GROUP NET METERING
1. What is group net metering?
Group net metering is when one or more customers of the same distribution utility have agreed to share in the utility payments for the excess generation created by the output of an electrical generating facility (up to and including one (1) megawatt (MW) in capacity) powered by renewable energy or a heat led combined heat and power system for the purpose of controlling energy costs of the group. All group members must be default service customers of the same distribution utility, meaning they may not get energy from a competitive electric supplier other than their local utility. The total kilowatt hour (kWh) output of the facility should not be greater than the total kWh usage of the group. The relationship between members shall be governed by an agreement, which must include:
(a) The contact information for the host and each member, including their names, billing addresses, service addresses, phone numbers, email addresses, and name of distribution utility;
(b) The procedure by which the host will allocate and make payments to, and allocate and collect payments from, its members, including the frequency and manner of such payments and collection;
(c) The procedure by which members may join and leave the group, which procedure shall, at a minimum, contain the language required by New Hampshire Public Utility Commission (PUC) Rule 909.05;
(d) A binding process for the resolution of any disputes involving the host, its members, or among members. The process cannot rely on the distribution utility or the PUC. This dispute resolution clause shall address disputes arising out of the member removal process required by PUS Rule 909.05;
(e) The host and each member must sign the agreement attesting that the information provided is true to the best of their knowledge and belief; and
(f) The agreement and signatures may be electronic.
2. What are the responsibilities of the host of the group?
The host is the member of the group that owns and/or operates the electrical generating facility powered by renewable energy or a heat led combined heat and power system. As the owner and/or operator of the facility, the host is responsible for obtaining all necessary local, state and federal approvals for the installation and operation of the facility. Additionally, the host assumes the following responsibilities with respect to the group: (1) register or re-register the group with the PUC and the distribution utility; (2) file annual reports on behalf of the group; (3) receive monthly payments from the utility on behalf of the group; (4) distribute monthly payments to the group according to the terms of the group net metering agreement; (5) receive or pay the annual true-up; and (6) distribute the annual true-up payment from the utility to the group members or collect the annual true-up payment that goes to the utility from the group, consistent with the group net metering agreement.
3. What are the responsibilities of the members of the group, including the host?
The members of the group shall comply with all of their obligations under the group net metering agreement. The members of the group are responsible for providing all the information to the group host that the host needs to register or re-register with the PUC and distribution utility or to file annual reports with the PUC and the distribution utility. Additionally, the members are responsible for providing the host with their share of the funds to make the annual true-up payment to the utility (if one is required). Finally, the members are still responsible for paying all the charges that appear on the bill issued from their distribution utility.
4. What will the value of the monthly check paid to the group host represent in terms of kWh production and the value paid per kWh?
A payment shall be made from the distribution utility to the host at the end of the monthly billing period if the kWh output of the facility for the month is greater than the total kWh usage of the facility. The payment will be based on the difference between the kWh produced and the total kWh usage of the facility. The payment will be valued at the same value the host would receive if they were a single net metering customer. See the following answer for an explanation of how the size of the facility dictates the value of kWh credit.
Example: The host’s facility produces 5 kwh each month, the host facility itself uses 1 kwh each month, so the utility payment for each month is based on the 4 kwh difference, paid at the ‘retail’ rate, to be shared with the members according to the terms of agreement. At the end of the year, the host generated 60 kwh, used 12 kwh, and the utility paid the host for the 48 kwh difference at the ‘retail’ rate. If the group members, as a group, used more than 48 kwh that year, no further payment or adjustment is necessary. If the group members used only 40 kwh in total, the host would have to pay the utility the difference between the ‘retail’ rate and the avoided cost or default energy rate for those 8 kwh that the group did not ‘use.’
5. What will be the difference in groups utilizing an electrical generating facility over 100 kW in size versus 100 kW and under in size?
The most important difference between how the size of facility will impact the group is in how the kWh credits distributed in the monthly payment will be valued. The kWh credit will be valued based on the size of the facility and the distribution utility rates that the host pays to the utility. If the facility is up to and including 100 kW, the kWh credit shall be valued at the total of the all the rates that the utility charges the host for electric usage based on kWh. If a facility is greater than 100 kW and up to and including 1 MW, the kWh credit shall be valued at the default energy rate that the utility charges the host for electric usage.
6. Is there an annual true-up of the output of the net metering facility and the usage of the group members?
Yes. Because the intent of the group net metering law is that the kWh output of the group net metered facility not exceed the total kWh usage of the members of the group, the distribution utility will compare the host’s prior calendar year’s kWh output to the host’s and group’s prior calendar year’s combined kWh usage by June 1st of the following year. If the group and host used more kWh in the previous year than the host produced, no true up payment will be due to either the group or the utility. If the host produced more kWh in the previous year than the group and host consumed (excess production), for which the utility paid the host at the retail rate, the utility will calculate how much the group should have been paid if the excess production were valued at the utility’s avoided cost kWh rate or the default energy kWh rate, whichever the utility has elected. [If this amount is less than was paid to the group, the utility shall pay the difference to the group host.] [Although theoretically correct, we cannot imagine a situation where the amount due using the lower avoided cost or default rate would ever exceed the amount actually paid using the retail rate.] If this amount is greater, the group shall pay the utility the difference.
7. What enforcement rights does the PUC have to enforce the rules of group net metering?
The PUC is authorized to assess fines against, revoke the registration of, and prohibit from doing business in the state, any group host which violates the requirements of this paragraph and rules adopted pursuant to this paragraph.
8. What is the group net metering application?
The application is the method that the host uses to register or re-register the group with the PUC and the distribution utility. Annual re-registration is not necessary unless the host fails to comply with the PUC rules, including the requirement to file annual reports. The application is provided on the PUC website as Form PUC 909.09 [link]. The application must provide the following information:
(1) The host’s name, trade name, address, service address, telephone number, e-mail address, and website address, as applicable;
(2) The name, telephone number, and e-mail address of the individual responsible for responding to commission inquiries;
(3) A list of all members in the host’s group, including each member’s name, billing address, service address, and projected annual load;
(4) A certification that all members and the host are default service customers of the same distribution utility;
(5) The total historic annual load and the total projected annual load of the host;
(6) The total historic annual load and the total projected annual load of the members;
(7) The fuel source of the host facility, its generation capacity, the actual annual output of the host’s facility, if known, and the projected annual output of the host’s facility;
(8) A certification that the total historic annual load of the members together with the host exceeds the projected annual output of the host’s facility;
(9) A certification that the host has provided a copy of the application to the distribution utility; and
(10) A certification that the applicant has the authority to file the application on behalf of the host and that its contents are truthful, accurate and complete.
The host shall electronically file the form and any attachments, in a format compatible with the computer system of the PUC, through the PUC’s website.
9. What is the group net metering annual report?
On or before April 1st of each year, the host must file an annual report with the PUC and the distribution utility. The annual report form is provided on the PUC website as Form PUC 909.10. The annual report must include the following information:
(1) Any changes to the information required in application/registration form;
(2) As to those members who joined the group during the course of the immediately preceding calendar year, the effective dates of each such member’s addition and each such member’s name, billing address, service address, and projected annual load; and
(3) As to those members who left the group during the course of the immediately preceding calendar year, the effective date of each such departure.
The host shall electronically file the annual report and any attachments, in a format compatible with the computer system of the PUC, through the PUC’s website.
10. Are any fees required when an application or annual report are submitted?
11. What tax consequences may result from the treatment by an electric utility of excess generation produced under a net metering arrangement?
The tax consequences depend upon how the members are compensated by the utility and under the group net metering agreement. If excess generation during any month is rolled over and credited in customer’s bill, adverse tax consequences usually do not occur. However, if the utility pays the host or the host pays other members for the excess generation (i.e. cuts a check), such payment would generally be considered taxable income to the recipient that must be reported on the recipient’s return.
12. What are some possible implications of securities laws under net metering arrangements where a group forms a corporation or other entity to own the renewable energy generator, and then issues stock or membership interests to the participants?
In general, the sale of corporate stock or interests (such as units of an LLC), is the sale of a security and therefore subject to regulation at the both the Federal and State level. Both sets of laws require either registration of securities or an exemption from registration to be established before an offering commences. The most common type of exemption is the exemption for "accredited investors", who are generally high net worth or highly compensated individuals, officers and directors of companies, or individuals who otherwise demonstrate a high level of investment sophistication and experience. The other type of exemption is the limited offering or private placement exemption, where stock or interests are sold to a very limited number of purchasers. Note, however, that even exempt offerings trigger certain Federal and State filing obligations. For this reason, anyone considering conducting an offering should consult with legal counsel before even soliciting prospective purchasers to ensure compliance with all applicable securities regulations.