2023 -- H 5033 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2023

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A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- NET METERING

     Introduced By: Representatives Potter, Solomon, Knight, Carson, Cortvriend, and Boylan

     Date Introduced: January 11, 2023

     Referred To: House Corporations

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 39-26.4-2 and 39-26.4-3 of the General Laws in Chapter 39-26.4

entitled "Net Metering" are hereby amended to read as follows:

     39-26.4-2. Definitions.

     Terms not defined in this section herein shall have the same meaning as contained in

chapter 26 of this title. When used in this chapter:

     (1) “Community remote net-metering system” means a facility generating electricity using

an eligible net-metering resource that allocates net-metering credits to a minimum of one account

for a system associated with low- or moderate-income housing eligible credit recipients, or three

(3) eligible credit-recipient customer accounts, provided that no more than fifty percent (50%) of

the credits produced by the system are allocated to one eligible credit recipient, and provided further

at least fifty percent (50%) of the credits produced by the system are allocated to the remaining

eligible credit recipients in an amount not to exceed that which is produced annually by twenty-

five kilowatt (25 KW) AC capacity. The community remote net-metering system may transfer

credits to eligible credit recipients in an amount that is equal to or less than the sum of the usage of

the eligible credit recipient accounts measured by the three-year (3) average annual consumption

of energy over the previous three (3) years. A projected annual consumption of energy may be used

until the actual three-year (3) average annual consumption of energy over the previous three (3)

years at the eligible credit recipient accounts becomes available for use in determining eligibility

of the generating system. The community remote net-metering system may be owned by the same

entity that is the customer of record on the net-metered account or may be owned by a third party.

     (2) “Electric distribution company” shall have the same meaning as § 39-1-2, but shall not

include Block Island Power Company or Pascoag Utility District, each of whom shall be required

to offer net metering to customers through a tariff approved by the public utilities commission after

a public hearing. Any tariff or policy on file with the public utilities commission on the date of

passage of this chapter shall remain in effect until the commission approves a new tariff.

     (3) “Eligible credit recipient” means one of the following eligible recipients in the electric

distribution company’s service territory whose electric service account or accounts may receive

net-metering credits from a community remote net-metering system. Eligible credit recipients

include the following definitions:

     (i) Residential accounts in good standing.

     (ii) “Low- or moderate-income housing eligible credit recipient” means an electric service

account or accounts in good standing associated with any housing development or developments

owned or operated by a public agency, nonprofit organization, limited-equity housing cooperative,

or private developer that receives assistance under any federal, state, or municipal government

program to assist the construction or rehabilitation of housing affordable to low- or moderate-

income households, as defined in the applicable federal or state statute, or local ordinance,

encumbered by a deed restriction or other covenant recorded in the land records of the municipality

in which the housing is located, that:

     (A) Restricts occupancy of no less than fifty percent (50%) of the housing to households

with a gross, annual income that does not exceed eighty percent (80%) of the area median income

as defined annually by the United States Department of Housing and Urban Development (HUD);

     (B) Restricts the monthly rent, including a utility allowance, that may be charged to

residents, to an amount that does not exceed thirty percent (30%) of the gross, monthly income of

a household earning eighty percent (80%) of the area median income as defined annually by HUD;

     (C) Has an original term of not less than thirty (30) years from initial occupancy.

     Electric service account or accounts in good standing associated with housing

developments that are under common ownership or control may be considered a single low- or

moderate-income housing eligible credit recipient for purposes of this section. The value of the

credits shall be used to provide benefits to tenants.

     (iii) “Educational institutions” means public and private schools at the primary, secondary,

and postsecondary levels.

     (4) “Eligible net-metering resource” means eligible renewable energy resource, as defined

in § 39-26-5 including biogas created as a result of anaerobic digestion, but, specifically excluding

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all other listed eligible biomass fuels.

     (5) “Eligible net-metering system” means a facility generating electricity using an eligible

net-metering resource that is reasonably designed and sized to annually produce electricity in an

amount that is equal to, or less than, the renewable self-generator’s usage at the eligible net-

metering system site measured by the three-year (3) average annual consumption of energy over

the previous three (3) years at the electric distribution account(s) located at the eligible net-metering

system site A projected annual consumption of energy may be used until the actual three-year (3)

average annual consumption of energy over the previous three (3) years at the electric distribution

account(s) located at the eligible net-metering system site becomes available for use in determining

eligibility of the generating system to self-supply electrical energy and power for an eligible net-

metering customer. No electric distribution company shall limit the eligibility of a net-metering site

based on prior consumption. The eligible net-metering system may be owned by the same entity

that is the customer of record on the net-metered accounts or may be owned by a third party that is

not the customer of record at the eligible net-metering system site and which may offer a third-

party, net-metering financing arrangement or net-metering financing arrangement, as applicable.

Notwithstanding any other provisions of this chapter, any eligible net-metering resource: (i) Owned

by a public entity, educational institution, hospital, nonprofit, or multi-municipal collaborative or

(ii) Owned and operated by a renewable-generation developer on behalf of a public entity,

educational institution, hospital, nonprofit, or multi-municipal collaborative through a net-metering

financing arrangement shall be treated as an eligible net-metering system and all accounts

designated by the public entity, educational institution, hospital, nonprofit, or multi-municipal

collaborative for net metering shall be treated as accounts eligible for net metering within an

eligible net-metering system site.

     (6) “Eligible net-metering system site” means the site where the eligible net-metering

system or community remote net-metering system is located or is part of the same campus or

complex of sites contiguous to one another and the site where the eligible net-metering system or

community remote net-metering system is located or a farm in which the eligible net-metering

system or community remote net-metering system is located. Except for an eligible net-metering

system owned by or operated on behalf of a public entity, educational institution, hospital,

nonprofit, or multi-municipal collaborative through a net-metering financing arrangement, the

purpose of this definition is to reasonably assure that energy generated by the eligible net-metering

system is consumed by net-metered electric service account(s) that are actually located in the same

geographical location as the eligible net-metering system. All energy generated from any eligible

net-metering system is, and will be considered, consumed at the meter where the renewable energy

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resource is interconnected for valuation purposes. Except for an eligible net-metering system

owned by, or operated on behalf of, a public entity, educational institution, hospital, nonprofit, or

multi-municipal collaborative through a net-metering financing arrangement, or except for a

community remote net-metering system, all of the net-metered accounts at the eligible net-metering

system site must be the accounts of the same customer of record and customers are not permitted

to enter into agreements or arrangements to change the name on accounts for the purpose of

artificially expanding the eligible net-metering system site to contiguous sites in an attempt to avoid

this restriction. However, a property owner may change the nature of the metered service at the

accounts at the site to be master metered in the owner’s name, or become the customer of record

for each of the accounts, provided that the owner becoming the customer of record actually owns

the property at which the account is located. As long as the net-metered accounts meet the

requirements set forth in this definition, there is no limit on the number of accounts that may be net

metered within the eligible net-metering system site.

     (7) “Excess renewable net-metering credit” means a credit that applies to an eligible net-

metering system or community remote net-metering system for that portion of the production of

electrical energy beyond one hundred percent (100%) and no greater than one hundred twenty-five

percent (125%) of the renewable self-generator’s own consumption at the eligible net-metering

system site or the sum of the usage of the eligible credit recipient accounts associated with the

community remote net-metering system during the applicable billing period. Such excess

renewable net-metering credit shall be equal to the electric distribution company’s avoided cost

rate, which is hereby declared to be the electric distribution company’s standard-offer service

kilowatt hour (KWh) charge for the rate class and time-of-use billing period (if applicable)

applicable to the customer of record for the eligible net-metering system or applicable to the

customer of record for the community remote net-metering system. The commission shall have the

authority to make determinations as to the applicability of this credit to specific generation facilities

to the extent there is any uncertainty or disagreement.

     (i) For electrical energy produced greater than one hundred percent (100%) but less than

one hundred and ten percent (110%) of the renewable self-generator's own electricity consumption

at the eligible net-metering system site or the sum of the usage of the eligible credit recipient

accounts associated with the community remote net-metering system during the applicable billing

period, excess renewable net-metering credits shall be equal to the electric distribution company's

avoided cost rate, which is hereby declared to be the electric distribution company's last resort

service kilowatt hour (KWh) charge for the rate class and time-of-use billing period (if applicable)

applicable to the customer of record for the eligible net-metering system or applicable to the

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customer of record for the community remote net-metering system. The commission shall have the

authority to make determinations as to the applicability of this credit to specific generation facilities

to the extent there is any uncertainty or disagreement.

     (ii) For electrical energy produced at or greater than one hundred and ten percent (110%)

of the renewable self-generator's own electricity consumption at the eligible net-metering system

site or the sum of the usage of the eligible credit recipient accounts associated with the community

remote net-metering system during the applicable billing period, excess renewable net-metering

credits shall be equal to one hundred and three percent (103%) of the wholesale electricity rate,

which is hereby declared to be the average ISO-NE clearing price. The commission shall have the

authority to make determinations as to the applicability of this credit to specific generation facilities

to the extent there is any uncertainty or disagreement.

     (8) “Farm” shall be defined in accordance with § 44-27-2, except that all buildings

associated with the farm shall be eligible for net-metering credits as long as: (i) The buildings are

owned by the same entity operating the farm or persons associated with operating the farm; and (ii)

The buildings are on the same farmland as the project on either a tract of land contiguous with, or

reasonably proximate to, such farmland or across a public way from such farmland.

     (9) “Hospital” means and shall be defined and established as set forth in chapter 17 of title

23.

     (10) “Multi-municipal collaborative” means a group of towns and/or cities that enter into

an agreement for the purpose of co-owning a renewable-generation facility or entering into a

financing arrangement pursuant to subsection (14).

     (11) “Municipality” means any Rhode Island town or city, including any agency or

instrumentality thereof, with the powers set forth in title 45.

     (12) “Net metering” means using electrical energy generated by an eligible net-metering

system for the purpose of self-supplying electrical energy and power at the eligible net-metering

system site, or with respect to a community remote net-metering system, for the purpose of

generating net-metering credits to be applied to the electric bills of the eligible credit recipients

associated with the community net-metering system. The amount so generated will thereby offset

consumption at the eligible net-metering system site through the netting process established in this

chapter, or with respect to a community remote net-metering system, the amounts generated in

excess of that amount will result in credits being applied to the eligible credit-recipient accounts

associated with the community remote net-metering system.

     (13) “Net-metering customer” means a customer of the electric distribution company

receiving and being billed for distribution service whose distribution account(s) are being net

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metered.

     (14) “Net-metering financing arrangement” means arrangements entered into by a public

entity, educational institution, hospital, nonprofit, or multi-municipal collaborative with a private

entity to facilitate the financing and operation of a net-metering resource, in which the private entity

owns and operates an eligible net-metering resource on behalf of a public entity, educational

institution, hospital, nonprofit, or multi-municipal collaborative, where: (i) The eligible net-

metering resource is located on property owned or controlled by the public entity, educational

institution, hospital, or one of the municipalities, as applicable; and (ii) The production from the

eligible net-metering resource and primary compensation paid by the public entity, educational

institution, hospital, nonprofit, or multi-municipal collaborative to the private entity for such

production is directly tied to the consumption of electricity occurring at the designated net-metered

accounts.

     (15) “Nonprofit” means a nonprofit corporation as defined and established through chapter

6 of title 7, and shall include religious organizations that are tax exempt pursuant to 26 U.S.C. § 

501(d).

     (16) “Person” means an individual, firm, corporation, association, partnership, farm, town

or city of the state of Rhode Island, multi-municipal collaborative, or the state of Rhode Island or

any department of the state government, governmental agency, or public instrumentality of the

state.

     (17) “Project” means a distinct installation of an eligible net-metering system or a

community remote net-metering system. An installation will be considered distinct if it is installed

in a different location, or at a different time, or involves a different type of renewable energy.

     (18) “Public entity” means the federal government, the state of Rhode Island,

municipalities, wastewater treatment facilities, public transit agencies, or any water distributing

plant or system employed for the distribution of water to the consuming public within this state

including the water supply board of the city of Providence.

     (19) “Renewable net-metering credit” means a credit that applies to an eligible net-

metering system or a community remote net-metering system up to one hundred percent (100%) of

either the renewable self-generator’s usage at the eligible net-metering system site or the sum of

the usage of the eligible credit-recipient accounts associated with the community remote net-

metering system over the applicable billing period. This credit shall be equal to the total kilowatt

hours of electrical energy generated up to the amount consumed on-site, and/or generated up to the

sum of the eligible credit-recipient account usage during the billing period multiplied by the sum

of the distribution company’s:

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     (i) Standard-offer service kilowatt-hour charge for the rate class applicable to the net-

metering customer, except that for remote public entity and multi-municipality collaborative net-

metering systems that submit an application for an interconnection study on or after July 1, 2017,

and community remote net-metering systems, the standard-offer service kilowatt-hour charge shall

be net of the renewable energy standard charge or credit;

     (ii) Distribution kilowatt-hour charge;

     (iii) Transmission kilowatt-hour charge; and

     (iv) Transition kilowatt-hour charge.

     Notwithstanding the foregoing, except for systems that have requested an interconnection

study for which payment has been received by the distribution company, or if an interconnection

study is not required, a completed and paid interconnection application, by December 31, 2018, the

renewable net-metering credit for all remote public entity and multi-municipal collaborative net-

metering systems shall not include the distribution kilowatt-hour charge commencing on January

1, 2050.

     (20) “Renewable self-generator” means an electric distribution service customer of record

for the eligible net-metering system or community remote net-metering system at the eligible net-

metering system site which system is primarily designed to produce electrical energy for

consumption by that same customer at its distribution service account(s), and/or, with respect to

community remote net-metering systems, electrical energy which generates net-metering credits to

be applied to offset the eligible credit-recipient account usage.

     (21) “Third party” means and includes any person or entity, other than the renewable self-

generator, who or that owns or operates the eligible net-metering system or community remote net-

metering system on the eligible net-metering system site for the benefit of the renewable self-

generator.

     (22) “Third-party, net-metering financing arrangement” means the financing of eligible

net-metering systems or community remote net-metering systems through lease arrangements or

power/credit purchase agreements between a third party and renewable self-generator, except for

those entities under a public entity net-metering financing arrangement. A third party engaged in

providing financing arrangements related to such net-metering systems with a public or private

entity is not a public utility as defined in § 39-1-2.

     39-26.4-3. Net metering.

     (a) The following policies regarding net metering of electricity from eligible net-metering

systems and community remote net-metering systems and regarding any person that is a renewable

self-generator shall apply:

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     (1)(i) The maximum allowable capacity for eligible net-metering systems, based on

nameplate capacity, shall be ten megawatts (10 MW), effective sixty (60) days after passage. The

aggregate amount of net metering in the Block Island Utility District doing business as Block Island

Power Company and the Pascoag Utility District shall not exceed a maximum percentage of peak

load for each utility district as set by the utility district based on its operational characteristics,

subject to commission approval; and

     (ii) Through December 31, 2018, the maximum aggregate amount of community remote

net-metering systems built shall be thirty megawatts (30 MW). Any of the unused MW amount

after December 31, 2018, shall remain available to community remote net-metering systems until

the MW aggregate amount is interconnected. After December 31, 2018, the commission may

expand or modify the aggregate amount after a public hearing upon petition by the office of energy

resources. The commission shall determine within six (6) months of such petition being docketed

by the commission whether the benefits of the proposed expansion exceed the cost. This aggregate

amount shall not apply to any net-metering financing arrangement involving public entity facilities,

multi-municipal collaborative facilities, educational institutions, the federal government, hospitals,

or nonprofits. By June 30, 2018, the commission shall conduct a study examining the cost and

benefit to all customers of the inclusion of the distribution charge as a part of the net-metering

calculation.

     (2) For ease of administering net-metered accounts and stabilizing net-metered account

bills, the electric distribution company may elect (but is not required) to estimate for any twelve-

month (12) period:

     (i) The production from the eligible net-metering system or community remote net-

metering system; and

     (ii) Aggregate consumption of the net-metered accounts at the eligible net-metering system

site or the sum of the consumption of the eligible credit-recipient accounts associated with the

community remote net-metering system, and establish a monthly billing plan that reflects the

expected credits that would be applied to the net-metered accounts over twelve (12) months. The

billing plan would be designed to even out monthly billings over twelve (12) months, regardless of

actual production and usage. If such election is made by the electric distribution company, the

electric distribution company would reconcile payments and credits under the billing plan to actual

production and consumption at the end of the twelve-month (12) period and apply any credits or

charges to the net-metered accounts for any positive or negative difference, as applicable. Should

there be a material change in circumstances at the eligible net-metering system site or associated

accounts during the twelve-month (12) period, the estimates and credits may be adjusted by the

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electric distribution company during the reconciliation period. The electric distribution company

also may elect (but is not required) to issue checks to any net-metering customer in lieu of billing

credits or carry-forward credits or charges to the next billing period. For residential-eligible net-

metering systems and community remote net-metering systems twenty-five kilowatts (25 KW) or

smaller, the electric distribution company, at its option, may administer renewable net-metering

credits month to month allowing unused credits to carry forward into the following billing period.

     (3) If the electricity generated by an eligible net-metering system or community remote

net-metering system during a billing period is equal to, or less than, the net-metering customer’s

usage at the eligible net-metering system site or the sum of the usage of the eligible credit-recipient

accounts associated with the community remote net-metering system during the billing period, the

customer shall receive renewable net-metering credits, that shall be applied to offset the net-

metering customer’s usage on accounts at the eligible net-metering system site, or shall be used to

credit the eligible credit-recipient’s electric account. The electric distribution company shall issue

checks to any net-metering customer for excess net-metering credits fir requested by a net-metering

customer.

     (4) If the electricity generated by an eligible net-metering system or community remote

net-metering system during a billing period is greater than the net-metering customer’s usage on

accounts at the eligible net-metering system site or the sum of the usage of the eligible credit-

recipient accounts associated with the community remote net-metering system during the billing

period, the customer shall be paid by excess renewable net-metering credits for the excess

electricity generated up to an additional twenty-five percent (25%) beyond the net-metering

customer’s usage at the eligible net-metering system site, or the sum of the usage of the eligible

credit-recipient accounts associated with the community remote net-metering system during the

billing period; unless the electric distribution company and net-metering customer have agreed to

a billing plan pursuant to subsection (a)(2).

     (5) The rates applicable to any net-metered account shall be the same as those that apply

to the rate classification that would be applicable to such account in the absence of net metering,

including customer and demand charges, and no other charges may be imposed to offset net-

metering credits.

     (b) The commission shall exempt electric distribution company customer accounts

associated with an eligible net-metering system from back-up or standby rates commensurate with

the size of the eligible net-metering system, provided that any revenue shortfall caused by any such

exemption shall be fully recovered by the electric distribution company through rates.

     (c) Any prudent and reasonable costs incurred by the electric distribution company

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pursuant to achieving compliance with subsection (a) and the annual amount of any renewable net-

metering credits or excess renewable net-metering credits provided to accounts associated with

eligible net-metering systems or community remote net-metering systems, shall be aggregated by

the distribution company and billed to all distribution customers on an annual basis through a

uniform, per-kilowatt-hour (KWh) surcharge embedded in the distribution component of the rates

reflected on customer bills.

     (d) The billing process set out in this section shall be applicable to electric distribution

companies thirty (30) days after the enactment of this chapter.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PUBLIC UTILITIES AND CARRIERS -- NET METERING

***

     This act would prohibit utility companies from limiting the eligibility of a net metering site

based on prior consumption and require excess energy not consumed under the net metering system

to be credited to the consumer. It would also amend the definition of excess renewable net-metering

credit.

     This act would take effect upon passage.

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