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Net metering
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Net metering is a billing system in which customers who generate their own electricity, usually using renewable sources (e.g., solar panels) are able to sell their excess electricity back to the grid, which is an interconnected network that is used to deliver electricity. This requires electricity to be able to flow both to and from a consumer. According to the Database of State Incentives for Renewables and Efficiency "net metering is required by law in most U.S. states, but state policies vary widely."[1] In some states, consumers are compensated at the full retail rate; other states compensate individual producers at the wholesale rate. Retail electricity rates are the final prices paid by consumers; retail rates include the costs of electricity from generation to delivery. Wholesale electricity rates, according to Call Me Power, "include the cost of the fuel used to generate electricity and the cost of buying the power," but do not include the costs of transporting or delivering electricity. Generally, wholesale rates are lower than retail rates because retail rates include the costs of delivering electricity directly to the consumer. Various charges, including purchasing cost, delivery, and taxes and state surcharges are added to the wholesale price to make up the retail price.[2][3]
Net metering policies vary from state to state. The Energy Policy Act of 2005 required that all public utilities provide net metering options when customers request them. According to the Institute for Energy Research, 43 states and the District of Columbia had adopted net metering policies as of 2014.[4]
- Proponents of net metering argue that the system is beneficial because it promotes renewable energy and incentivizes consumers to produce their own electricity, which proponents of net metering argue is more efficient. For these reasons, proponents generally argue that consumers should be paid the retail rate for electricity generated.[5]
- Opponents of net metering argue that customers who sell their electricity back to the grid at the full electricity price are not paying for the fixed costs associated with power generation, including wires, poles, meters, and other infrastructure. According to these opponents, consumers producing their own energy are often still using power supplied by a utility company when their own generation isn't sufficient. For these reasons, opponents generally argue that consumers should be paid the wholesale price for electricity.[2]
See also
Footnotes
- ↑ Database of State Incentives for Renewables and Efficiency, "Glossary," accessed October 22, 2014
- ↑ 2.0 2.1 Edison Electric Institute, "Straight Talk About Net Metering," September 2013
- ↑ Call Me Power, "What is the difference between wholesale and retail electricity?" March 12, 2015
- ↑ Institute for Energy Research, "Net Metering 101," January 14, 2014
- ↑ Solar Energy industries Alliance, "Net Metering," accessed October 22, 2014
