New Net Metering Regulation to Focus on "Right-Size" Renewable Energy Systems; Ends Limit of 500 kW Max Output

Large electricity customers will no longer be restricted from participating in net metering. The Ministry of Energy recently posted an overview of proposed amendments to the Net Metering Regulation to the Environmental Registry for public comment.

As we previously discussed, Ontario has allowed net metering since the Net Metering Regulation came into force in 2006. The regulation required electricity distributors to allow customers to deliver electricity to the distributor so long as the electricity was generated from a renewable source for the customer's own consumption, and from equipment with a capacity of less than 500 kW. The amount of electricity delivered back to the distributor is set off against the amount of electricity consumed by the customer and the customer is billed for the balance.

Under the proposed amendments, the capacity restriction of 500 kW would be eliminated to enable larger customers to "right-size" their renewable energy systems to their load. The Ministry notes that "[l]arger customers tend to self-consume a higher proportion of generated electricity due to higher daytime loads, aligning with the objective to match generation to local demand, which can help reduce local load and related infrastructure needs." To be eligible for net metering, customers will still be required to generate power primarily for their own use.

Other amendments to the Net Metering Regulation include:

• Compensation: Net metering generators will continue to be compensated at the same rate that they are charged for consumption of electricity as consumers. The Ministry had explored the idea of crediting consumers at a "value-based" compensation rate but stakeholders expressed concern that such a rate would not be as transparent as using retail rates (see for example, feedback submitted by OSEA). The description of the method used to calculate credits, which is currently expressed as a formula, will be put in plain language.
• Storage: Net metering generators will be permitted to use energy storage when paired with renewable energy generation. Participants will be able to store and remit electricity from the electricity distribution system and from a renewable energy system.
• Agreements: Participants who have existing net metering agreements will be given the option of entering into new agreements, which reflect the amended provisions of the regulation, or maintaining their existing agreements.
• Single-Entity Virtual Net Metering: The Ministry will establish a billing method for credit transfers between multiple electricity accounts held by the same person or corporation subject to certain conditions and limitations to be developed with further consultation.

In addition to amending the Net Metering Regulation, the Ministry is also proposing to undertake a cost-benefit evaluation of the program every three years, if required. This would coincide with the province's Long-Term Energy Plan cycle.

The Ministry also advised that the Ontario Energy Board is exploring taking steps to facilitate the implementation of net metering, including:

• Developing a standardized net metering application and agreement;
• Monitoring the program through the collection of net metering information from electricity distributors at more frequent intervals; and
• Improving the availability of program information.

Comments on the proposed amendments will be accepted through the Environmental Registry until October 3, 2016. The amended regulation is set to be in force by July 1, 2017.