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Net Metering in Mississippi, Costs, Benefits, and Policy Considerations

At its December 7, 2010 Open Meeting, the Mississippi Public Service Commission voted to open docket 2011-AD-2 in order to investigate establishing and implementing net metering and interconnection standards for Mississippi. Mississippi is one of only a few states that do not have some sort of net metering policy for their distribution companies. In this report we describe a potential net metering policy for Mississippi and the issues surrounding it, focusing on residential and commercial rooftop solar. Two vertically integrated investor-owned utilities serve customers in Mississippi: Entergy Mississippi and Mississippi Power. The Tennessee Valley Authority, a not-for-profit corporation owned by the United States government, owns generation and transmission assets within the state. Many Mississippi customers are served by electric power associations, including South Mississippi Electric Power Association, a generation and transmission cooperative, and the 25 distribution co-ops. These entities rely primarily on three resources for electric generation: natural gas, coal, and nuclear power. About 3 percent of generation is attributable to wood and wood-derived fuels. Less than 0.01 percent of Mississippians participated in distributed generation in 2013. We modeled and analyzed the impacts of installing rooftop solar in Mississippi equivalent to 0.5 percent of the state’s peak historical demand with the goal of estimating the potential benefits and potential costs of a hypothetical net metering program.

Highlights of analysis and findings: - Generation from rooftop solar panels in Mississippi will most likely displace generation from the state’s peaking resources—oil and natural gas combustion turbines. - Distributed solar is expected to avoid costs associated with energy generation costs, future capacity investments, line losses over the transmission and distribution system, future investments in the transmission and distribution system, environmental compliance costs, and costs associated with risk. - Distributed solar will also impose new costs, including the costs associated with buying and installing rooftop solar (borne by the host of the solar panels) and the costs associated with managing and administering a net metering program. - Of the three cost-effectiveness tests used for energy efficiency in Mississippi—the Total Resource Cost (TRC) test, the Rate Impact Measure, and the Utility Cost Test—the TRC test best reflects and accounts for the benefits associated with distributed generation. - Net metering provides net benefits (benefit-cost ratio above 1.0) under almost all of the scenarios and sensitivities analyzed