Net Metering and Community Self-Generating Policy
The NWT has adopted net metering, which allows customers to install up to 15 kilowatts (kW) of renewable electricity generation on their property to offset their power use. This can help Northerners manage their electricity costs while reducing greenhouse gas (GHG) emissions, which is in line with this objective. In addition, the 2030 Energy Strategy also outlines a participation model for diesel communities to generate renewable electricity to be used locally.
Customer and community-owned generation is also a contributing factor to reduced utility revenues. This results in increased electricity rates for all consumers.
The GNWT commissioned a study to review existing net metering and community generation policies, estimate the effects of various levels of renewable deployment, and provide recommendations on changes that could help maximize the use of renewable electricity, reduce GHG emissions, and minimize costs to electricity ratepayers.
- Net revenue loss to utilities from non-utility renewable generation is estimated to be $500,000 in 2019, with net metering responsible for most of the loss ($300,000).
- Under existing rules, annual net revenue loss for utilities would increase between $1.8 million-$2.7 million by 2030. Most of the loss is due to the net-metering program (between $1.5-$2.4 million). The continued deployment of the net-metering program in the NWT’s electricity rate zones primarily served by hydroelectricity drives most of the loss increase by 2030 ($1 million) while not contributing to GHG reductions.
- Non-utility owned renewable generation reduced GHG emissions by 632 tonnes of carbon dioxide equivalent (CO2e) in 2019 (465 tonnes over 2016 levels). Annual GHG savings could increase to 1,084-1,349 tonnes by 2030 under existing rules.
- The cost of reducing one tonne of CO2e under existing policies was estimated to be $780 in 2019. This cost is predicted to more than double by 2030 in all scenarios examined in the study ($1,654-$2,013), primarily due to the expected continued deployment of renewable energy in hydro communities.
The study had five recommendations. It did not recommend all five be done at the same time:
- Adjust the renewable energy generation credit: The credit for renewable energy delivered to the grid would reflect the variable generation costs of utilities (i.e., fuel cost, variable portion of operation and maintenance) in each rate zone. Electricity rates in the NWT are based on how electricity is primarily generated in a community. There are zones for thermal and hydro generation in the NWT.
- Better align fixed charges for customers with fixed costs for utilities: Revise the GNWT rate policy guidelines to permit utilities to adjust their fixed charges. Fixed charges are minimum charges customers pay regularly.
- Revise terms and conditions of service: Strengthen terms and conditions of service and permitting requirements to ensure utilities and the Public Utilities Board have good visibility of all customer-owned renewable generation. This could also include creating a central registry to maintain records on renewable generation installed in the territory.
- Adjust the stand-by charge for customers delivering renewable energy to the grid to better represent the cost of maintaining adequate capacity: This would create a mandatory rate option for customers who install their own generation (e.g., solar panels). This rate option may not have any additional charges initially but could develop the ability to implement specific charges or credits for grid services in the future.
- Review the subsidy framework for utilities to account for the revenue losses caused by renewable generation: Utilities are currently subsidized by a variety of policy instruments (for example the Territorial Power Subsidy Program), the higher rates paid by governments, and various capital funding programs for renewable energy. This framework should be coordinated to reflect the growing cost of integrating distributed renewable generation on public electrical grids.
Read the full report.