The impacts of net metering on utility profits and rates: Case studies of two prototypical utilities

Heated debates about the impact of net metering on utility shareholders and ratepayers have surfaced in some of the larger state solar markets and will only become more pronounced and widespread as solar costs decline and deployment accelerates. In order to inform these discussions, we performed a scoping analysis to quantify the magnitude of the financial impacts of distributed PV on utility shareholders and ratepayers, and that assesses the potential efficacy of various options for mitigating those impacts. We quantify the impacts of customer-sited PV for two prototypical investor-owned utilities: a vertically integrated utility located in the southwest and a wires-only utility and default service supplier located in the northeast. For each utility, we model the impacts of customer-sited PV over a 20-year period, estimating changes to utility costs, revenues, average rates, and utility shareholder earnings and return-on-equity.