Ontario, U.S.A. --- (METERING.COM) --- July 16, 2007 - The obligation to support net metering for renewable and distributed generation resources should be recognised by utilities across Ontario, and rates that properly reflect the costs of service should be adopted.

These are among recommendations put forward in a new discussion paper on distributed generation (DG) and its rate treatment that was prepared for the Ontario Energy Board (OEB) with a view to the development of DG in the province.

According to the paper, net metering is at various stages of development across Canada. British Columbia and Ontario have developed net metering programs, while New Brunswick and Nova Scotia have recently introduced their net metering programs. Manitoba has a long-established net metering program, but participation levels have been low in part due to the low electricity rates in the province. Quebec is just starting a net metering for DG facilities, and Prince Edward Island is developing a net metering program as part of the upcoming PEI Renewable Energy Act.

Alberta does not have a policy in place for net metering, but a discussion paper was released by Alberta Energy in 2005. The remaining provinces and territories appear to be in more preliminary stages of developing their decentralized or renewable energy strategies, including consideration of net metering policies.

The paper comments that the interest level in DG has significantly increased in recent years due to a variety of industry changes. These include utility restructuring, increasing system-capacity needs, technology advancements, social policy and greenhouse gas emission reduction. However, because DG differs fundamentally from the traditional model of central generation and delivery, a new set of policy issues must be resolved.

Among these is the standby rate for the service typically provided by the local utility to a customer that generates all or most of its electricity requirements with generation facilities located on its own premises. The report says that ultimately the standby rate should reflect the costs that the utility incurs (demand, energy and customer related costs), and collect the desired level of revenues, and in general should include the monthly contract demand rate ($/kW) to collect cost of having the distribution and local transmission system available when needed as well as the monthly customer charge to collect administrative and service costs. Furthermore the standby rate should be utility specific, although the methodology used to calculate it should be consistent across utilities.

In a companion paper the OEB says that at present, about fourteen electricity distributors in Ontario have standby rates for customers with load displacement generation, but these incorporate different approaches to the establishment of the level of the charge and a variety of billing determinants. Noting that its opinion is that unless otherwise justified rates structures should be consistent across electricity distributors, key issues that must be clarified are a reasonable billing determinant for recovering demand-related costs, and whether standby charges should be further differentiated between backup, maintenance and supplemental services.

The OEB notes that the Distribution System Code has been amended to implement net metering, and says it also wants to establish the institutional or regulatory barriers to the implementation of DG and how such barriers might best be addressed.