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Report on the Inquiry into BELCO’s proposed Termination of the Net Metering Scheme

Wednesday, October 26, 2016

Today the Ministry of Economic Development released the Energy Commission’s report on the inquiry into the proposed termination of BELCO’s Net Metering Scheme.

The inquiry was initiated at the request of Dr. the Hon. E. Grant Gibbons, JP, MP, the Minister of Economic Development, following BELCO’s notice [to the Energy Commission] of its intent to terminate the current Solar Photovoltaic (PV) residential and commercial Net Metering Scheme and replace it with a new tariff structure. The Net Metering scheme had been introduced by BELCO in 2010 to encourage renewable energy and allowed customers with rooftop solar systems to receive credit at the full retail rate for any excess electricity generated and sold to BELCO.

The Energy Commission provided their report to the Minister after inviting industry and public comment.

The report includes the following recommendations:

· The continuation of the current Net Metering Scheme until December 31, 2016;

· The introduction of a new feed-in tariff as of January 1, 2017, based upon a BELCO avoided cost rate of $0.1736 per KWh;

· That, as a matter of priority, the Regulatory Authority after assuming responsibility for regulating the electricity sector, conduct a more thorough Solar PV economic and market study to create a comprehensive rate determination methodology;

· That until such time as a final decision is made by the Regulatory Authority, BELCO fully absorb the cost of purchasing that power and allocate it to a recovery account similar to the Commission’s ruling in a recent rate case filing directive; and

· That the Government give consideration to establishing a policy regarding the importation and utilization of power storage solutions.

The Minister welcomed the completion of the report and thanked the members of the Energy commission for their analysis and recommendations. He noted that due to the limitations of the existing Energy Act 2009, the Energy Commission is precluded from issuing Directives on any matter other than the rates that BELCO charges to its customers and is therefore unable to implement these specific recommendations. The rate that BELCO pays for the purchase of power is outside the authority of the Energy Commission.

However, the Minister noted that the transfer of responsibility for electricity regulation from the Energy Commission to the Regulatory Authority is imminent and that he will shortly be issuing a Commencement Notice for the Electricity Act 2016. Since the new Electricity Act gives the Regulatory Authority the full scope of powers to regulate all aspects of the electricity sector, it is the Minister’s hope that the Authority will, as a matter of public interest, address this issue as one of its first orders of business and issue a final decision as soon as is practically possible.

In regard to the report, Dr Gibbons stated that, “The regulation of electricity and the setting of rates in particular is a delicate balance of many factors. We all want to see more renewable energy used in Bermuda, but we also have a duty to understand any inherent subsidies and ensure that renewable energy comes at a price we can all afford. The Energy Commission’s report highlights that complexity and demonstrates the necessity for the new regulatory regime. I have every confidence that the Regulatory Authority will meet this new challenge with the same due diligence and professionalism they’ve exhibited in regulating the electronic communication sector.”