Texas - Net Metering

Summary

Note: HB 3693, passed in May 2007 and effective September 2007, appears to make significant modifications to Texas net metering and interconnection policy. As of April 2008, the Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission of Texas (PUCT) were still in the process of implementing this legislation. Although implementation is ongoing, an April 2008 PUCT order clarifies that net metering will not be available in areas of Texas in which retail electric competition has been introduced. The impact of HB 3693 on net metering availability in non-competitive areas of Texas is still being determined. PUCT documents on this subject are available under Docket 34890 while ERCOT is addressing issues for small renewable generators (<50 kW) through its Profiling Working Group. The Public Utility Commission of Texas (PUCT) has adopted limited net-metering rules. PUCT Substantive Rule § 25.242(h) requires any integrated investor-owned utility (IOU) that has not unbundled in accordance with § 39.051 of the federal Public Utility Regulatory Policy Act (PURPA) to provide specific net-metering options for customers that operate qualifying facilities (QFs) of 100 kilowatts (kW) or less that use non-renewable-energy resources, and to qualifying facilities of 50 kW or less that use renewable-energy resources. Less than 25% of Texas is currently served by integrated IOUs since deregulation. Customers should review § 25.242 to determine if their renewable-energy facility meets the criteria for net metering. For eligible facilities, there is no statewide limit on the number of customers who may net meter, and there is no statewide limit on the total aggregate net-metered capacity under the rules. Since Texas began deregulating its electric industry, electric utilities now fall into two categories with regard to net metering and interconnection: (1) integrated IOUs outside the Electric Reliability Council of Texas (ERCOT) with a clear regulatory obligation to interconnect and net meter, and (2) electric cooperatives, municipal utilities and river authorities with no obligation to interconnect and net meter. For IOUs outside ERCOT (i.e., El Paso Electric Company, Entergy Texas, Southwestern Electric Power Company and Xcel Energy), a customer may interconnect a renewable-energy facility up to 50 kW in size with a single, bi-directional meter. With bi-directional net metering, customers effectively receive the retail price for energy produced up to the amount consumed on-site, and customers receive the utility’s avoided-cost rate for excess energy exported to the grid. For deregulated entities within ERCOT, there are no clearly written rules for net metering. Existing rules and requirements have not been modified to address this issue. Interconnection Standards Any "electric utility" (defined in § 31.002 of PURA) that (1) owns and operates a distribution system in Texas, and (2) is not subject to a utility rate freeze, must make available, upon request, interconnection service to an electric customer with an on-site generating facility. To facilitate this right, the PUCT has adopted distributed generation (DG) rules for the interconnection of small generators to the electric utility network (16 TAC § 25.211 et seq.). 16 TAC § 25.211 prescribes rules applicable to all investor-owned utilities for such interconnections for generators of 10 megawatts or less. Click here for more information about Texas's interconnection standards.