Nothing but Net: Renewable Energy and the Environment, MidAmerican Legal Fictions, and Supremacy Doctrine
120 Pages Posted: 12 Apr 2007
One of the most significant legal innovations to promote decentralized energy development is net metering. Net metering creates a legal fiction that when an eligible small power producer sells power back to the utility grid, it in fact does not legally constitute a "sale," despite the fact that power is physically transferred, often at times that the utility recipient does not need additional power, and under all legal principles of the U.C.C. or common law, title to power is legally transferred. This legal fiction was upheld by the Federal Energy Regulatory Commission in a major decision that is much more suspect legally than FERC admits: The legal precedent that FERC utilizes actually indicates that the legal result should be contrary. Nonetheless, this key decision has spurred more than 40 states to adopt net metering at the state level, making it the most prevalent policy incentive for the promotion of decentralized power in the United States. This concept is now also being adopted by certain other countries in the world. This article analyzes the legal machinations that created this legal fiction, and surveys the disparate policies of the states in implementing this legal innovation. The article concludes by stating while a worthy policy initiative, FERC's means to reach its legal conclusion are questionable.
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