Massachusetts on Friday became the first state in the nation to approve a "demand charge" for residential solar customers with a much-anticipated decision from the Department of Public Utilities.

The DPU ruling affects utility customers under Eversource Energy. The charges for new, net-metered residential solar projects will go into effect Dec. 31, 2018. Under the system, new net-metering customers will pay a charge tied to their top usage hour within a monthly billing period, regardless of when that peak hour occurs.

Consumer and clean energy advocates lashed out at the ruling, while Eversource said it creates greater equity and lets them recoup costs imposed by residential solar customers.

Eversource had argued that $8 million per year in "displaced distribution revenues" should be collected from the solar customers. The DPU agreed, saying the charge will more fairly distribute the costs of maintaining the local power grid.

"The demand charge portion of the (monthly minimum reliability charge) will eliminate, to the extent possible, the unfair cross subsidization by non-net-metered customers that currently exists" with rates based upon kilowatt-hour charges and no kilowatt demand, said Eversource spokeswoman Priscilla Ress.

Ress said peak demand "is what we have to size our equipment to meet, regardless of how long that peak is present."

She said net-metered customers will now "pay their fair share of the cost of the significant maintenance and upgrade work we do on the local grid every day," and that "currently, their neighbors are paying more than their share of those costs."

A demand charge has been in place for commercial customers for decades, and Eversource will charge net-metered customers a lower usage rate than non-net-metered customers will pay, said Ress.

Clean energy advocates took aim at Friday's ruling, saying it takes away consumer control, slows efforts to modernize the grid, and undermines the state's own policy goals.

The Northeast Clean Energy Council called the development a "huge step backward" for grid modernization, one that will undermine a goal set by Gov. Charlie Baker to deploy 1,600 megawatts of solar across the state.

The non-profit Acadia Center said the DPU "rubberstamped" a ruling for Eversource that is "harmful to consumers" and counterproductive to the growth of energy efficiency, storage, electric vehicles, and rooftop solar.

The groups said that Eversource does not provide "smart metering" that lets customers understand and manage their peak usage, leaving consumers with little control over the demand charge.

"As a result, consumers will be paying the highest possible rate for this charge without being provided the information needed to understand the cause of these costs," said the Acadia Center.

The groups said the ruling does not help flatten peak power demand across the system, because it does not incentivize using electricity during off-hours. The DPU also eliminated "time-of-use rates" that offer savings to customers who use power during times of lower demand.

In December, the DPU approved a rate increase for Eversource that was not as high as the corporation wanted. Eversource had requested an increase of $90 million, and the DPU approved $12.3 million for the NSTAR territory, and a $24.1 million boost for WMECO. Attorney General Maura Healey has appealed the rate hike, saying the DPU's allowance for a 10 percent shareholder return is too high.

In December, Eversource announced it would reduce its rate increase in Western Massachusetts because the company will pay less in corporate taxes under a new federal law. The announcement came after Healey and other attorneys general called for across-the-board ratepayer cuts because of the tax savings.



In a plus for clean energy, December's order provided a $45 million investment in electric vehicle infrastructure, and authorized investments in energy storage. Eversource has 210,000 customers in Western Massachusetts.