Net Metering Explained

Generating Your Own Power

There is growing interest in small-scale, home or business-based
power generation such as small wind turbines and rooftop solar
panels, which are referred to as distributed generation (DG). Most
members with DG systems use the electric cooperative’s grid to
buy power during times when their DG systems are not producing
enough power to meet their needs and to sell power to their electric
cooperative when their systems are producing more electricity than
is needed. To encourage DG systems when they first came to market,
many states approved a billing system called net metering.

Tell me simply. What is net metering?

Net metering, as the name implies, is a metering process designed
to determine the net amount of energy provided to the member by
the cooperative and the energy provided to the cooperative by the
member. Simply put, net metering is the difference between how
much energy is used at a member’s home or business and how
much energy the DG system at that home or business produces
every month. Net metering policies vary by state, and in Missouri,
electric utilities must abide by the “Net Metering and Easy
Connection Act.” Details of net metering in this document are
based on the Missouri Act.

Give me an example.

Suppose you have installed DG at your Missouri home or business
and are connected to the grid. Your cooperative will net your
monthly use against your monthly generation produced and
delivered to the grid, measured during each billing cycle. If your
monthly use is more than your monthly generation produced, you
will pay the difference based on your cooperative’s retail rate. If
the generation your system produced and delivered to the grid is
more than your monthly use, you will receive a credit, based on
avoided cost, on your next monthly bill.

What is avoided cost?

Per the Missouri Net Metering Act, any credit from generating more energy than you use will be based on the average monthly avoided cost of Associated Electric Cooperative, Inc. (AECI), your cooperative’s wholesale power provider. Avoided cost is what it would cost AECI to  generate power or purchase power from another utility. The credits will never be paid in cash to a member. They may only be used as a credit against energy used and billed at the cooperative’s retail rate (see example on right). Under the Act, the credits must be used within 12 months or they expire without compensation.

You will still have an electric bill.

Regardless of the amount generated by your DG system, you will always need to pay your cooperative’s fixed monthly rate, also referred to as a basic charge or availability charge. This charge helps your cooperative offset operating costs for things such as poles, wires, meters, and other infrastructure to keep your power safe and reliable. Your net metering credits are not applied against that charge.

How do the meters work?

Every electric cooperative member has an electric meter that records the amount of power delivered by their cooperative. As electricity is used, the meter spins forward, much like a car’s odometer records miles traveled. Under net metering, your cooperative can use either a single bi-directional meter or two meters to measure the net of the energy used and produced. A single bi-directional meter will provide your cooperative with two readings - one for the energy purchased from the grid and one for the energy provided to the grid. Your cooperative will then “net” these two readings to determine the monthly bill. Alternatively, your cooperative may use two separate meters to acquire these two readings.

What are my next steps?

If you are considering installing a DG system, talk with your local electric cooperative first. Not only will this be helpful, you are also required by law to inform and work with them prior to installing a DG system that connects to the grid to be sure it meets safety requirements. You cooperative can provide resources to help you decide if a DG system is right for you, and provide you with the proper information and forms you will need going forward.