The Massachusetts Department of Public Utilities issued an order on Feb. 1 clarifying ownership of capacity and energy rights of facilities under net metering and Solar Massachusetts Renewable Target, or SMART, programs participating in the ISO New England Inc.’s forward capacity market. The order allows owners of storage-paired facilities to retain their energy or capacity rights to bid into the New England market. The agency directs electric distribution companies to assume title to the capacity rights of Class II and III net-metered facilities and SMART facilities receiving alternative on-bill credits, and monetize their capacities under two options – retain 20 percent of the proceeds or credit 100 percent of the proceeds to ratepayers. The order provides a buyout option allowing for behind-the-meter solar and front-of-the-meter solar-paired storage facilities to make a one-time, up-front purchase of the capacity associated with their facilities.
The order follows a compromise proposal filed by stakeholders last July for establishing the rights associated with net metering facilities and SMART facilities. Under the first option, distribution companies can directly monetize the capacity of facilities for which they assume title by qualifying and bidding into the market to obtain a capacity supply obligation. The second option requires registering the facility to passively earn performance incentive payments under the grid operator’s pay-for-performance rule. The department found that the 80/20 share recommended in the compromise proposal “represents an appropriate balance between participation and risk that will ensure maximum benefits for ratepayers.”
Net metering allows customers to receive credits for excess electricity that their facilities generate. The SMART program, unveiled in 2017, is a 1,600 MW AC declining-block program, which includes a tariff-based compensation for solar projects. Compensation for energy can be provided via three methods – net metering tariff, qualifying facility tariffs, and a new alternative on-bill crediting mechanism or SMART tariff.
The department said it has already established that small hydro projects do not belong to not Class I, Class II, or Class III net metering facilities. Recognizing that these facilities are distinct and in keeping with the legislature’s intent to provide incentives to support facility owner’s ability maintain operations, the department finds the host customers will hold title to their capacity rights, while the distribution companies will retain title to their energy rights, using the revenue to offset the net metering recovery surcharge.
The order directs each distribution company to revise its net metering and SMART tariffs to reflect the requirements for qualification and participation in the capacity market. Unitil Corp, National Grid plc, and Eversource Energy must submit revised model tariffs within 10 days of the order.