Some states permit end-users to “obtain” energy generated at a remote location, without requiring such end-users to pay the utility to which they and the generator are interconnected for the delivery and ancillary services required to move the energy to the end-user’s load. Such “virtual net metering” is a key element of some community (or shared) solar programs. Examples of end-users that pay no delivery charges for energy delivered from “off-site” or “remote” generation are reflected in an Oregon commission’s recent May 23, 2018 order and in Minnesota, where the local utility continues to credit customers of community solar gardens at the full retail rate. In contrast, (most) other end-users must pay delivery charges when consuming energy delivered over the utility’s wires, whether the energy they consume is largely produced a block away or hundreds of miles away. (On-site net-metering programs also may result in free delivery service for end-users, but that issue is not the focus of this post.) The focus of this post is whether a state or state utility commission may lawfully mandate that energy produced at one location can be deemed to have been consumed by an end-user at another location without that end-user having to pay for delivery service if the utility’s wires are used for such delivery. As discussed below, there are a variety of legal grounds on which virtual net-metering laws, regulations, or tariffs could be challenged by utilities, customers to whom delivery costs may be shifted, and competing generators as relates to the free (or reduced cost) delivery service aspect of virtual net metering.
Continue Reading Virtual Net Metering –Vulnerabilities of Free Delivery Service to Legal Challenges

Based on the two-day FERC Technical Conference on DERs, where varying opinions were presented on a variety of technical and operational issues relating to DERs and DER aggregation, the following are overarching takeaways that the Commission and its Staff should consider before taking the next step on DERs’ and/or DER aggregations’ participation in wholesale markets.

Those persons that believe that the Federal Power Act left exclusive jurisdiction over local distribution facilities (and everything that occurs on such facilities) to the states have been told that they are wrong. The courts have told them they are wrong. FERC has told them they are wrong. Yet, whenever FERC mentions the distribution system, state regulators and others object vociferously that FERC is intruding into state-jurisdictional matters. Indeed, the Commission’s Final Rule on Storage, which assumes that many if not most storage devices will be connected to distribution, actually raises no meaningful jurisdictional issues that have not already been addressed by the courts. Nonetheless, several rehearings raising jurisdictional issues related to storage devices located on the distribution system were filed in response.

Successful appeals are unlikely on jurisdictional grounds, assuming FERC does not appease the states as it has on other occasions, such as with regards to non-QF interconnections to distribution. NARUC and some utilities have objected to certain aspects of the Final Rule that permit participation by storage resources interconnected to distribution in wholesale markets. FERC jurisdiction over all wholesale sales in interstate commerce is well-established. And, FERC jurisdiction over the usage of a distribution system to engage in wholesale market transactions rests on FERC precedent more than two decades old. FERC jurisdiction over wholesale distribution service was affirmed in New York v. FERC, and Detroit Edison Co. v. FERC.
Continue Reading Untangling Jurisdiction Issues for DERs