Government describes as “arbitrary and capricious” Fiscal Board's attempt to restrict Net Metering

The Puerto Rico government, in its opposition to the summary judgment that the Fiscal Oversight Board (FOSB) requested to annul the statute that extends the benefits of the net metering program until 2031, argued that the agency misinterprets the scope of Act 10-2024 and that, contrary to its allegations, there is no violation of the current fiscal plans, since these do not consider in their calculations any change to the incentive for subscribers who generate and export their own energy.

According to the plea that lawyers for the administration of Pedro Pierluisi submitted last Wednesday to the Title III Court created by the PROMESA law , the attempt of the JSF to annul Law 10 constitutes an “arbitrary and capricious” act, among other elements, because the fiscal entity celebrated, five years ago, Law 17 of 2019 , which extended the validity of the program, which credits customers for the energy they export to the electricity grid.

Likewise, according to the government, the JSF is wrong both when it states that Act 10 prevents the Puerto Rico Energy Bureau (NEPR) from making changes to the compensation that net metering customers receive, and when it states that these “prosumers” get a “one-to-one” credit for the energy they produce in excess.

In that regard, the brief opposing summary judgment argues that the statute - unanimously validated in the Senate and House earlier this year - “explicitly preserves” the NEPR's power to adjust rates, and that it only provides that, if a change is approved, a 12-month period is granted before it takes effect. It further argues that - due to limits that have been in place since net metering was created in 2007 - program participants that export more energy than they typically consume receive an incentive of 7.5 cents per kilowatt hour (kWh) at the end of the fiscal year, when the residential rate is around 25 cents per kWh.

Through the summary judgment motion it filed in September , the JSF asked the court to resolve the case in its favor without requiring discovery, arguing that there was no controversy over the facts at issue.

The Pierluisi administration, on the other hand, disputed that premise, arguing that, "while the Board criticizes the estimates, the Board fails to explain what analysis would be necessary to demonstrate the absence of fiscal impact when Act 10 has no effect on the financial model of the government's 2023 fiscal plan and simply maintains the same fiscal assumptions underlying the Electric Power Authority's ( PREPA) 2023 fiscal plan ”.

Through Act 10, the government ordered the NEPR to postpone until 2030 the net metering study that was previously due to be completed by 2024. The analysis, once completed, would be discussed in public hearings and would serve to define changes to the compensation granted to customers of the program.

The government, as other intervening parties in the court case have done, has pointed out that it was the NEPR itself who suggested, in public hearings, to set a date certain for the study.

Senate modifies position

On the other hand, the Senate, which had previously also requested a summary judgment, although in favor of Law 10, argued in the past few days that there are “significant and genuine controversies of material facts” that make “a summary judgment inappropriate in this case”.

In the rebuttal to the JSF's argument, the Senate submitted arguments from multiple experts, including Steve Gabel, owner of the firm that, in April, published a study listing multiple economic and environmental benefits of the net metering program .

The Gabel & Associates study estimated that the benefits derived from the incentive quadruple the cost of the credits, which would discount the premise, pushed by the JSF, that net metering places a higher rate burden on customers without access to their own energy systems.

Meanwhile, the JSF filed a brief asking the court to dismiss the Senate's motion for summary judgment, but to grant its own, since "net metering has a clear impact on Prepa's revenues and expenses, and Act 10 directly impacts its fiscal and economic responsibility.

Last Wednesday, the Sierra Club Puerto Rico and Solar United Neighbors also filed a friend-of-the-court brief after Judge Judith Dein denied their request to participate as intervenors in the case.

Among their arguments, the non-profit entities expressed that, originally, it was anticipated that, for this year, the country's renewable energy portfolio would be around 25%, which would have made it reasonable to review the public policy regarding net metering, but that, given the significant delays in the development of clean sources, it was appropriate to postpone those deadlines.

“Net metering is one of the few policies that are facilitating increased distributed solar power generation and storage," they stressed.