The net metering program enables Michigan's utility, cooperative and AES customers to develop on-site renewable energy electric generation projects to meet some or all of their electric energy needs and reduce their electric bills. Under the net metering program, customers may install an on-site renewable energy electric generation project, such as a wind turbine or solar photovoltaic panel. The project must be sized small enough so that it is no larger than what is needed to meet a customer's electric energy needs. The customer will be able to reduce their electricity purchases from the utility by using their generated electricity "behind the meter" and receive a credit for excess generation. As of December, 2016, Michigan had over 2,500 customers participating in net metering.
2016 PA 342 includes a new distributed generation program and directs the Commission to establish the program. The new energy law states “…the Commission shall conduct a study on an appropriate tariff reflecting equitable cost of service for utility revenue requirements for customers who participate in a net metering program or distributed generation program under the clean and renewable energy and energy waste reduction act…” According to the timeline in the law, the cost-of-service based distributed generation tariff study must be completed by April 2018 in order for consideration as part of utility rate cases filed after June 1, 2018. The new distributed generation tariff will go into effect at the conclusion of each utility’s rate case.
The Commission issued an order on July 12, 2017 finding that the net metering program shall continue as the distributed generation program until the new distributed generation tariffs are approved. Customers who enter the distributed generation program during this interim period may continue to net meter for 10 years from the date of their enrollment.
After completing the standard electric utility interconnection process with the electric provider and receiving final approval to begin generating electricity, the customer may reduce their electric bill by generating some or all of their electric needs and receive a credit from the electric provider for any excess generation delivered to the electric provider during the billing month. Net metering customers will continue to pay monthly customer charges or system access charges. Net metering projects must be sized no larger than required to meet the customer's expected annual electricity needs. More details about net metering are provided below.
Net metering will be available to a utility's customers until the size of the program reaches 1% of their provider's previous year system peak in MW. The 1% previous year peak size of a utility's program will be measured against the total of the generator nameplate capacities for all participating customer's generators. One of Michigan’s utilities has reached its program cap for Category 1. Upper Peninsula Power Company reported they have closed their Category 1 Program as of July 22, 2016.
Renewable energy credits (RECs) belong to the net metering customer. A customer may be able to work out a purchase arrangement with their utility. REC prices are generally market based.
Before making any decisions about participating in the net metering program, ask your utility for a sample net metering bill.
Net Metering: 20 kW and Under Renewable Energy Projects
Net metering is available to any customer meeting the generator size requirements (20 kW and under) and using a UL 1741 certified inverter. Typically, residential customers would fit under this type of net metering. Details of this net metering project type include:
- Billing is based on net usage.
- Customer receives credit for the full retail rate for all excess kWh.
- The utility shall use the customer's existing meter if it is capable of reverse registration (spinning backwards) or install an upgraded meter at no additional cost to the net metering customer.
- Utilities with fewer than 1,000,000 customers shall charge net metering customers at cost for an upgraded meter if the customer's existing meter is not capable of reverse registration (spinning backwards). There will be no additional meter charges for customers of utilities with more than 1,000,000 customers (Consumers Energy and Detroit Edison).
- A generator meter shall be provided at cost, if requested by the customer. (The generator meter is for the customer's benefit. Utilities are not obligated to read a customer's generator meter.)
- Net metering inverters must be certified to meet international standards for electrical safety. The commonly accepted standard is based on testing certified by Underwriters Laboratories (UL); standard number 1741. The inverter manufacturer will be able to produce proof of this certification.
- Maximum interconnection costs will be the combined $100 interconnection and net metering application fees). Utilities will not charge any additional study fees, testing, or inspection charges.
- Net metering credits for excess generation can carry forward indefinitely.
Modified Net Metering: >20 kW up to 150 kW Renewable Energy Projects
This category of net metering is available to any customer meeting the generator size requirements. Typically, these would be commercial, industrial, or institutional customers. Details of this net metering project type include:
- Customers pay the full retail rate for electricity deliveries from their electric provider and receive the generation portion of the retail rate or a wholesale rate for deliveries of excess generation to the grid.
- No charge for the engineering review for interconnection.
- Customers pay all interconnection costs, distribution study fees and any required distribution system upgrade costs.
- Customers with generators up to 150 kW can use their generation on-site (behind the meter) without paying a standby charge.
Modified Net Metering - Methane Digesters: >150 kW up to 550 kW
This category of net metering is available only for on-farm methane digesters. Details of this net metering project type include:
- Nearly the same as the >20 kW to 150 kW program.
- Customers pay the costs of any additional meters.
- Customers pay standby charges.