Overview:
Palau senators are proposing changes to the country’s net-metering law that would allow the public utility to recover certain costs associated with customers who generate renewable electricity. Senate Bill 12-81 would also revise how excess solar power is credited and strengthen requirements for connecting renewable-energy systems to the grid.
By: L.N. Reklai
KOROR, Palau — A Senate bill backed by Sens. Rukebai Kikuo Inabo, Secilil Eldebchel and Mason N. Whipps would change how Palau credits customers who send renewable electricity to the public grid and allow the utility to recover certain costs of serving them.
If passed, Senate Bill No. 12-81 could bring power customers two benefits: a fairer division of grid costs that may ease pressure on other customers’ rates, and stronger safeguards for reliable electricity service. Those are the bill’s intended effects, not guaranteed reductions in bills or outages.
The proposal would amend Palau’s 2009 Net Metering Act. Net metering allows customers with solar panels or other eligible renewable systems to offset electricity they use from the Palau Public Utilities Corp. grid with electricity they send back. The bill would retain that arrangement while changing how credits may be calculated and what costs PPUC may charge net-metered customers.
In its findings, the Legislature says customer-owned renewable systems have grown substantially since the law was enacted. But it says the current framework does not fully account for the cost of maintaining a grid that also serves customers who generate their own power. Some of those costs may be passed on to customers who do not participate in net metering, the bill says.
The findings put PPUC’s financial obligation for renewable-energy credits at as much as $1 million. They say that figure could rise as more systems connect, increasing pressure on the utility and potentially on rates paid by other consumers. The bill does not calculate how much any customer’s bill would change.
It also says electricity from net-metered solar systems increased from about 3% of total generation in 2022 to slightly more than 5% recently. Despite that growth, PPUC still must maintain conventional generating capacity to provide reliable service, according to the findings. The bill says the current amount and variability of solar power do not allow the utility to shut down a conventional generator, so its generation and fuel costs have not fallen in proportion to solar’s growth.
One proposed change would let PPUC recover reasonable, identifiable costs tied to net-metering service, including interconnection, standby capacity, meters and inspections. Such charges would have to be allocated fairly, without discrimination, and could not duplicate costs recovered through another rate or fee. This is the provision intended to reduce the burden on customers without renewable systems; whether it affects rates would depend on the charges ultimately adopted.
For customers who generate more electricity than they draw from the grid during a billing period, the bill would continue credits for excess electricity sent to PPUC. The credits would be based on tariffs adopted by the Palau Energy and Water Administration, or PEWA. Under PEWA rules, credits could be adjusted for reasonably determined curtailment — a reduction in output — and for technical and nontechnical losses associated with delivering power through the grid. Adjustments could not change the amount of electricity actually recorded by meters.
The second intended benefit, more reliable service, would come through tighter interconnection standards and authority for PPUC to require customers to reduce or stop sending electricity to the grid when reasonably necessary for capacity, safety, reliability, stability or power quality. Such restrictions would have to be nondiscriminatory and limited to the extent and duration needed. Customers would not receive credits for electricity that never reaches the grid.
PPUC would set technical standards consistent with applicable ANSI and IEEE standards, review changes affecting a system’s output or grid connection, and inspect connected renewable installations annually. Residential net-metering systems generally would have to be smaller than 5 kilowatts unless PPUC approved a larger installation.
PEWA would issue implementing rules under the Administrative Procedures Act, while tariffs would have to comply with existing law and treat similarly situated customers fairly. Existing contracts would retain directly conflicting terms until renewal. The bill would take effect upon presidential approval or if it became law without the president’s signature.