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Unfair Cost Shifting in Net Metering Policies

Net metering policies have been in effect since the 1980s, but not all of those policies still make sense today. Keep reading to learn what net metering is, and to find out how net metering might be costing your family more than you should have to pay for your home’s electricity.

What is Net Metering?
Net metering is a billing arrangement between a utility company or nonprofit Electric Cooperative and a smaller power producer (like the Watt Family, who has installed solar panels on their roof).

The solar energy the Watt Family generates is used to power their home. Sometimes they’re even able to create even more energy than they need. When that happens, they can send their extra energy back to the Cooperative to be shared with the coop’s other Member-Owners.

The net metering billing arrangement between the Watt Family and the Cooperative decides how the Watt Family will be credited for the excess energy it sends back to the power company. This is dictated in part by state and federal legal requirements. 

What is a Net Meter?
The net meter itself is a tool that tracks exactly how much energy the Watt Family is using from the coop’s power sources and exactly how much solar energy the Watts are sending back to the coop after powering their own home.

Net metering started out with good intentions: it was designed as a simple way to track energy sharing by smaller energy producers like the Watts. While net meters are still fine, the policies surrounding net metering don’t always makes sense today.

Why Net Metering Policies Don’t Make Sense Today
Under current net metering legal regulations, your Cooperative may have to pay small producers like the Watt Family retail price for the wholesale electricity they add back to the power grid.

When that happens, your Cooperative incurs costs that it cannot recoup. Your Cooperative has to shift some of that cost on to you, its member-owners, in your monthly electric bills.

Unfair Cost Shifting
If your local grocery store had to pay farmers retail prices for eggs, milk, or meat, your grocery bills would get a lot more expensive. That wouldn’t be fair to you, the shopper, right?

Electrical power is no different. If your Cooperative is required by law to pay small power producers like the Watt Family retail prices for their wholesale power production, your electricity bill gets more expensive. That’s not fair to you, the Member-Owner, and that’s why we call it unfair cost shifting — because you shouldn’t have to pay the price of independent renewable energy production by other Member-Owners in your community.

Member-Owners Cannot Afford to Foot the Bill
A large majority of Missouri Electric Cooperatives' Member-Owners live on fixed incomes or low wages and cannot afford to install renewable energy systems. These Member-Owners need reliable, affordable electricity for their homes without any fancy bells or whistles.

These fixed- or lower-income Member-Owners don’t have access to alternative energy sources like solar panels or wind energy because they simply cannot afford the installation costs. If they have to pay higher rates to subsidize those members who do have the ability to install renewable energy sources, it creates a system imbalance.

Equity in Electricity
Your Cooperative appreciates — and sometimes needs — the extra electric power that small producers like the Watt Family add back to the grid. The goal is to fairly reward families like the Watts for producing extra power without unfairly shifting the cost of renewable energy production on to the majority of our Member-Owners.

Your Cooperative’s Principles make us stewards for our entire communities, which means that we must advocate for policies that make sense for all of our Member-Owners. Come back to the blog to learn more about policy options that encourage renewable energy creation without unfairly shifting its cost on the member-owners who can least afford it.

Learn More
Learn more about Missouri’s Electric Cooperatives, and how we work to provide safe, efficient energy to rural Missouri by following us on Facebook, Twitter, YouTube, and Instagram.

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