An amendment to the Senate energy bill filed last week by Sens. Angus KingAngus Stanley KingOvernight Health Care — Sponsored by PCMA — Trump hits federally funded clinics with new abortion restrictions Dem senators ask drug companies to list prices in ads Overnight Health Care: Trump unveils plan to lower drug prices | Dem questions drug company's payment to Trump attorney | House panel unveils opioid proposals MORE (I-Maine) and Harry ReidHarry Mason ReidMcConnell not yet ready to change rules for Trump nominees The Hill's Morning Report — Sponsored by CVS Health — Trump’s love-hate relationship with the Senate Trump to press GOP on changing Senate rules MORE (D-Nev.) would impede the ability of states to make their own decisions about retail electricity rates and would promote socially regressive subsidies that benefit customers with residential rooftop solar systems at the expense of electricity customers who do not have these systems. Those cross-subsidies effectively transfer wealth from less affluent households to more affluent ones, divert capital from more efficient renewable resources to less efficient resources, and dilute, if not completely eliminate, incentives for increased productivity from distributed energy resources.

If you look at the amendment in the context of ongoing state debates over how to properly compensate customers with rooftop solar who produce and sell electricity back to their local utility via the electric grid, it seems clear that the King-Reid amendment is intended to act as a barrier to states developing socially progressive, equitable, and economically efficient policies. It also is supportive of the basic business model of many distributed solar vendors, which is to chase subsidies from taxpayers and ratepayers rather than to compete in the marketplace. That model may be profitable to vendors in the short-term, but it is harmful to the long-term viability of solar energy, and increases costs for all customers, solar and non-solar alike.

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Why should the average electricity customer be concerned about the King-Reid amendment? Because most state net metering policies are outdated and do not reflect the current realities of a 72-percent reduction of the costs for solar panels in the past decade, widespread solar market penetration, growing social inequality, and the need to provide meaningful incentives for a more energy-efficient economy. State regulatory bodies are quite capable of dealing with such matters and possess the expertise and requisite removal from politics to do so. It does not make sense for Congress to obstruct independent state regulators, on behalf of special interest subsidy chasers.

Pricing distributed generation is a very complex issue that requires further explanation of the main problems with net metering and the existing pricing model in most, but not all, states. Net metering policies, which the King-Reid amendment is designed to make very difficult to change, were never well thought-out. Rather, net metering was the default position in an age when grid and meter technology was "dumb," where solar market penetration was virtually non-existent, where solar costs were extremely high, and where the effects of wealth transfers were unknown. To the extent that there was any policy at all, it was to put in place a non-permanent stimulus to get small-scale residential solar over a commercial hump.

None of those characteristics exist today, so the effect of the proposed amendment would be to ignore today's realities of declining solar costs, socially regressive wealth transfers, substantial market penetration, and "smart" technology. In effect, the proposed King-Reid amendment effectively tells state regulators to ignore current reality. It suggests that it is appropriate public policy for all electricity customers to subsidize a select few in order to increase profits for solar vendors.  

Because utilities must pay a retail price for a wholesale product, net metering enables those with rooftop solar systems to avoid contributing to the costs of maintaining the electric grid and keeping it operating reliably. What results is an inequitable shift in grid costs to non-solar customers, who are, on an aggregated basis, less affluent than those they are being asked to subsidize. Recently, the Nevada Public Utilities Commission found that, "the annual subsidy associated with the existing shift in fixed costs from net metering customers to other customers is approximately $623 for each residential net metering customer in southern Nevada and $471 for each residential net metering customer in northern Nevada."

State commissions throughout the country recognize that the inequalities caused by cost shifting need to be addressed in order for solar to have a sustainable future that benefits all customers. In fact, 37 states are now evaluating their current net metering policies. And, utility commissions and local governments in Arizona, Hawaii, Nevada, and Wisconsin all recently decided to adjust net metering policies to end cost shifting.  

Without investment in the grid, and without applying solid market principles, it is difficult to sustain the growth of solar. Contrary to popular belief, most rooftop solar customers are not 'off the grid.' In fact, they rely on the grid around the clock either to import and export energy, and as a backup energy supply.

The production of renewable and clean solar energy at the residential level is a positive development for society. But, policymakers cannot continue to support outdated net metering policies that pick winners and losers, perpetuate subsidies that are no longer needed, are burdensome to low-income families, and don't provide for the sustainable, long-term growth of solar.  

As a former state utility commissioner, I urge the Senate to reject the King-Reid amendment and any other efforts to expand or perpetuate net metering subsidies. I believe that state regulators are well-equipped to decide such matters without any "guidance" from Congress. The King-Reid amendment is completely unneeded, is counter-productive, and is a backward-looking intrusion into the reasoned regulatory processes at work.  

Brown is executive director of the Harvard Electricity Policy Group and is a former commissioner of the Public Utilities Commission of Ohio.