. But the electric utilities buying this power must still incur the full costs of maintaining the staff, poles, wires, meters and other equipment needed to deliver the power to their other customers. When solar panel owners are compensated at rates beyond what their energy is worth, utilities are forced to increase prices on the other customers to offset the higher costs.
Take Arizona’s example: non-solar customers pay an additional $9 million to $10 million annually to cover the cost of net metering customers. A study by the Nevada Public Utilities Commission found that paying net metering customers at the retail rate shifted costs onto other ratepayers and created a $623 annual subsidy for each residential net metering customer in southern Nevada. The cost to utilities is inflated by the fact that the peak of solar energy production often doesn’t coincide with peak demand. Utilities can rarely lower or increase their output to match changes in solar output and, with little ability to store the excess energy, they are at risk of chronically misaligning supply with demand.
To make matters worse, net metering subsidies disproportionately flow from low-income households to those with higher-income. The median income of those with solar systems is $91,210, 49 percent more than the average household income in the United States. This is objectively unfair given that households with earnings of less than $15,000 spend 17 times more of their income on electricity bills than households earning more than $200,000.
Thus, the implicit subsidy inherent in many net metering programs pushes recovery of these costs to those that can least afford it. This levy on the poor was highlighted by Gov. Sununu in New Hampshire when he initially vetoed the bill in June, saying, “We should not force our ratepayers to massively subsidize those who can afford to construct 40-acre solar farms.”
Forcing the poorest New Hampshire consumers to disproportionately carry the burden of faulty energy policy is exacerbated by the fact that the state is not starved of energy. With New England’s second largest nuclear power plant in Seabrook, the Granite state is one of the country’s top electricity exporting states. Furthermore, when it comes to renewables, the state consumed almost four times as much energy from hydroelectric sources than it did from coal.
Between 2005 and 2016, New Hampshire made the greatest relative reduction in energy-related carbon-dioxide emissions of all the states. New Hampshire is poorly suited for solar power as the state is annually blanketed in snow, meaning the efficiency of the panels in the winter months is reduced to zero. Even at the best of times New Hampshire has relatively low solar potential when compared to other states across the country, such as California or Arizona. While industrial customers in New Hampshire pay some of the highest electricity prices in the country, the poorest in the state shouldn’t be forced to compensate them through misguided renewable energy policies.
Rejecting a veto override would allow lawmakers and citizens the ability to continue the discussion on net metering, with the aim of finally producing a policy that is fair for all. Last year the legislature failed to override Sununu’s similar veto of bill SB 446, which would have forced utilities to buy electricity at the retail rate and resell it for a loss on the spot market. Rejecting HB 365 could start the next round of discussions that might finally lead to a fairer approach to net metering.
Lawmakers should look to successful net metering programs across the country as examples of policies that work for everyone in society. In a number of states, for example, net metering customers are compensated at the wholesale price for electricity (roughly half the retail rate). That price reflects the cost of generating the power but excludes transmission and delivery expenses.
Solar power is an important part of our energy future, but misguided net metering policies, like the one in New Hampshire, aim to distort the market and transfer wealth from the poorest Americans to the richest. The basic solution is simple: states should adopt fair, market-driven rates to compensate net metering customers.