Section 18.05 - Allocation of Net Metering Credits(1) Net Metering Credits shall be allocated to Customer accounts by each Distribution Company as follows:(a) For a Class I Net Metering Facility, Class II Net Metering Facility, or Class III Net Metering Facility that is not a New Solar Net Metering Facility or not a Cap Exempt Facility that is also a Class II Solar Net Metering Facility or Class III Solar Net Metering Facility, or a Small Hydroelectric Net Metering Facility participating in the Small Hydroelectric Net Metering Program, each Distribution Company shall allocate Net Metering Credits, as designated in writing by the Host Customer, to other Customers who are in the Distribution Company's service territory and are located in the same ISO NE load zone. The manner and form of credit designation shall be as specified in the Distribution Company's Net Metering Tariff pursuant to 220 CMR 18.09(2). Notwithstanding the foregoing, if the Host Customer of a Class I Net Metering Facility, Class II Net Metering Facility, or Class III Net Metering Facility is a Municipality or Other Governmental Entity, including a Governmental Cooperative, it may direct its Distribution Company to allocate Net Metering Credits only to other Customers that are Municipalities or Other Governmental Entities.(b) For a New Solar Net Metering Facility or a Cap Exempt Facility that is also a Class II Solar Net Metering Facility or a Class III Solar Net Metering Facility, each Distribution Company shall allocate Net Metering Credits, as designated in writing by the Host Customer, to other Customers who are Customers of a Distribution Company located in the Commonwealth and may allocate credits to customers in more than one Distribution Company service territory. The manner and form of credit designation shall be as specified in the Distribution Company's Net Metering Tariff pursuant to 220 CMR 18.09(2). Notwithstanding the foregoing, the Host Customer of a Class I Net Metering Facility, Class II Net Metering Facility, or Class III Net Metering Facility that is a Municipality or Other Governmental Entity, including a Governmental Cooperative, may direct its Distribution Company to allocate Net Metering Credits only to other Customers that are Municipalities or Other Governmental Entities.(c) For a Neighborhood Net Metering Facility, the Distribution Company may only allocate Net Metering Credits to residential or other Customers who reside in the same Neighborhood in which the Neighborhood Net Metering Facility is located and have an ownership interest in, or are served by, the Neighborhood Net Metering Facility.(2) The Distribution Company shall carry forward, from Billing Period to Billing Period, any remaining Net Metering Credit balance.(3) For a Class III Net Metering Facility, including a Class III Net Metering Facility that is a New Solar Net Metering Facility, and a Small Hydroelectric Net Metering Facility participating in the Small Hydroelectric Net Metering Program, a Distribution Company may elect to pay to the Host Customer Net Metering Credits rather than allocating such credits pursuant to 220 CMR 18.05(1).(4) For a Class II Net Metering Facility or Class III Net Metering Facility that is also a Cap Exempt Facility, a Distribution Company shall credit or pay the Host Customer for any Net Metering Credits that are accrued in excess of its annual electricity consumption for the period running from April through the following March. The value of such excess Net Metering Credits shall be equal to the Distribution Company's Avoided Cost Rate as determined pursuant to 220 CMR 18.05(5).(5) The Avoided Cost Rate is based on data used by ISO-NE to set prices for energy purchases and sales. A Distribution Company's annual payout amount for Net Metering Credits shall be derived by applying an adjustment factor to the value of the Net Metering Credits that accrued during the preceding 12-month period beginning from April of the preceding year and are remaining on the Host Customer's billing account as of March 31st of the current year. The adjustment factor ratio shall be the average monthly LMP rate that was realized by the settlement of the output of Net Metering facilities with ISO NE, divided by the average monthly Net Metering Credit rate that the Net Metering facility received from the Distribution Company, weighted by the monthly net excess electricity generated by the Net Metering Facility.Amended by Mass Register Issue 1318, eff. 7/29/2016.Amended by Mass Register Issue 1353, eff. 12/1/2017.Amended by Mass Register Issue 1516, eff. 3/1/2024.