Wow, Jeanne, what a different world the US is. We agree on what needs to be done, but how fascinating that you oppose what the world's leader in renewables practices. No doubt, what Germany does will not work in the US - the reasons why would be enlightening. But let me first point out that Germany has "double metering". The power produced by PV systems is metered and paid for independent of what is consumed from the grid. The rate for this is based on what PV costs. The government sat down with the PV industry and calculated what PV power costs. The rate will fall by 40% by 2010. It is currently between 45 and 60 cents per kWh, 3 to 4 times the retail rate of around 19 cents. If that seems expensive, keep in mind that Germany averages 11 minutes of power failure per year - a figure that I find 11 minutes too high (I can't remember the last outage here). I spent 30 days back home in the US last winter and had more minutes without power than that.

At any rate, net metering does not, as you seem to suggest, prevent accounting based on avoided costs for excess power. If you produce more than you consume, your meter reads "minus X kWh", and you utility can simply say it will pay the wholesale rate for all negative figures, i.e. excess production. I am sure that this is exactly what is done in many US states.

But let me come back to why this insistence on net metering is bad, and why central utilities have already won the battle in the US. Basically, it does not matter how you meter distributed power. What matters is how much you pay for distributed power. Do you want to have wind and PV move from the fledgling stage to maturity? Then give them the support that nuclear, coal, and oil have had.

Grid costs should not be deducted from distributed generation (DG) because 1) it actually takes a burden off the grid and 2) the grid is often (at least partially) paid for with tax dollars. Ideally, the grid would be a publicly owned natural monopoly, with large and small generators feeding power to the grid. And ideally, we would give preference to renewables and use finite resources like coal and uranium as back-up power to fill the gap when renewables do not provide enough. The paradigm would be reversed: small, renewable generators would have priority, with large, central plants revving up to fill in the gaps. The extra costs for utilities to run below full capacity would have to be passed on consumers, raising costs for electricity even further, perhaps even to the level of Europe, which is a very pleasant place to live. Higher prices would then make efficiency all the more worthwhile.

Is this possible in the US? Can Americans take such thinking seriously?

I am currently finishing a book on the issue to be published by New Society Press next summer under the title "Energy Switch." I will be discussing the German success story in detail. Those who can read German can check out the German version of the book here http://www.dpunkt.de/buch/3-936931-26-7.html and my articles in German here http://www.heise.de/tp/r4/inhalt/zen.html.

The answer is simple: Net metering is bad policy and political appeasement is achieved by allowing a minimum amount. Consider these facts:

1) Net metering increases costs to all consumers (except the few able to utilize it). How can this NOT be true if net metering forces utilities to pay more for power than they would otherwise have to pay?

2) Net metering shifts wealth to relatively wealthy individuals and from relatively poor areas. Consider WHO takes advantage of net metering: those with access to the capital investment required for investments in distributed generation. (Drive around a rural area - stop and notice WHICH homes and farms have wind generators, pv's, etc. By far, the bigger, wealthier operations.)

3) Net metering shifts economic well being from relatively poor areas to relatively wealthy ones. Think about areas that have the most potential for net metering: clearly rural areas have far more potential. It is a fact that rural areas are relatively poor in terms of income and standard of living. Will net metering bring a boon of investment in rural areas? No. In fact ANY investment occuring because of net metering is being funded by the area in which the net metering is occuring. Specifically, the benefits of net metering are paid for locally, by the other customers of the local utility. Typically - this occurs more with rural electric cooperatives than in more densly populated IOU territory because rural areas are where more potential for distributed technologies exists. Note again - that the areas PAYING for net metering already have far higher electricity prices and severe cost disadvantages compared to densly populated areas. (Indeed - this is part of the reason net metering is so appealing to the few able to take advantage of it).

But even worse - the touted benefits of "renewable" and "clean" generation technologies so often associated with net metering are not local in nature. Are the benefits of clean air resulting from a wind generator - paid for by the customers of a rural utility in the form of a net metering subsidy - limited to that service area? No. Those benefits shift to all areas - courtesy of and paid for by the local utility customers.

4) The reason net metering potential exists is the failure of regulatory pricing policy. What would net metering be if fixed costs were priced with fixed charges? Net metering (i.e. retail price) and avoided cost would be one and the same. Allow utilities the correct fixed network access (read "customer") charge AND add a time element to the pricing of energy consumed and there would not be a utility in America against net metering.

There is an old adage in ratemaking: two wrongs DO make a right. This seems to be the regulatory response: we don't price to the consumer correctly, so we'll make up for it by pricing back to the utility incorrectly. What a recipe for bad policy.

There a so many ways to encourage investment in new technologies - especially technologies that encourage the achievment of such social goals as cleaner environment, security, etc. However, not all policies are the same. Net metering no doubt encourages the adoption of distributed technologies - but its very nature is regressive and inefficient. Achievement of social goals would be much better served through adoption of more progressive policies - from polution taxes to tax credits - than such policy failures as net metering.

Net metering is a small but significant step in the process that Utilities and Regulators need to recognize is the wave of the future. The above article brings up some good points in this regard, but only hits a single when in this day and age we should be looking at home runs. The article states, “The only major cost of using net metering for distributed generation is the decrease in demand for utility supplied electricity”. Since when is this “decrease in demand” a cost? I’m sure the implication here is that if the DG customer uses less energy from the utility, costs will go up because of less use. Doesn’t it make sense that there will be more energy for the larger customers that are paying ill-conceived demand charges. Wouldn’t that more than make up for this lessened consumption? And what about arbitrage? If these same utilities have the ability to buy back electricity from the distributed network, they could sell it on the open market for significantly more.

“Many states require at least some of their utilities to offer net metering…” Ms. Fox goes on to say and that New Jersey is no exception. If New Jersey is truly in the forefront of net metering and “arguably the most progressive.” why not make all the utilities in the state offer it? Why only some? Sounds like New Jersey is jumping on the bandwagon, not trying to drive it.

One of the salient parts of the current Energy Bill just signed, and complimented by most utilities (including New Jersey) is the emphasis on renewable energies. Yes, wind, solar and waves are the ideal power supply for the future------ free and plentiful. (And who knows, maybe hydrogen will some day also.) However, until then, there is technology that can be used to augment these sometimes spotty (and costly) resources. Internal combustion engines and microturbines are existing power technologies that can be utilized as standalone units to generate heat and power and also be used to compliment these renewables. Microcogeneration (less than 20KW ) with an internal combustion engine and recovering over 90% of the input energy is commonplace in Japan and Germany. (In addition I might add, they are significantly less polluting than the coal burning plants that are the mainstays of the current utility equation.) These are countries that have been sensitive to the high cost of energy and pollution for many years ----actually since they have been rebuilt after 1945. Interesting, how the prewar legacies (that we are stuck with) didn’t carry over with them. Both these countries embrace net metering and cogeneration.

Lastly, the Utilities and the Regulators have to wake up and smell the coffee. Net metering and distributed generation----of all forms, must be dealt with and recognized for what they are----- a disruptive technology that the marketplace will embrace. The utilities are not pioneers, they haven’t had to be, but the telecom industry wasn’t either, and look what the marketplace has done with that industry. It is only a matter of time before this new technology redirects the energy marketplace.

'Since when is this “decrease in demand” a cost?'

Answer: When central plants cannot run at full capacity. DG will cut into their margins. That is why they are fighting it.

Ciao

"1) Net metering increases costs to all consumers"

Not true. It increases *prices*. Whether your costs increase depends on whether you react to higher prices, for instance through efficiency and conservation. In Europe, gas and power prices are generally twice as high as in the US, but Europeans pay basically the same *costs* for energy because they consume half as much.

"2) Net metering shifts wealth to relatively wealthy individuals and from relatively poor areas."

No, it allows people with money to switch to renewables and pay their power bills for the next 20 years in advance. This is no different than the rest of the business world. Poor people cannot pay for their cars up front either, so they have to pay interest, i.e. the poor always run the risk of paying more.

"3) Net metering shifts economic well being from relatively poor areas to relatively wealthy ones."

You are right that home ownership as usually a prerequisite for this scheme, but investments always require cash up front. In Europe, where home ownership is lower than in the US (around 70% in the US, less than 50% is most parts of Europe), tenants who want to invest in renewables are able to rent rooftop space from building owners who want to have renewables, but lack the cash. Usually, this rooftop space is rented almost for nothing.

"Are the benefits of clean air resulting from a wind generator - paid for by the customers of a rural utility in the form of a net metering subsidy - limited to that service area? No. Those benefits shift to all areas - courtesy of and paid for by the local utility customers."

I don't see the problem. Pollution is not local either.

"Allow utilities the correct fixed network access (read "customer") charge AND add a time element to the pricing of energy consumed and there would not be a utility in America against net metering."

If I understand you correctly, you would like to have by-the-minute/hour metering. Good idea.

"There is an old adage in ratemaking: two wrongs DO make a right. This seems to be the regulatory response: we don't price to the consumer correctly, so we'll make up for it by pricing back to the utility incorrectly. What a recipe for bad policy."

The question is where you want to go. Germany and Denmark are showing the world how to ramp up renewables. Do you want to learn from them?

"Achievement of social goals would be much better served through adoption of more progressive policies - from polution taxes to tax credits - than such policy failures as net metering."

You contradict yourself: tax credits benefit those who pay taxes. The rich benefit from tax credits more than the poor. Tax credits are a bad way to support renewables. If you want to have renewables, find out how much they cost, pay that rate, and make the rate degressive so that companies will be under great pressure to bring costs down.