Net Metering in Oklahoma

In Oklahoma, net metering of Distributed Generation ("DG") Resources is governed by 17 O.S. Section 156 and Commission Rules (OAC 165:40:9). Distributed Generation is another term for consumer generation such as rooftop solar or small wind generators.

In April 2014, the Governor signed HB 1456 which modified the language related to fixed cost recovery from Distributed Generation customers and what additional rates or surcharges could be applied to DG customers.  The Law required, if subsidization was evidenced to be occurring, that a new tariff should be filed by December 2015 but that the DG customers could not be charged more than the cost to serve them.

This has been referred to as a "Sun Tax" by some stakeholders. Please keep in mind, tariff rates do not go to the State. Tariff rates are audited and subject to full public hearings for all regulated entities. These rates are designed to cover the investments and expenses necessary to operate the utility in a safe and reliable manner. This process is open to all interested parties. Only the actual cost to serve customers, as ordered by the Commission, may be passed through on bills.  

Rates, for regulated entities, are developed through a full audit and litigated hearing. The purpose of HB 1456 was to ensure that customers who were able to offset some of their usage through self-generation would not be subsidized by those who could not do so.  This subsidization could occur as some of the fixed costs of the utility are passed through in the usage portion of the rate. Therefore, if a customer is no longer using as much power, they could not be covering the fixed costs they cause on the system.   The audits for any future tariff will review these potential issues as well as any system wide benefits that can be quantified related to the addition of self-generation.

To date no regulated utility has provided sufficient information to identify if or the level of subsidy that occurs with the installation of Distributed Generation.  For example, in  Final Order No. 662059, the Commission states:

In the event OG&E proposes, in the future, a demand charge or any other substantive change to a tariff applicable to customers with distributed generation that OG&E deems necessary to comply with 17 O.S. Section 156, the Commission will require OG&E to include as part of its case cost effectiveness tests, such as those performed for the Company's demand programs, and make available to the parties detailed cost and benefit data.

At this time, Distributed Generation customers on regulated utilities continue to be billed on the utility's otherwise standard or time of use rates. Keep in mind, the OCC does not regulate municipal systems or Cooperatives that have opted out of rate regulation.

TITLE 165. CORPORATION COMMISSION CHAPTER 40. STANDARD TERMS OF PURCHASES FROM PRODUCERS of 300 KW OR LESS

SUBCHAPTER 9 - OPTIONAL NET ENERGY BILLING PURCHASE RATE

On July 25, 2019, several modifications to this chapter of the Commission Rules became effective.   Of those modifications there were several that affected Subchapter 9 – which governs the net metering purchases.

Net metering is the process that compensates customers with grid-connected distributed generation, by netting the energy produced from their distributed generation facilities against the energy consumed at that location.  The netting of the production against consumption provides the distributed generation customers compensation at the full retail energy rates - but only up to their consumption level or the energy used at that location that billing period.  Any additional energy consumed above the production of the distributed generation will be billed at the utility’s applicable tariff rate. Excess generation beyond consumption will be paid pursuant to the new rules as listed below.

The following changes were made effective on July 25, 2019:

1. An addition was made to Subchapter 9, (40:9-3(b)), which requires utilities to compensate net metering customers for any excess production, any energy supplied by the distributed generation facility above that consumed at that location.  The new rules requires that the excess energy be purchased by the utility at the utility’s avoided energy cost.  Prior to this rule change, customers were not provided any compensation for excess production.   In addition, this rule addition requires that the excess generation compensation be paid or credited in the next billing period.
2. The maximum participation level for the net metering customers was increased from 100 kW to 300kW for the qualifying rated capacity of the distributed generation facilities. Those greater than 300kW are covered by separate rules.
3. A limit of 125% of peak load was added to the eligibility of the net metering customers distributed generation facility.  This limit was added to ensure that the production of the net metering customers was limited to only cover the expected consumption at that location.  Net metering customers will be paid for excess generation but if the installed distributed generation is sized to exceed the 125% of peak load, customers may be excluded from the netting option and instead be paid under the small power producer or the Qualifying facilities option included in subchapter 11.
4. Finally, the rule also requires that utilities file an updated tariff to reflect the proposed compensation for the excess energy.  Currently two utilities have made filings to update their tariffs,   Oklahoma Gas & Electric Company (Cause No. PUD 201900065) and Public Service Company of Oklahoma (Cause No. PUD 201900071).

Please feel free to contact us with any additional questions you may have!  You can reach us using the information in the "Contact Us" section or through our Facebook page!

Please feel free to contact us with any additional questions you may have!  You can reach us using the information in the "Contact Us" section or through our Facebook page!