Most of Missouri’s Electric Cooperative Member-Owners have a fairly simple rate structure made up of two parts: a member charge and a kilowatt hour charge. The member charge is a fixed amount and the kilowatt hour charge varies based on the number of kilowatt hours you use during the month.
The member charge helps your Cooperative recover a small part of the fixed distribution costs of serving you, including expenses such as administration, operations, and maintenance. However, the majority of revenue needed to cover your Cooperative’s distribution costs comes from your bill’s kilowatt hour charge.
Your kilowatt hour charge is made up of three parts — energy (kilowatt hour), demand (kilowatt), and distribution system expenses — which are shown proportionally in the graph below.
- Energy: The operational costs, including fuel and labor, of generating electricity
- Demand: The overhead costs of owning and maintaining transmission and generating facilities
- Distribution Expenses: Administration, operations, maintenance, depreciation, interest, and margins
Missouri Net Metering
Net metering is a process that enables Missouri’s Electric Cooperative Member-Owners with a solar or wind system on their home or business to export power that is in excess of their immediate on-site needs. This offsets an equal amount of power supplied by your Cooperative at a different time within the same monthly billing period. In this situation the Member-Owner with a solar or wind system is billed at your Cooperative’s regular retail rate for the “net” amount of power used that is in excess of power the Member-Owner generates on site.
If the Member-Owner generates more power than his or her home uses during the monthly billing period, the excess is metered and put out onto the electric grid. Your Cooperative subtracts the amount of power purchased from the grid from the amount generated out to the grid and provides the Member-Owner with a “credit” for the “net excess” power. For most Missouri Electric Cooperatives, the credit is calculated by multiplying the number of “net excess” kilowatt hours by your Cooperative’s cost to purchase the fuel needed to generate a kilowatt hour (called avoided cost).
Member Solar Panels Generate to the Grid: 1,000 kWhs
Member Receives from the Grid: 950 kWhs
Member Receives Avoided Cost Credit for: 50 kWhs
Under current net metering laws, your Cooperative is not able to recover distribution expenses and demand costs through kilowatt hour sales when a Member-Owner installs a solar array or wind turbine. Those distribution expenses and demand costs are spread to your Cooperative’s membership without wind or solar to maintain vital infrastructure: distribution lines, poles and equipment, and the transmission network and power plants that deliver 24/7 electricity to all Member-Owners.
Why are those other resources needed? The energy output from a solar array or wind turbine does not typically coincide with your Cooperative’s peak load: early in the morning on a cold winter day. That is why a diverse power supply including coal and gas is so important. The chart below shows that replacing your Cooperative’s existing baseload resources with 5,000 megawatts of wind or solar leaves a huge gap between what Member-Owners need to power their homes and what wind and solar would provide on a peak winter day.
Expanding Current Net Metering Laws Would Negatively Impact Member-Owners
Renewable interest groups and solar vendors would like to see significant changes made to Missouri’s current net metering statutes. Those changes would increase subsidies paid by Missouri’s Electric Cooperative Member-Owners who don’t have wind or solar. Key points of their suggested changes are listed below:
Increase System Size: Currently, Missouri law limits net metering to systems of 100 kilowatts or less. These groups would like to increase the size to 500 kilowatts or less. This would allow businesses to put in larger arrays that generate more electricity, reducing the kilowatt hours they purchase from your Cooperative. This would shift more costs to the rest of your Cooperative’s Member-Owners.
Retail Rate Credits for Net Excess: Paying the retail rate for a kilowatt hour unfairly shifts costs onto your Cooperative’s Member-Owners who do not have a solar or wind system. It also forces your Cooperative to pay a higher cost to purchase power than it would incur with its own generators.
Annualized Net Metering Billing: This has the same effect as paying retail for any net excess. Annualizing the net metering account would carry the monthly net excess forward as kilowatt hours at a retail rate, not a credit for kilowatt hours at avoided cost.
State Income Tax Credit: Solar and wind systems are already heavily subsidized with a 30 percent federal income tax credit and current net metering laws. Renewable interest groups have encouraged implementing a Missouri state tax credit that would mean more subsidies and that would cause additional burden on Missouri taxpayers. This could lead to state tax increases to comply with Missouri’s balanced budget requirement.