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Maine, like other states, has sought to diversify its energy supply – to address climate change and in hopes of avoiding large price swings. One means to do this has been net energy billing, a system put in place to encourage the development of renewable energy projects.
As it is currently structured, net energy billing in Maine is having some unintended consequences, including contributing to already high electricity prices. To reduce some of these consequences, lawmakers have changed and pared back the state’s net energy billing program and convened a group to develop a successor system.
Lawmakers are now debating what that successor system should be. The goal of any fix should be to continue to encourage more renewable energy generation without unduly burdening the state’s utility customers. At the same time, changes should be prospective, not retroactive. Making retroactive changes could open the state to costly lawsuits and send the message that the state’s business climate is unpredictable.
Net energy billing, which essentially provides the developers of renewable energy with price incentives for the energy they produce, was meant to spur the development of renewable energy in Maine. In that sense, it has worked, especially for spurring solar energy projects. Hundreds of solar projects have been proposed for Maine and many have been built or are in the process of being built, which has brought significant new investment to the state.
However, net energy billing involves costs that are being passed on to utility customers, including those who have not bought into solar projects. The drawbacks of net energy billing have been exacerbated in recent months by the high overall costs of electricity, which are driving primarily by the state’s heavy reliance on natural gas for electricity generation.
As the legislative session winds down, lawmakers have yet to act on two bills that deal with net energy billing.
One, LD 1986, hues fairly closely to the committee report, which contained broad ideas but not specific recommendations because of the diversity of people and perspectives in the group. The bill would set up a new program to procure solar energy through a competitive bidding process, which would encourage lower prices, which the current iteration of net energy billing did not. Changes would not be made for those who have solar arrays at their homes.
The bill, which is still being amended, can also help align the state with requirements for federal funding, including funds from the Inflation Reduction Act, that would incentivize small-scale solar projects with direct benefits to low-income consumers.
Under LD 1986, for projects already included in the net energy billing system, the Maine Public Utilities Commission would have to assess their costs and benefits each year. The benefits include avoided transmission and distribution costs and avoided use of fossil fuels, along with reduced greenhouse gas emissions and potential increased grid reliability. These benefits are often not included in current debates about net energy billing that emphasize the high prices paid to the developers of solar projects. However, the Public Utilities Commission has said that while compiling this information would be helpful, a plan in the bill to allocate those benefits to ratepayers is unworkable.
A different bill, LD 1347, which is also being amended, initially sought to repeal the net energy billing program without a replacement, which could have retroactively changed the terms for some projects that are already in place or in development and stifled future investment. It would also have ended net energy billing for individual customers with solar installations on their homes. A newer version of the bill more closely aligns with the committee report and calls for a new program to both foster solar energy development and to secure federal funds.
For some time, the state’s net energy billing program has been identified as too generous and has already been pared back. Further changes are needed. They should be done in a way that continues to encourage renewable energy development without passing excessive costs on to customers.
