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Mississippi Public Service Commission Proposes Net Metering Rule Based on Synapse Recommendations

After hiring Synapse to conduct a cost-benefit analysis of net metering and interconnection in Mississippi, the Public Service Commission released proposed rules on April 7 that would implement net metering and interconnection standards.

Synapse’s report, Net Metering in Mississippi: Cost, Benefits, and Policy Considerations, found that solar net metered projects have the potential to provide a net benefit to the state in nearly every scenario and sensitivity analyzed, as long as participants are compensated for energy sold back to the grid at a rate above the average retail rate.

Synapse modeled the impacts of a hypothetical net metering program, with installed rooftop solar in Mississippi equivalent to 0.5 percent of the state’s peak historical demand. The results of the cost-effectiveness test showed that the costs avoided by distributed solar outweigh new costs in every sensitivity except the one in which all inputs are selected to yield the lowest possible benefits.

In its order, the Commission stated that “consistent with the conclusion of the Synapse Report, the Commission finds it is in the best interest of ratepayers to proceed with the development of proposed net metering and interconnection rules.”

Benefits quantified in the study include the avoided cost of operating alternate resources (Synapse found that rooftop solar would displace generation from Mississippi’s combustion turbine peakers), the avoided cost of compliance with certain environmental regulations, and the avoided need for additional capacity resources. Modeled costs include reduced revenue to distribution companies and administrative costs. Synapse found that, under its mid case assumptions, every dollar spent on spent on a net metering policy would return $1.19 in benefits.

However, these benefits will only be realized if customers choose to participate in the program and invest in distributed generation resources. Results from a test that looks only at the potential costs and benefits to participants of net metering—rather than to society as a whole—show that participants would need to receive a rate beyond the average retail rate in order to see a return on investment.

Mississippi was previously one of six states that had not adopted some sort of net metering policy for distribution companies. The remaining states that do not have such a policy are Alabama, Idaho, South Dakota, Tennessee, and Texas.

The Commission is now seeking comments concerning the draft rules. Comments are due on or before July 1, 2015, after which the Commission will issue final guidelines.