Federalism and the Net Metering Alternative

This article evaluates whether the Federal Energy Regulatory Commission (FERC) has a legal basis for regulating customer net metering. It concludes that, under existing law, the statutory and regulatory foundations for any federal regulation of net metering are weak. Nothing in federal law supports FERC extending the reach of its jurisdiction to dictate net metering terms for the hundreds of thousands of retail customers that deploy generation resources in compliance with state or utility net metering programs. Outside of a situation where the retail customer affirmatively transacts to sell energy into the interstate wholesale energy market, FERC lacks statutory authority to regulate compensation for retail customer energy resources. Even where a retail customer affirmatively transacts to sell energy into the wholesale market, FERC would share jurisdiction over compensation for retail customer energy resources with state regulators, who have the ultimate responsibility to determine whether or not retail customer energy resources may participate in wholesale markets