Net-energy metering (NEM) has been a cornerstone of the California solar market since 1996. It allows a solar customer's meter to spin backward, giving customers credit at full retail rates when they are feeding power into the electric grid. Customers pay only for their net usage of electricity from the utility.
Under state legislation passed in 2013 (A.B.327), the current net-metering rules for solar customers will end soon. The California Public Utilities Commission (CPUC) is reviewing the rules to determine if the new version of net metering (known as NEM 2.0) should be the same as the current structure or if changes need to be made. The commission has a deadline to create the new rules by December of this year. It issued a memo on Jan. 23 updating the scope and timeline of the proceeding.
Since the proceeding began last summer, most of the debate has been around building a model that will measure how much revenue utilities lose when people go solar. This ‘public tool’ will be used to evaluate different proposals for NEM 2.0. A beta version of the model will be released in February, with a final version available in the second quarter of the year.
With all the debate focused on the yardstick, parties have not yet put their proposals formally on the table. However, it is clear that solar advocates want to continue with net metering unchanged and utilities want to scrap net metering altogether in favor of a feed-in tariff at wholesale rates. Under a feed-in tariff, power from solar panels is fed directly into the grid and all of the power used by the building comes from the grid, rather than using the solar panels to power the building and exporting only the surplus or importing the shortfall.
Solar companies are concerned that a feed-in tariff at low rates would kill the market for new solar installations. Under a CPUC decision last year, existing solar customers will stay on the current net-metering rules for 20 years.
According to the Jan. 23 memo, the CPUC will solicit ‘comments on policy issues’ in the first quarter and formal proposals for the successor tariff in the second quarter.
New solar customers will not be able to sign up for net metering under the current structure after the total amount of net-metered solar output reaches 5% of a utility's aggregate customer peak demand, or July 1, 2017, at the latest. Based on the pace of solar installations for each of the state's largest utilities, it appears that Southern California Edison will continue NEM 1.0 through June 2017, Pacific Gas & Electric will at least be close to that date and San Diego Gas & Electric will reach its cap somewhere between December 2015 and April 2016.
Brad Heavner is the policy director for the California Solar Energy Industries Association (CALSEIA). He can be reached by email at brad@calseia.org.
