The Department of Energy (“DOE”) issued Department Circular (“DC”) 2024 No. DC2024-08-0025 on 19 August 2024 entitled Prescribing Further Policies to Enhance the Net-Metering Program for Renewable Energy Systems Amending, For this Purpose, Department Circular (DC) No. DC2020-10-0022.
Under Section 10 of the Renewable Energy Act of 2008 (“RE Act”), distribution utilities (“DU”) are required to enter into Net-Metering Agreements with qualified end-users who install renewable energy (“RE”) systems. These agreements must be made upon the request of the end-user, subject to technical considerations, and without any form of discrimination. The ERC, DUs, and all relevant parties were mandated to establish the necessary mechanisms for the physical connection and commercial arrangements to ensure the success of the Net-Metering Program, in line with the Grid and Distribution Codes. In light of this, on 27 May 2013, the ERC issued Resolution No. 9, Series of 2013 or the “Net-Metering Rules”, pursuant to the RE Act and its Implementing Rules and Regulations (“IRR”).
Subsequently, on 22 December 2017, the DOE issued DC No. DC2017-12-0015 or the “RPS On-Grid Rules”, which made energy produced or generated by eligible RE facilities under the Net-Metering Program eligible to earn Renewable Energy Certificates (RECs). These certificates may be credited as part of the compliance mechanisms that DUs may use to fulfill their obligations as mandated participants under the RPS On-Grid Rules.
Thereafter, on 16 August 2019, the ERC issued Resolution No. 06, Series of 2019 or the
“Amended Net-Metering Rules”, aimed at addressing several concerns, including the applicability of lifeline rates to qualified end-users and the reasonableness of the mechanism for accumulating credits for net exports on customer bills.
Nonetheless, while the Amended Net-Metering Rules addressed many of the economic and technical barriers to the Net-Metering Program, the DOE deemed it necessary to further refine the policies and commercial arrangements to boost the utilization of RE through the Net-Metering Program. As a result, on 22 October 2020, the DOE issued DC No. DC2020-10-0022, which aims to encourage and promote greater participation of electricity end-users in the Net-Metering Program by enhancing the existing policies and commercial frameworks, while also safeguarding the economic and technical viability of DUs.
However, despite the issuance of DC No. DC2020-10-0022, the DOE continued to receive various concerns from stakeholders, which hindered the effective implementation of the Net-Metering Program.
In response, on 19 August 2024, the DOE issued DC No. DC2024-08-0025 to further enhance and ensure the effective implementation of the Net-Metering Program. Under this new issuance, any qualified end-user may now generate electricity subject to the capacity limit set forth in the RE Act. This marks a significant shift from the previous rule, which restricted the qualified end-user’s electricity generation to their annual energy consumption. Previously, any qualified end-user under normal circumstances, should not be a net generator or producer by the end of each calendar year to avoid oversizing of the Net-Metering facility, where the annual electricity generation thereof has exceeded the qualified end-user’s annual energy consumption.
In essence, the original provision required that a qualified end-user must not generate more electricity than their annual consumption by the end of each calendar year to prevent oversizing of the Net-Metering facility. This rule ensured that the energy produced did not exceed the user’s energy needs. In contrast, the amended provision effectively removes the restriction on the end-user’s total electricity generation relative to their annual consumption and permits greater flexibility in electricity generation as long as it adheres to the capacity limits specified in the RE Act.
Furthermore, under the new amendment, all Net-Metering Credits may now be banked, rolled over, and credited to the qualified end-user’s electricity consumption for both current and future billing periods, as appropriate. Prior to this amendment, Net-Metering Credits could only be banked for a maximum of one (1) calendar year, with any excess credits or remaining balance at the end of the year being forfeited. The new amendment allows Net-Metering Credits to roll over without a set limit, ensuring that excess credits or remaining balances are no longer forfeited and can be applied to both current and future billing periods.
Lastly, the requirement for the REC Meter has been eliminated, contingent upon the ERC issuing a methodology for calculating or estimating the energy or generation output of the Net-Metering facility. To date, however, the ERC has yet to release a Resolution outlining such methodology.