A new lucrative energy resource is emerging in the state of Pennsylvania: compensation through net metering for customer-generators of alternative energy systems provides rewarding rates for electricity delivered to the grid. Solar systems up to 3 megawatts (3 MWAC) are eligible to participate in this net metering framework.
Net metering in Pennsylvania has existed since the 2000’s when the Alternative Energy Portfolio Standards (AEPS) Act of 2004 and subsequent amendments established that customer-generators who own qualified alternative energy systems are able to receive retail rate compensation for electricity delivered in the form of credits.1 However, it wasn’t until 2021 that this net metering framework enabled small commercial solar systems to deliver unlimited electricity to the grid and receive retail rate compensation.
The “Hommrich Decision”
The market changed when Pennsylvania’s Supreme Court ruled in Hommrich v. Commonwealth (2020) that that the Pennsylvania Utility Commission (PUC) overstepped its statutory authority in promulgating regulations that define the net metering framework.2 The Supreme Court ruled in favor of David Hommrich, who argued that the PUC lacked authority to set definitions that limited net metering to certain projects and output. This included the PUC’s definitions of “customer generator” and “utility” which required that any energy system to qualify for net metering must have independent load (load with the purpose other than to support the operation, maintenance or administration of the alternative energy system). In addition, the PUC had also limited a net-metered project to generating 110% of the customer-generator’s annual electric consumption. Consequently, the “Hommrich decision” opened the door for 3 MW AC or less to participate in net metering.
Since the Hommrich decision, the stakeholders in the market, including the PUC and Pennsylvania utilities, have been catching up to implement the findings of the Hommrich decision.3 The PUC did not update its regulations limiting net metering, under Chapter 75 of Pa. Code Title 52 Subchapter B Net Metering, that were struck as part of the Hommrich decision until 2021. The utilities, or electric distribution utilities (EDCs), were also slow in updating informational materials for customers and developers. However, the market has finally responded. Interconnection requests for alternative energy systems (with solar constituting 99.5% of those requests) have increased significantly. In 2020, interconnection requests for projects of less than 2 MW were around 1,500 and projects between 2 MW and 5 MW were close to zero. In 2024, interconnection requests increased to over 4,000 and nearly 500, respectively.5
Net Metering Rates
Why have developers taken interest? Why is net metering in Pennsylvania so lucrative?
The AEPS Act of 2004, subsequent amendments, and current PUC regulations require utilities to offset the kilowatt-hours of electricity consumed by a customer with the power generated of the alternative energy system at the full retail rate and compensate generators for excess credits that are delivered to the grid at the “price to compare” (PTC), which is the retail value of generation and transmission service charges.6 A customer-generator will be compensated at the PTC of the applicable rate class based on how utilities determine a customer’s rate schedule in their electric service tariff.
PTC Rate = Default Service Supply Charge + Transmission Service Charge
The PTC provides a highly competitive rate for electricity generated by small commercial scale solar projects (of 3 MWAC or less). There is no limit to the energy that can be provided to the grid and there is no cap on the number (or total capacity) of energy systems that can participate in net metering in Pennsylvania, as there usually is in other state net metering programs. In addition, projects are permitted to collocate under the same aggregated meter as long as they are located within 2 miles of each other.
Figure 1 shows the historical PTC information for seven of the utilities in Pennsylvania dating back to 2020, while Figure 2 shows the breakdown of the generation and transmission components for the Large Power Service (LP4-L4L) under PPL. Current rates are in the $80-$120/MWh range.
Figure 1. Historical Price to Compare by Utility, Jan 2020-May 2025 ($/MWh)
Figure 2. PPL LP4-L4L Price to Compare by Component, Jan 2020-May 2025 ($/MWh)
Complications and Risks to Consider
This attractive opportunity does not come without several complications and risks.
First, projects have only been coming online and earning compensation under net metering in the last couple years. It is not abundantly clear through utilities’ online informational materials which charges are included under the PTC, including whether demand charges (those in $/kW) are included in the PTC, and what the applicable rate schedule would be for a project. In fact, Power Advisory has found that transmission service charges for certain utilities are not included in the PTC under current electric service tariffs. For example, FirstEnergy utilities (Met-Ed, Penelec, WestPenn, PennPower) factor in their transmission service charges under the Default Service Supply Rider rather than the PTC. This can make understanding the full PTC value challenging.
Power Advisory has experience providing PTC forecasts for all the utilities in Pennsylvania. It is important to consider several aspects when creating PTC forecasts in this market. For one, how will the recent results of the 2025/2026 PJM Base Residual Auction (BRA) impact generation supply charges in that time period and the lasting effect of increased BRA capacity prices on retail rates? Moreover, there is a substantial range in generation supply charges across utilities in Pennsylvania. Is this wide range due to existing supply and/or transmission congestion and will it persist in the medium to long-term? And, as mentioned, knowing the exact charges that are included in the PTC rate and how they are calculated can be complex.
Second, policy and legislative factors present risks for net metering. The PUC cannot limit net metering because of the Hommrich decision; however, the Pennsylvania General Assembly and Governor could modify future regulations through legislation. In its last several AEPS Reports (2021, 2022, and 2023), the PUC has recommended that the General Assembly “consider modifying the structure of net metering by placing reasonable bounds on net metering to curb the economic harms of subsidizing excessive wholesale generation at retail, rather than wholesale, rates.”7 This call for change had been generally ignored until the 2024 legislative session, in which Senator Lisa Boscola introduced Senate Bill 1040, the Renewable Energy & Warehouse Solar Procurement Act, a bill that would limit the compensation available to customer-generators and eliminate virtual aggregated net metering.8 SB 1040 was referred to the Consumer Protection and Licensure Committee but did not advance.
While the stagnation of SB 1040 is indicative of the overall interest of legislators in modifying net metering regulations, this also follows suit with the political environment of Pennsylvania surrounding energy policy in the last decade. With a state congress that is now split between Republican (Senate majority) and Democrats (House majority), any bill requires bipartisan support to be passed. Pennsylvania has been a hotbed for energy and climate policy contention recently with its participation in the Regional Greenhouse Gas Initiative (RGGI) which was ultimately declared void by the Commonwealth’s Supreme Court.9 Most recently, Governor Shapiro (Democrat) introduced the “Lighting Plan” which includes re-introducing bills that would increase the AEPS targets in the state (PRESS) and establish a Pennsylvania-specific cap-and-invest carbon allowance program (PACER).10 Community solar legislation has been introduced repeatedly in Pennsylvania (most recently House Bill 1842) and has begun to gain traction.11 But community solar still faces an uphill battle to be ratified in a split General Assembly, as do other energy and climate bills.
The risk for net metering still looms over many developers and projects that are looking to interconnect in Pennsylvania and receive PTC compensation. Regulatory questions, such as how long a project receives net metering credits and whether projects will be grandfathered into the net metering framework, will persist. Political questions include which legislators will continue to support net metering modifications and whether those supportive of solar and climate policy may choose to horse trade net metering modifications in return for other initiatives to be advanced, such as PRESS, PACER and community solar.
Legislative and political uncertainty are key risk factors to evaluate and developing an educated outlook is important when considering an investment in small commercial scale solar projects in Pennsylvania. Power Advisory has followed this market and the policy risks at play and is well positioned to provide opinions regarding the level of risk that exists to developers.
Andrew Kinross, Director, can be reached at akinross@poweradvisoryllc.com
Andrew Bracken, Senior Consultant, can be reached at abracken@poweradvisoryllc.com.
1 AEPS Act, Pennsylvania Public Utility Commission, 2025. https://www.puc.pa.gov/filing-resources/issues-laws-regulations/aeps-act/
2 Hommrich v. Commonwealth of Pennsylvania, Pennsylvania Public Utility Commission; 231 A.3rd 1027(Pa. Cmwlth. 2020)
3 Stewart, Todd, Surviving in Post-Hommrich Pennsylvania, HMS Legal, August 21, 2023. https://hmslegal.com/surviving-in-post-hommrich-pennsylvania/
4 52 Pa. Code § 75.11 to 75.17Subchapter B. Net Metering. https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/052/chapter75/subchapBtoc.html&d=reduce
5 Bureau of Technical Utility Services,Net Metering & Interconnection Report 2022 – 2024, Pennsylvania Public Utility Commission, 2024. net-metering-interconnection-report-2022-2024-final.pdf
6 Id. at 4
7 Pennsylvania Public Utility Commission, Compliance for Reporting Year 2022-23, Pennsylvania Department of Environmental Protection, May 2024. aeps-2023-report-final.pdf
8 Bill Information, Regular Session2023-2024 Senate Bill 1040, Pennsylvania General Assembly. https://www.legis.state.pa.us/cfdocs/billInfo/billInfo.cfm?syear=2023&sind=0&body=S&type=B&bn=1040
9 Rosen, Josh, Update on RGGI in Pennsylvania, Foley Hoag LLP, March 26, 2024. https://foleyhoag.com/news-and-insights/blogs/law-and-the-environment/2024/march/update-on-rggi-in-pennsylvania/#:~:text=The%20court%20held%20that%20the,the%20merits%20of%20the%20decision
10 Governor’s Newsroom, Governor Shapiro Unveils “Lightning Plan” to Strengthen Commonwealth’s Energy Leadership, Create Jobs, and Lower Costs for Consumers, Commonwealth of Pennsylvania, January 30, 2025. https://www.pa.gov/governor/newsroom/2025-press-releases/governor-shapiro-unveils--lightning-plan--to-strengthen-commonwe.html
11 Bill Information, Regular Session2023-2024 House Bill 1842, Pennsylvania General Assembly. https://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?syear=2023&sInd=0&body=H&type=B&bn=1842