Florida Legislature Approves Bill to Cut Solar Net Metering Compensation

The Florida legislature on March 7 approved a utility-backed bill that would phase down compensation for surplus power sent back to the grid by home solar customers by 50 percent from 2024 through 2028, and decrease further to the avoided cost rate by 2029. The bill would allow utilities to impose new charges on those customers to recover their alleged underpayment of grid maintenance costs. Under Florida’s current net metering framework, excess energy is credited at the utility’s retail rate.

In a concession to the solar industry, customer-sited generation that is in service before Jan. 1, 2023 would be allowed to continue under current net metering rate design and rates for 20 years. For installations approved from 2024-2025, payments would be cut by 25 percent from current levels. Compensation will be further cut by 40 percent from current levels for new customers starting in 2026 and then by 50 percent in 2027 and 2028. In 2026, a utility may seek approval to impose charges including grid access fees to recover the cost of serving customers that own or lease renewable generation and ensure that other ratepayers do not subsidize customer-owned or leased generation.

The bill would direct the Florida Public Service Commission to put in place new net-metering rules to take effect in 2029 that would subject solar customers to the full cost of connecting to the grid and any upgrades utilities would have to pay for to accommodate rooftop solar. Under that new rule, all energy delivered to the customer must be billed at the applicable retail rate and grid-exported energy must be credited to the customer-generator at the utility’s full avoided costs. Net metering applications approved before Jan. 1, 2029 would be allowed to continue with the rate design and rates applied at the time of approval.

Florida utilities contend that the reduced payments are warranted for equity reasons as the relatively wealthy people who can afford rooftop solar are getting excessive compensation funded by lower-income ratepayers, and that the benefits provided by distributed solar to utility grids are limited. Utilities also contend that home solar customers do not pay their fair share of grid maintenance costs because those costs generally are allocated to ratepayers according to how much grid power they buy, and home solar customers buy less than non-solar customers.

Solar industry advocates say the bill largely removes economic incentives for Floridians to install rooftop arrays by eliminating their ability to recoup their investment by lowering their electric bills over time. When combined with the rate-recovery mechanisms in the bill, solar advocates say the proposal makes any cost savings virtually non-existent.

Clean energy and environmental groups contend utilities do not like rooftop solar because it cuts their power sales revenues, and that distributed solar provides significant benefits to utilities and their ratepayers by reducing the need for expensive new power plants and transmission lines to meet rising demand. The Solar Energy Industries Association said that the legislation will wither Florida’s prospering rooftop solar industry. The association added that Florida has seen its solar industry grow to employ 11,000 people and generate over $10 billion of economic activity and bad legislation like this will see much of that business growth disappear.