Last week New York utility Central Hudson Gas & Electric said it reached its capacity limit for net-metering distributed solar systems and would no longer accept applications for more net-metered systems. However, due to outcry from homeowners and solar installers it’s since relented. However, it’s the first utility in New York to reach the limit and shows the limitations of a net-metering program.

Under New York’s Public Service Commission utilities are required to source 1 percent of their electric demand from 2005 from renewable energy resources, including solar, wind, microhydro or others. “Central Hudson is only one so far to reach the cap. But it shows there’s potential for it to happen in other utilities,” said New York Solar Energy Industries Association (NYSEIA) President and EarthKind Energy Chairman Ron Kamen. “It’s the third time they reached it.”

Kamen observed that the utility is much smaller than some of the state’s more urban utilities like ConEdison. “Central only has about 370,000 customers,” he said. Still, the 1 percent of solar in Central’s Electric supply would be a tenth of a percent for that utility. But other smaller utilities in New York, like National Grid and NYSEG or Rochester Gas and Electric are more at risk of reaching the level soon.

In the case of Central, the utility first said they wouldn’t accept more applications, then it changed its decision after installers and homeowners complained. At first the company contended that the net-metering program would cost it’s other rate payers more money. Kamen countered that its value to the utility was greater than not having net-metering in its network. “The retail cost of net-metering is much less than the avoided cost during peak hours,” he said.

Ultimately Central decided to reinstate the program voluntarily, at least while the commission is reviewing the state’s net-metering policy. “The Public Service Commission has the legislated institutional power to change it,” Kamen said. NYSEIA is pushing for an expansion of the program that will affect all the utilities. He said such a program will likely have the support of the Governor.