Net Metering

Note: After June 1, 2018, utilities will file new distributed generation tariffs following the "inflow-outflow" methodology approved by the MPSC as part of their general rate cases. Customers that began or begin net metering service before the new tariff for their utility is approved will be able to continue taking service under the old net metering tariff for 10 years following the date of their enrollment, after which they will move to the new tariff. 

In October 2008, Michigan enacted P.A. 295, requiring the Michigan Public Service Commission (MPSC) to establish a statewide net metering program for renewable energy systems. On May 26, 2009 the MPSC issued an order formally adopting revised net metering and interconnection rules to implement P.A. 295 of 2008. 

Availability

Michigan's net metering law applies only to rate-regulated utilities and alternative electric suppliers. The designation "rate-regulated utility" presently includes investor-owned utilities and rural electric distribution cooperatives that have not opted for member regulation. As of April 2011, only Cherryland, Alger Delta, and Tri County electric cooperatives have opted for member regulation. Municipal utility rates are not regulated by the MPSC. 

Eligible Technologies and System Size

Renewable energy systems using solar, wind, biomass, geothermal, anaerobic digester gas, landfill gas, municipal solid waste, and moving water are eligible for net metering. The definition of biomass is very broad and includes agricultural crops and crop wastes; energy crops; animal wastes; paper and pulp products; and a variety wood waste materials. Moving water technologies include those using waves, tides, and currents as well as traditional hydropower using water released through a dam. 

Net metering billing practices are split into two distinct categories. All qualifying customer generators up to 20 kilowatts (kW) are eligible for "true" net metering, while most systems between 20 kW and 150 kW are eligible for "modified" net metering.* 

In general, the capacity of an individual system is limited to that which will meet their own needs. The rules describe several options a customer can use to arrive at this value.

Aggregate Cap

True net metering is available until the aggregate net metered capacity reaches 0.5% of a utility's peak load. Modified net metering is available until the aggregate net-metered capacity reaches an additional 0.25% of a utility's peak load for systems of 150 kW or less and 0.25% for systems larger than 150 kW. 

Nondiscriminatory Rates Requirement

Utilities must provide net metering customers with electric service at nondiscriminatory rates that are identical to those that would be charged if the customer were not participating in net metering.

Net Excess Generation

For systems of 20 kW or less, net excess generation (NEG) during a billing period may be carried forward to the next billing period at the retail rate. 

Modified net metering (facilities up to 150 kW) allows NEG carry over at the power supply component of the retail rate (i.e., energy avoided cost) or the monthly average real-time locational marginal price for energy at the commercial pricing node within the electric provider’s distribution service territory each billing period. 

Customers on time-of-use rates may carry forward NEG at the applicable retail rate for each time-of-use pricing period within a billing period. 

NEG can be carried forward indefinitely. 

Credits associated with modified net metering may not be applied against distribution charges. 

Systems larger than 150 kW must pay standby charges. This practice does not meet the definition of net metering as it is generally understood, thus this summary considers only systems up to 150 kW as eligible for net metering.

Renewable Energy Credit Ownership

Customer-generators own the renewable energy credits (RECs) associated with electricity generated under the program. 

Metering

Utilities serving more than 1 million customers (i.e., Consumers Energy & DTE Electric) are required, if necessary, to supply true net metering customers with a net metering compatible meter or meters at no cost to the customer. Utilities with fewer than 1 million customers must supply the appropriate meter or meters to the customer at cost, not to exceed the incremental cost above that for meters provided by the utility to similarly situated non-net metering customers. Metering configurations and cost allocations for modified net metering customers are slightly different (see R 460.648 for details).

Net metering application fees may not exceed $25 and the combined total of net metering application and interconnection review fees may not exceed $100. 

Reporting

Annual net metering reports from individual utilities and alternative electricity suppliers are contained in Case U-15787, available through the PSC E-Docket System. 

Interconnection

Interconnection standards for systems up to 2 megawatts (MW) were adopted by the MPSC as part of the same administrative proceeding that addressed net metering. The forms and procedures are available here. 

* Methane digesters up to 550 kW are eligible for "true" net metering or "modified" net metering, depending on its size.