Gov. Dan McKee is backing off a plan to restrict payments to some of the state’s largest solar farms that he put forward to cut consumers’ energy bills. 
McKee has dropped a proposal for an across-the-board cut to the rate at which so-called virtual net metering projects are paid and is instead putting forward a voluntary fixed-price program that they can choose to opt into.  
Also as part of a budget amendment introduced in the General Assembly April 29, the governor would lower the current cap on virtual net metering projects from 275 megawatts to 125, and move new projects to another state program that pays lower rates.   
The changes would still mean that McKee’s energy relief package would meet its goal of saving ratepayers $1 billion over five years, according to the governor’s office. 
“This proposal protects the projects that are already up and running, aligns our solar program with the region, and gets us one step closer to delivering $1 billion in real relief to the families and businesses who need it most,” McKee said in a statement. 
Net metering is a common program across the country that allows customers to offset their electric bills through credits from renewable energy production. It started out with solar panels or wind turbines installed “behind the meter” at the location where a customer was using power. A home rooftop solar system is an example of a typical project that qualifies for net metering.  
The program was expanded to allow for virtual net metering, with projects at remote locations, so that electric users who didn’t have room on their properties to install solar panels or a wind turbine could switch to renewable energy and qualify for the bill credits. Brown University, the Narragansett Bay Commission, the City of Providence and other big institutional customers have signed on as off-takers of credits for virtual projects.   
But complaints have arisen because net metering pays an inflated rate as an incentive for development. The rate doesn’t just cover the cost of energy. It also repays customers for most distribution costs. While that may make sense for behind-the-meter projects that aren’t as dependent on the distribution system, it’s a stretch for virtual projects, which must still send all of their power out using poles and wires. 
If the projects don’t ease usage of the power grid and their customers aren’t paying their full share of distribution costs, then it means all other ratepayers must pick up the tab. 
Legislators placed restrictions on the virtual program in three years ago, but overall net metering costs have continued to increase, going from $30 million in 2020 to $111 million in 2024, according to the governor’s office. More than 80 % of those costs come from virtual projects. 
As part of his budget plan released in January, McKee proposed forcing virtual off-takers to accept a rate that would be frozen as of July 1. Because energy rates generally go up over time, it would mean that off-takers would see credits go down relative to their bills. 
Solar developers said the move would destroy the industry by compromising existing contracts and undermining confidence in Rhode Island as a place for renewable energy investments.  
The Rhode Island AFL-CIO also came out in opposition to the governor’s proposal, saying that it “would dismantle an industry that is supplying good union jobs.” 
“…many currently operating solar projects would be pushed into structural monthly losses and could be forced to shut down or be decommissioned. This raises the real possibility of dismantling Rhode Island’s existing solar infrastructure and destroying the jobs created through its development,” Erica Hammond, legislative director for the Rhode Island AFL-CIO wrote in testimony when the budget proposal came before the Senate.    
The governor’s new proposal would allow virtual projects to switch to a rate of 19 cents per kilowatt hour that would increase by 2.75% annually for 25 years. 
The starting rate is about equal to the commercial rate virtual net metering projects are currently being paid. 
The governor’s office estimates that doing and lowering the aggregate cap on projects could save ratepayers $25 million a year when compared to projections of increasing costs. The total $1 billion in savings would be felt in a similar way. Costs wouldn’t necessarily go down from where they are now, but they wouldn’t go up as much as projected. The typical ratepayer would be better off by $180 a year, according to administration officials. 
The new budget amendment preserves the other major change to state renewable energy laws proposed by McKee in January: a watering down of the state Renewable Energy Standard, the law that requires annual increases in purchases of renewable energy to offset usage. 
As it’s currently written, the law requires the state to reach 100% renewable purchases by 2033. McKee proposes pushing back that date to 2050, and allowing 25% of purchases to come from nuclear energy and large-scale hydropower.  
Environmental advocates have called the weakening of the law short-sighted, saying that the administration is only looking at one side of the ledger and hasn’t factored in the benefits of renewables, not only to the climate and public health but also to customer bills by reducing the region’s overdependence on natural gas. 

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