Updating the structure of electricity rates is an important part of NB Power’s commitment to ensuring rates better reflect the cost of serving different customer groups and support a reliable, sustainable electricity system.

On April 30, NB Power filed the next phase of our Rate Design Modernization plan with the New Brunswick Energy and Utilities Board (NBEUB), which includes proposed changes to the Net Metering Program. This filing is part of a long-term process, in response to direction from the NBEUB, to review and update how electricity rates are structured in New Brunswick. 

There has been increased discussion about the proposed updates to net metering. This overview explains the proposed changes, why they are being introduced, and what they mean for customers.

NB Power continues to support solar and customer-owned renewable energy

Solar PV generation remains the most common choice for customers who want to self-supply electricity in New Brunswick, and growing customer interest shows that the program has been successful in encouraging adoption.

The proposed updates focus on how the program is structured so that it remains sustainable and fair as participation grows to support continued solar adoption while helping ensure the system works for everyone.

What is cross-subsidization and how does it negatively impact customers

Cross subsidization occurs when some customers do not pay the full cost of the electricity system required to serve them, resulting in those costs being borne by other customers. In the case of the current net metering program, this happens because participants reduce their energy purchases and receive credits for exports but still greatly rely on the grid, especially on cold winter mornings and nights when the sun isn’t shining but system costs and stress are highest to supply them anytime there is no solar production. This means their payments may not fully cover the infrastructure and system costs they depend on, and the remaining costs are recovered from non-participating customers, including those who are unable to install a solar system.

In practical terms, when some of the costs of serving solar customers are not fully recovered through their bills, those costs are shared across all customers.

Analysis indicates that, under the current rate structure, this cost shift will grow over time and increase overall rates for all customers if left unaddressed.

The proposed changes are intended to ensure:

• All customers contribute fairly to the cost of the grid
• Solar customers still receive value for the energy they export in line with its value to the grid

Demand charge changes

The demand charge being introduced for residential customers will better reflect how customers use the grid. Demand measures the maximum electricity required at a given moment, which drives the need for system capacity and infrastructure. The updated design introduces a demand component based on how electricity is used during a full hour, not on short spikes.

Adding a demand component ensures customers contribute to the cost of maintaining the system, not just the energy they consume. This helps recover fixed system costs, which are not reduced simply because a customer consumes less energy overall. Customers with higher peak demand place greater strain on the system, and the updated structure ensures costs are more accurately allocated.

Demand-based pricing also encourages customers to manage when and how they use electricity. By sending clearer price signals, the new structure supports more efficient energy use and helps reduce system peaks.

The demand component is a key tool to address cross-subsidization and separating demand from energy charges helps close the gap where some customers were not fully covering the infrastructure costs they rely on.

10-year grandfathering period

Existing net metering participants, and those approved before the proposed changes take effect, will remain under current rules for up to 10 years.

This transition period:

• Provides stability and certainty for customers who already invested in solar
• Aligns with the broader goal of predictability in rate design
• Allows time to adapt to future program changes

Solar customers are generating power for their own use

Under the net metering program, customers use the electricity they generate to meet their own needs in real time. Only excess energy, when more is produced than needed, is exported to the grid.

This means solar customers directly benefit from their systems by reducing the electricity they need to purchase.

Industry involvement

Through previous regulatory proceedings, industry and large customers asked the New Brunswick Energy and Utilities Board (NBEUB) to address issues such as:

• Value of solar
• Cost allocation
• Virtual net metering

This proposal responds to those requests while aligning with the NBEUB’s goals of equity, clarity, and predictability in rate design.

Understanding solar exports and the grid

Solar generation is strongest during sunny summer days, but New Brunswick’s highest electricity demand occurs during cold winter months before the sun rises.

This means:

• Solar exports do not significantly reduce system peak demand
• The grid must still be built to meet winter peaks, when solar output is low

Because of this, solar exports have limited impact on reducing fixed generation, transmission and distribution capacity costs.

What is peak demand—and why does it matter?

Peak demand is the point when the electricity system is under the greatest pressure, typically cold winter mornings in New Brunswick.

Even with solar systems, customers:

• Heavily rely on NB Power during these peak periods
• Require the system to be available when solar is not producing

That’s why recovering the costs required to meet peak demand is important to maintain a reliable system for everyone.

Evidence shows that solar generation does not align with system peaks in New Brunswick.

This is why:

• Export credits are designed to reflect the value of energy at the time it is delivered
• Rate design focuses not just on total energy produced, but when it is produced

Expanding opportunities for businesses

NB Power is also proposing an increase to the maximum size of non-residential systems to 500 kW, with exceptions up to 1 MW considered. This supports larger investments in renewable energy and provides more flexibility for businesses and institutions.

A balanced approach for the future

NB Power’s proposed updates are intended to support a balanced approach that:

• Supports continued solar adoption
• Ensures fairness between participants and non-participants
• Maintains a reliable grid for all New Brunswickers
• Responds to evolving customer needs and industry input

These changes are part of a broader effort to modernize rate design, ensuring it is equitable, adaptable, and transparent for years to come.