Several people have requested details. Well... you asked for it! Here are the issues with HB 2201: 1. The language is vague. It is not self-evident what types of costs are “directly incurred” in “accommodating” a net metering system. This could be interpreted to mean the direct costs of interconnecting a net metering system—which has a temporal element as the time of interconnection—but it could also be read to include a broader range of costs that accrue after interconnection or that are unrelated to interconnection. 2. For the last 5+ years, PSC rules have protected against equipment upgrade cross-subsidization, which makes the intent of this language even more ambiguous. Since the existing rules already prohibit the shifting of distribution upgrade costs to nonparticipating customers, this more general language could be seen as indicative of the intent to expand the prohibition beyond just interconnection upgrade costs. 3. The definition could be interpreted to have fundamental impacts on net metering, and the bill language could force the PSC to make changes. If the term “cross-subsidization” includes a broader category of costs than just upgrade costs, HB 2201 would result in a significant new restriction on the PSC’s discretion to set rates for customer-generators. Under existing law, the PSC may not approve undue or unreasonable preferences in rates or allow for undue or unreasonable discrimination among similarly situated customers. These provisions provide fairness in rates (avoiding undue or unreasonable subsidies) while giving the PSC the discretion it needs to appropriately balance priorities and objectives. 4. The language is unbalanced. It only looks at half of the story. HB 2201 does not enable the Commission to consider the benefits that customer-generators provide to the utility. Instead, it restricts the Commission to looking solely at costs. 5. The language sets net metering customers apart for distinct (i.e., potentially discriminatory) ratemaking treatment, a significant departure from traditional regulatory practice. The cross-subsidization prohibition in HB 2201 limits the PSC’s ability to weigh additional factors to determine just and reasonable rates. Considering that customer-generators may still be “similarly situated” to other customers in the class (i.e., they look the same to the utility from a cost to serve perspective), distinct treatment would be a significant departure from traditional regulatory practice. For example, residential customers with low usage may not purchase enough electricity to cover the cost the utility incurs to serve them, but, as a whole, the residential class still provides sufficient revenue to the utility and low-usage customers are not set apart for an additional charge. If “cross-subsidization” includes the fixed costs associated with electric service, then HB 2201 allows discriminatory treatment of low-usage customer-generators when compared to low-usage customers in the same class without a net metering system. If HB 2201 stated that the costs “directly incurred” to “accommodate” net metering systems are limited to interconnection upgrade costs, then HB 2201 would merely reflect the status quo under PSC rules. As it stands, there is a significant risk that the bill will create a new ratemaking standard for customer-generators and inject additional regulatory uncertainty into the net metering market. Faced with a similar situation, Governor Fallin of Oklahoma issued an executive order to protect the citizens of her state: https://www.sos.ok.gov/documents/executive/938.pdf. This Mississippi PSC study provides data on the importance of an unrestricted, stable Net Metering market: http://votesolar.org/wp-content/uploads/2014/10/Synpase-MS.pdf.