Almost lost in the fine print of an energy bill passed by the U.S. Congress in 2005 is a provision requiring states to allow residential homeowners and small businesses to generate their own electrical energy and sell any surplus back to the local power company. Relatively few Americans so far have opted to go it alone in power generation, in part because Congress neglected to fund programs supporting such alternative energy initiatives.

Opting Off the Grid

Growing numbers of Americans believe life "off the grid" could mean both greater energy security and a cleaner environment. That's certainly Gordian Raccke's story. He loves to show off his monthly electric bill, which, unlike his neighbors' in a Long Island, New York, suburb, he says totals next to nothing. "I pay zero dollars and zero cents for electricity," he says.

That's thanks to the solar electric panels he installed on the roof of his carport. New York, like 34 other states, has a so-called "net metering" law, which permits Raacke, whose home is still wired to the local power grid, to sell back to the utility company any excess electricity he produces.

Raacke banks the energy credits he earns on sunny summer days for the dark days of winter. Simply put, he says, he wanted to save money. "We had to shell out quite a bit of money initially, but when we wrote out that big check to the contractor I said to my wife, 'We are done with paying our electric bill forever, for life!'"

Study Ranks New Jersey First in Net Metering

In a new study of net metering in the United States, New Jersey ranked first among the 34 states that permit the practice. Chris Cooper, executive director of the private Network for New Energy Choices, which conducted the study, says the state's interest in off-grid energy systems is growing more quickly than state officials can manage. "The state utility commission is drowning in new applications for small scale solar installations."

Cooper says in the first nine months of 2006 New Jersey more than doubled the capacity of small scale solar compared to the four previous years. "The utility commission in fact had to put a hold on new applications to allow their staff time to process the new applications. So we know that it worked," Coopers says.

Most State Net Metering Programs Poor

Other states have not been quite so busy. Only about half of the 34 state net metering programs reviewed had passing grades. The evaluation showed many of the programs restricted commercial, industrial or agricultural use, and sometimes capped the number of participants.

In some states, customers are prevented from receiving credit for excess electricity they've generated or face discriminatory fees, unreasonable safety requirements or other obstacles to generating their own power.

Cooper says some programs are in name only because of so few customers and feels the report can help to shame them into doing more.

Good for Utility and Homeowner

Vermont Law School Professor Michael Dworkin says net metering makes sense for the power company and the homeowner. He says clean, consumer-generated energy can help reduce demand on public utilities, and permit them to redistribute surplus energy. He says net metering can also help reduce the carbon emissions from fossil fuel-burning power plants, which contribute to global warming. "It's pretty clear worldwide and becoming clearer in this country that worrying about carbon emissions is really critical."

Dworkin says the report offers a comparative analysis of best energy practices, which he hopes can provide a manageable path to a more secure energy future. "Model state laws often lead to national standards."

The report recommends greater federal support for net metering. Advocates hope that changes in the makeup of the U.S. Congress following the November elections will sharpen lawmakers' focus on the need for alternative energy systems.