Net Metering

Summary

Note: In May 2021, in a general rate case for Kentucky Power Company, and the first such case to involve newly proposed net metering rates since S.B. 100 went into effect, the Kentucky Public Service Commission required an export credit rate of  9.746 cents per kWh. Later rate cases for Kentucky Utilities (KU) and Louisville Gas & Electric (LGE) made similar determinations, setting export credit rates of 7.366 cents per kWh for KU and 6.924 cents per KWh for LGE.

In April 2008, Kentucky enacted legislation that expanded its net metering law by requiring utilities to offer net metering to customers that generate electricity with photovoltaic (PV), wind, biomass, biogas or hydroelectric systems up to 30 kilowatts (kW) in capacity. The Kentucky Public Service Commission (PSC) issued rules on January 8, 2009. Utilities had 90 days from that date to file tariffs that include all terms and conditions of their net metering programs, including interconnection.

Net metering is available to all customers of investor-owned utilities and rural electric cooperatives, exempting TVA utilities. Kentucky's requires the use of a single, bi-directional meter for net metering. Any additional meter, meters or distribution upgrades needed to monitor electricity flow in each direction will be installed at the customer's expense. The customer retains ownership of any Renewable Energy Credits.

If the cumulative generating capacity of net-metered systems reaches 1.0% of a utility's single-hour peak load during the previous year, the PSC may limit the utility's obligation to offer net metering. When time-of-day or time-of-use metering is used, the electricity fed back to the grid by customers is net-metered and accounted for at the specific time it is fed back to the grid in accordance with the time-of-day or time-of-use billing agreement currently in place.

The PSC order also included interconnection standards for net-metered systems. According to the state's net-metering statute, systems and interconnecting equipment must meet all applicable safety and power quality standards established by the National Electrical Code (NEC), the Institute of Electrical and Electronics Engineers (IEEE), and accredited testing laboratories such as Underwriters Laboratories (UL).

In the 2019 legislative session, Kentucky passed a bill (S.B. 100) which made several changes to net metering. The bill went into effect on January 1, 2020. It increased the maximum system size to 45 kW, and requires the state Public Service Commission to set crediting structures for each utility based on dollar value rather than kWh netting, with dollar value determined by the Commission in special proceedings. Utilities will be entitled to implement rates to cover all costs necessary to serve eligible customers, including but not limited to fixed or demand-based costs. Customers taking service under previous net metering rules (including customers that begin service before the new crediting rules for each utility are developed) will be grandfathered in for 25 years.