Several stakeholders have weighed in – and clashed – over net metering in Pennsylvania
After a winter hibernation in which Pennsylvania solar net metering developers hunkered down and awaited developments on a number of fronts, spring has yielded some market clarity in how net metering projects will likely be treated moving forward. And in a welcome surprise, the value stack of the hourly pricing-based Price to Compare (PTC) that customer-generators will receive moving forward currently offers an attractive return on excess generation.
At present, a massive number of “merchant” net metering projects (those without independent onsite load) are under development but few have gone operational. The first projects to come online were in early 2025. As of November 1, 2025, the Public Utilities Commission (PUC) reported that 23 merchant net metering projects totaling about 58 MW had come online1, most of which were in PPL territory2. The PUC expected that 68 systems would be online by May 31, 2026 (approx. 170 MW). All told, the PUC said that about 2,000 merchant net metering projects totaling 4.5 GW had been reviewed by staff to date.
There are several storylines developing in parallel as project developers – and their investors and lenders – assess their next moves. Figure 1 shows the timeline of the key processes that are in play, sorted in chronological order based on when they began.
Figure 1. Pennsylvania Net Metering - Important Timelines
In this article, we provide updates on the following topics that are all driving forces of Pennsylvania net metering projects:
PPL Proposed Settlement
As described in our previous update, PPL Enters the Fray with Rate Case Filing, on September 30, 2025, PPL Electric Utilities (“PPL”) filed a request to increase distribution base rates (under docket no. R-2025-3057164)3. On March 5, 2026, a proposed settlement was published by PPL and the Joint Solar Advocates, which consisted of industry trade groups Solar Energy Industries Association (SEIA) and the Coalition for Community Solar Access (CCSA)4. The settlement included the following highlights:
The settlement agreement finally provides some much desired market clarity to developers and investors. Not only that, but it affords a more optimistic value stack than the market had expected, as will be described later on. The settlement still needs to be approved by the PUC, but Power Advisory expects that it will be because it is consistent with the PUC’s stated preference to limit the number (MWs) of net metering projects that are classified with other small C&I customers using the standard retail PTC. A coalition of 17 developers opposed the settlement, focusing their objection on just one issue, the Maximum Registered Peak Load (“MRPL”) provisions which enable the long-term reclassification of net metering projects to the hourly based GSC-2 PTC5. This is not an insignificant coalition in terms of its size, but nonetheless, it’s unlikely that the PUC would vote in their favor.
While PPL has agreed to not change the structural components between customer-generators and non-customer generators, there is some risk that PPL might adjust how it calculates a given rate component at some point in the future as a means of reducing the realized rate to the net metering customer-generator. While energy and capacity are unlikely to be touched, the way transmission is calculated could be changed. At present, the transmission charge is a very favorable cost component; in fact, it is the largest component of the four components in the PPL value stack. However, this is a double-edged sword for PPL: a change could reduce what it pays to customer-generators, but at the same time, it could reduce the revenue it derives from ratepayers.
The settlement does not explicitly state how long a project would be entitled to net metering credits, but in the absence of any mention, one assumes that it is for the project life. As a reminder, there are no contracts executed by the project owner and utility for net metering in Pennsylvania.
FirstEnergy Default Service Plan (DSP) Filing
On February, 3, 2026, FirstEnergy filed its Default Service Plan (DSP-VII) for the period June 1, 2027-May 31, 20316. Among other things, this plan addresses net metering. The highlights include:
The DSP is currently in the discovery phase. Direct and rebuttal testimony are expected in the summer and the plan should be approved sometime later in 2026. The value stacks of some of the FirstEnergy companies are higher than PPL, while others are lower. This may vary when the new NITS charge is established for each FirstEnergy utility.
Penn Renewables v PUC Decision
Following the PUC’s approval of UGI’s default service plan that included the rate reclassification placing customer-generators into its hourly Locational Marginal Pricing (LMP) GSR-2, Penn Renewables LLC (“Penn Renewables”), a renewable energy developer,filed an appeal in the Pennsylvania court system in March 20257. In March 2026, the original order was affirmed by the court8. Penn Renewables did not appeal the decision, and thus, the reclassification of customers by using their “supply peak load impact” (the equivalent of MRPL) will remain effective. This likely means that PPL, FirstEnergy and other utilities will be permitted by law to use the MRPL to classify customer-generators once approved by the PUC. All net metering projects moving forward can expect to be classified in the hourly-based PTC if not included in a utility’s grandfathering.
PTC Value Stacks – Retail and Hourly-Based
With the transition from retail to hourly-based PTC rates, market participants have turned their attention to the hourly-based value stacks. And the news is not bad. On the PPL side, the hourly-based value stack has taken a modest 8% haircut (for April 2026), but FirstEnergy utilities have actually increased in value (see Figure 2 for April 2026 value stacks). In terms of the FirstEnergy companies, Penelec’s hourly-based PTC is 21% higher than the retail PTC, and Met-Ed is 23% higher.
Figure 2. Net Metering Credit Value Stack PPL, Penelec and Met-Ed, April 2026 ($/MWh)
Note: Some charges have not been filed in a proposed or effective tariff and thus are estimates by Power Advisory. This included PPL’s capacity charge and FirstEnergy’s Transmission charge. In addition, Power Advisory splits the established FirstEnergy Cap-AEPS-Other charge into a capacity value and AEPS-Other value.
Figure 3 shows the historical monthly pricing for five Pennsylvania utilities. The rates in April 2026 ranged from $112/MWh for West Penn to $159/MWh for Met-Ed. The chart shows how these rates have increased from the $60-$80/MWh level since 2023. On average, these rates increased from $77.81/MWh in Jan 2023 to $144.55/MWh in April 2026, an 86% increase. This remarkable increase in rates can make the net metering projects receiving hourly-based PTCs economic today.
Figure 3. Historical Hourly-Based Price-to-Compare (PTC) Rates, Jan 2023-May 2026 ($/MWh)
Figure 4 shows the breakdown of rate components for PPL. As can be seen, for the current month (April 2026), the transmission charge is the highest charge, followed by the hourly LMP. The capacity charge is third, and administrative charge, fourth. While these last two charges are much smaller than the first two, they have nonetheless increased materially in the recent past.
Figure 4. Historical PPL GSC-2, Jan 2022-May 2026 ($/MWh)
A good portion of the credit is the hourly LMP. PPL, as agreed in the Settlement Agreement, will use a 6-month average of LMPs, aligning with the current supply periods (June-Nov & Dec-May) to calculate the LMP energy component. The significantly higher December 2025 – February 2026 LMP values seen in PJM have increased the current value of the hourly-based PTCs. There is inherent risk relying on wholesale market prices as a major component of the PTC. The hourly-based PTC can exhibit vastly difference total values depending on whether PJM exhibits a high or low priced 6-month period. At present, the futures market is showing that LMPs will remain at current high levels, with seasonal variation. And in the long term, Power Advisory forecasts that energy prices will trend higher than in recent years given the crunched supply and significant load growth expected.
The transmission charge, or NITS charge, is substantial in the PPL PTC value stack and by Power Advisory estimates is modest in the FirstEnergy PTC value. As described earlier, there is risk that PPL alters the structure of the transmission charge reducing its value. But it is two sided with respect to the revenue it earns from load customers. FirstEnergy will establish the NITS charge starting June 1, 2027, if the DSP-VII is approved by the PUC so there will be a slight waiting period to see the true value of this component. Power Advisory estimates the NITS charge to be in the range of $6/MWh to $23/MWh across the four utilities. Pennsylvania and PJM at large are expecting significant transmission investment on the grid. As a result, transmission charges should only increase moving forward.
REC Prices Holding Steady at $20-$25/REC
In addition to the net metering credit, a customer-generator will also produce an Alternative Energy Credit (AEC), or REC. These RECs are eligible to sell into the Pennsylvania Tier 1 REC market (technically they can sell into the SREC program as well, but that market is roughly the same price as the Tier 1 market). That market has trended downward from the $30s in recent years into the $20-$25/REC range (Figure 5). Forward markets indicate that prices are expected to remain steady in that range for the next 3-4 years. It continues to be an undersupplied market with prices near the Maryland ACP ($22.25), which acts as a tether for many PJM Tier 1 REC markets.
Figure 5. Pennsylvania Tier 1 REC Prices, 2023A-2028E ($/REC)
Proposed Legislation and Risks to Net Metering
There are a number of bills that could potentially impact net metering. Among them, House Bill 2348 would revert net metering to a pre-Hommrich period where customer-generators must have load independent from the alternative energy system and are limited to selling no more than 200% of their onsite load to the grid. There are exceptions for warehouse or commercial rooftop and safe harboring is offered for existing net metering systems (and those with interconnection applications), but the bill would overhaul the Pennsylvania net metering landscape eliminating pure play customer-generators. There is also House Bill 504 which would introduce a community energy facility program, effectively offering a community solar program to similarly-sized projects participating in net metering. The community energy bill credit would be of similar value to the PTC, based on residential and small C&I rates. However, HB 504 has stalled in the Senate, similar to past community solar bills. Finally, the PUC’s position on net metering is quite strong9. The PUC recommends that legislation be introduced to limit the number of megawatts that can participate in net metering at current compensation levels. Many legislators have taken notice of the issue. The House Energy Committee, for example, held a hearing to understand the situation and there have been previous bills other than HB 2348 proposing to limit net metering.
All that said, virtually no new energy legislation has been passed in Pennsylvania in the past 5 years. This is because of partisan gridlock within the Pennsylvania General Assembly, especially pertaining to energy policy. Within parties there are different camps that want different things. The state has yet to see a majority of legislators and the Governor come together and move bills through to completion and into law. Power Advisory believes that none of the described current bills that have been introduced will be made into law.
What’s Next
The net metering market has more certainty than it did six months ago. While M&A and lending transactions all but shut down following the PPL filing in September 2025, the market has been digesting the recent news, and M&A, along with project development, is resuming. More projects are slated to begin construction. Another immediate consideration for developers – and go/no go decision point – is ensuring that they capture the federal ITC before it is no longer available. That means either safe harboring their project before July 4, 2026, in which case they need to bring the project online no later than December 31, 2030, or placing it in service by December 31, 2027.
Some lenders have shied away from this market because rates are moving from a retail rate to a wholesale hourly-based rate. Though some may reconsider their position given how rates have gone up considerably in the last 2 years. The total hourly-based PTC value stack is not as much of a haircut from retail as originally thought, and in fact, for FirstEnergy companies, it could be an increase. Wholesale energy pricing can alter the story significantly, potentially lowering the PTC value, but forward markets point to higher LMPs over the next five years. It will be important for market participants to stay up to date on the latest values of the PTC stack given the evolving policy environment and wholesale market changes.
We expect increased activity – both on the M&A front and in terms of developers moving forward with their projects into construction. It’s already happening. All that being said, net metering does face two notable risks: (1) it’s based on a rate that floats rather than a fixed rate, and (2) it’s not a contract, which tends to be more iron clad. Nonetheless, the value of the projects is coming into greater focus and that value, as far as we can tell, makes the projects economic.
We will continue to track and report on developments in this market.
Andrew Kinross can be reached at akinross@poweradvisoryllc.com.
Andrew Bracken can be reached at abracken@poweradvisoryll.com.
[1] Compliance for Reporting Year 2024-2025, Pennsylvania Public Utility Commission in cooperation with the PA Department of Environmental Protection, pages 44-46, February 2026. https://www.puc.pa.gov/media/3805/aeps-2025-report_2-5-25_final_.pdf
[2] Based on data from the listing of 2-3 MW-ac solar projects that are operational from the PUC. https://pennaeps.com/reports/
[3] PPL Electric Utilities Corporation, Docket No. R-2025-3057164, “PPL Electric Utilities Corporation filed Original Tariff No. 202 which is a general rate increase effective December 1, 2025.”, 2025, August 29. https://www.puc.pa.gov/docket/R-2025-3057164
[4] Joint Stipulation and Settlement of PPL Electric Utilities Corporation and the Joint Solar Advocates, March 5, 2026, https://www.puc.pa.gov/pcdocs/1916971.pdf; Joint Petition for Non-Unanimous Settlement of All Issues, March 13, 2026, https://www.puc.pa.gov/pcdocs/1918030.pdf
[5] Customer-Generator Coalition, Docket Nos. R-2025-3057164, Objections to the Joint Petition for Approval of Non-Unanimous Settlement, https://www.puc.pa.gov/pcdocs/1920329.pdf
[6] FirstEnergy Default Service Plan (DSP) for June 1, 2027-May 31, 2031, Docket No. P-2026-3060298, https://www.firstenergycorp.com/.../PA/tariffs/PA-DSP.pdf
[7] Commonwealth Court of Pennsylvania at Docket No. 337 CD 2025
[8] MEMORANDUM OPINION, Penn Renewables, LLC v Pennsylvania Public Utility Commission, https://www.pacourts.us/assets/.../337CD25_3-13-26.pdf?cb=1
[9] In the PUC’s 2025 AEPS report, it recommends – in forceful terms – that legislation should be introduced that limits net metering program so that it doesn’t cause economic harm to ratepayers. Or that note, the PUC itself recommends reasonable bounds. It says: “The Commission recommends 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 that the EDCs are obligated to purchase at retail, rather than at wholesale rates. Alternatively, the General Assembly could authorize the Commission to evaluate and create those reasonable bounds. The need is immediate to avoid harm to the default service market product for small commercial and industrial customers.”