In a hearing held before the Michigan Public Service Commission (PSC), DTE Energy was finally granted its golden goose: the abolishment of net metering in its service area. And the writing had been on the walls for nearly three years.
In 2016 the Michigan legislature passed Public Acts 341 and 342, which required the PSC to phase out net metering and create a new distributed generation program. The PSC was also tasked with measuring and pricing “a distributed generation customer’s incoming and outgoing electricity flows separately on an instantaneous basis” and established “a method for consistent and appropriate cost-of-service billing”.
What happened next was that DTE made a proposal wherein the electricity that a customer uses from the grid would be billed at the customer’s full retail rate and the energy the customer sends out to the grid would be credited to the customer at the average monthly wholesale price of energy; an inflow/outflow model where one flow was valued much more highly than the other.
This initial proposal was rejected by the PSC, who ordered that the outflow credit be based on the power supply component of the customer’s retail rate, minus transmission charges. This was done because the commission felt that DTE would be getting credit for transmission that it was not providing. Eventually, the final outflow credit that was approved for DTE came to 7.477 ¢/kWh for the first 17 kWh per day.
This all became final with the announcement of the commission that:
Today, as directed by the 2016 laws, the commission is issuing a landmark decision to phase out net metering and to phase in a new methodology that reflects a cost of service for customers participating in the program.
Here’s a fun little graphic showing what the payback period for a residential system will look like under the new guidelines:
Here's how the net metering replacement will affect payback for DTE's rooftop solar customers — compared to the original policy and what DTE had proposed. pic.twitter.com/kJZKelTcNU
— Jim Malewitz (@Jmalewitz) May 2, 2019
The biggest savior, if it can be called that, for distributed solar in DTE’s service area came from a motion that the commission denied, as DTE also looked to establish a system access contribution charge on distributed resource owners. As reported by pv magazine at the proposal’s inception, this charge would have been $2.28-$2.31 per kilowatt basis based on the rated capacity of the PV system. The charge was defended by the questionable claim that such customers are “are not supporting the costs of the infrastructure required for their service.”
So, just to be clear, in this case, the PSC has accused DTE of getting credit for transmission that it was not providing and DTE has accused customers of not supporting the costs of the infrastructure required for their service.
Lastly, the state regulators also approved a substantial rate hike for DTE customers, one which raises prices almost 9% for use an average of 500 kilowatt hours of electricity a month. In a dollar figure, these customers will see bills increase by $6.19.
At the end of the day, it’s Michigan and DTE. The gutting of net metering has been a foregone conclusion for years now, today just happened to be the date of execution. All of the decisions made today: the new compensation model, the rejection of the access fee and the rate hikes will take effect in one week, on May 9.