On Sept 28, 2018, NorthWestern Energy (NWE) submitted paperwork to the Public Service Commission to change the residential net-metering agreement for the state of Montana. These changes will change the rate structure that NWE net-metering customers pay and add an additional type of charge to their monthly bill.
What does this mean for you?
Currently, residential net-metered customers pay two charges: a monthly service charge ($4.10 per month) and an energy charge ($0.1136 per kWh). The proposed changes include:
- An increase in the monthly service charge to $5.60 for both net-metered and residential customers.
- The energy charge (and thus the net-metering credits) is proposed to decrease to $0.0656. Net-metered customers seem to benefit by paying a lower rate than non-net-metered customers for supplied energy, but net-metered customers are receiving less through their credits as well, and cannot use this credit toward any other charge on their bill. Ultimately, this change would only affect customers who are not net-zero. In other words, if you install enough solar to cover all of your energy demands, then you will not be affected by this change.
- An additional demand charge, which is $8.64 per kilowatt. This means that a customer’s single hour of highest energy usage during the month is multiplied by $8.64 per kilowatt, which results in an extra charge of about $40 for the average customer. For customers who use large amounts of energy, such as owners of electric vehicles, this demand charge will be even higher (about $57 per month for just one electric vehicle charger) and cannot be offsetted by net-metering credits. This is the major proposed change that would make a financial return on solar impossible for many customers, effectively killing the solar industry in Montana.
What is Demand?
A demand charge is a volumetric charge that essentially taxes high electricity usage in a given time and has historically only been used for industrial customers. When a utility is worried that solar customers are not paying their fair share of fixed grid costs, they often consider adding a demand charge to solar customers’ bills as a tool to cover their variable costs, change consumer behavior, and reduce the grid’s peak load (the time of the day when the maximum amount of energy is being demanded from the grid).
Utilities benefit from reducing peak load because it reduces their infrastructure costs, for example, by not having to build another power plant to meet peak demand. Demand charges reduce the value of solar for customers who have chosen to invest in a sustainable alternative to grid electricity. This means that solar customers are being punished, even though they are already acting to reduce the utility’s peak load by producing their own energy, reducing energy costs of the grid through avoided transmission and distribution losses, reducing utility infrastructure costs, decentralizing the grid to make it more resilient, and more. To make matters worse, solar customers (with the exception of eGauge customers) have no way to determine what their peak usage is at any time and thus have no way to control what they are charged.
Lock in your Solar Rates
A recently passed grandfather clause will allow you to lock into existing favorable net metering rates if your system is installed prior to the new rules going into effect Spring 2019. Read more on these proposed changes and find out how you can help save solar with the Montana Renewable Energy Association here.
The 30% Federal Investment Tax Credit is available if your system is placed in service by 12/31/2019. Click here for more info.