Maine Modifies Net Energy Billing Programs

In July 2023, Maine Governor Janet Mills signed into law LD 1986, a bill passed by the Maine legislature amending the state’s net energy billing (NEB) statute.

LD 1986 makes two key changes to NEB:

  1. It lowers the size limit for solar and other projects participating in the NEB kWh credit program or the NEB tariff rate program from the current maximum of 2 megawatts (MWs) down to 1 MW.  Projects between 1 and 2 MWs currently in the programs must reach commercial operation by the date specified in the NEB agreement or an allowable modification the agreement and by December 31, 2024 in order to remain in the programs, subject to the right to seek a good-cause exemption from the Maine Public Utilities Commission (PUC) if delays outside of the developer’s control cause it to miss the deadline. 
  2. It further limits the eligibility for commercial and industrial projects participating in the NEB tariff rate program to projects that are collocated with the project’s NEB customers and are subscribed to 100% of the project’s output unless the project has an NEB agreement executed on or before December 31, 2023, in which case these limitations do not apply.

Thus, LD 1986 limits eligibility for NEB, while grandfathering in some projects in development that met previous standards, but not current standards, and that meet certain developmental deadlines.  LD 1986 also lays the groundwork for the PUC to conduct competitive solicitations for long-term contracts with renewable energy sources, which might provide sales opportunities for projects larger than 1 MW.

The NEB kWh credit program is available to all Maine electricity customers and offers kWh credits on participating customers’ electric bills.  The NEB tariff rate program is available only to non-residential customers and offers dollar credits on participating customers’ electric bills at tariff rates set by the PUC every year.

LD 1986 was motivated by a belief on the part of many lawmakers that too much solar development was occurring too quickly in Maine, and that compensation rates under the NEB program were too generous, resulting in cost-shifting to ratepayers and causing a rise in retail electric rates over the last few years.  Others attributed recent high retail electric rates to a rise in natural gas prices.

NEB in Maine took its present form in legislation enacted in 2019 (LD 1711), which organized NEB into the NEB kWh credit and NEB tariff rate programs, lifted the size cap on projects eligible for NEB from 660 kilowatts to 5 MW and removed the previous 10-customer limit on the number of accounts or meters that can be associated with an eligible NEB project.  The NEB statute was then amended by the legislature (LD 936) in 2021 to reduce the size cap from 5 MW to 2 MW (while grandfathering in projects between 2 and 5 MWs that met developmental milestones) due to the same cost-related concerns that motivated LD 1986.

According to the Natural Resources Council of Maine solar energy in Maine has grown seven-fold over the last few years, and over 20,000 Maine electric utility customers were participating in NEB as of May 2023.

The statutory changes apply to all NEB projects.  Developers of pending solar and other NEB projects in Maine should confirm that they meet the grandfathering provisions (applicable deadlines and requirements discussed above) to retain eligibility in the program.

If you have any questions about LD 1986 or Maine’s NEB program, please contact Chuck Willing, Eric Asquith or any member of Rath Young and Pignatelli’s Energy Practice Group.