Experts brief Senate on net metering versus net billing and distribution of network costs

The Senate Resources Committee on May 14, 2025, received a technical briefing on the difference between net metering and net billing from Steve Colt and Gwen Holdman of the Alaska Center for Energy and Power, who walked the committee through practical examples and policy trade-offs.

The issue matters because how surplus distributed-generation is accounted for and priced affects who pays fixed network costs, how quickly rooftop solar can spread, and whether low-income customers shoulder greater shares of grid costs.

Steve Colt gave a concise definition: "The short answer is that net metering refers to, your meter actually going back and forth," meaning the meter records energy flowing both directions and kilowatt-hours are offset one-for-one in the accounting interval. Colt contrasted that with net billing: "Net billing refers to anytime you convert the kilowatt hours into dollars and try to, consummate a transaction that somehow settles the account," which raises the question of what price is used for produced versus consumed kilowatt-hours.

Colt presented three examples the committee discussed: a) monthly net settlement where meter flows within a billing month net out and the customer is billed for net consumption; b) a customer who is a net exporter in a month and is compensated at a lower price when the settlement is converted to dollars (an example Colt gave used a retail buy price of roughly 30¢ and a compensation price of about 6¢); and c) an annual settlement model in which surplus kilowatt-hours generated in sunny months are rolled forward and then offset against winter consumption, producing large inter-seasonal credits if the system uses full retail offsets.

Senator Donny Myers asked about fixed costs borne by utilities when customers reduce purchases; Colt answered that the underlying question is how fixed network and operating costs are recovered if customers who invest in on-site generation reduce their retail purchases. "That is the $64,000,000 if not more question," Colt said, noting the same dynamic applies to energy efficiency as well as rooftop solar: reduced retail sales mean less contribution to fixed network costs unless rates are restructured.

Gwen Holdman and Colt told the committee one straightforward policy tool is to increase or relabel the monthly customer charge as a network charge so all customers contribute to the cost of maintaining the grid regardless of consumption. Colt added that while that is a clear economic solution, "it is politically almost impossible to implement." The presenters emphasized trade-offs: higher fixed charges reduce bill volatility and cost-shifting but also weaken price signals for conservation and rooftop deployment.

The committee did not take immediate legislative action. Members asked for further information about billing treatments and distributional impacts; the presenters said additional rulemaking and design work would be part of ongoing RCA and utility processes should the legislature or regulators pursue changes.

(Quotes are from committee testimony on the record; all speaker attributions are taken from the hearing transcript.)