In a close 3-2 vote on Thursday, the California Public Utilities Commission (CPUC) issued its long-awaited final decision on the state’s successor net-metering program, often referred to as NEM 2.0. Although the new rooftop solar program does include some unfavorable changes, it mostly resembles the previous iteration, and the solar industry has hailed the ruling as a major victory.
According to California Solar Energy Industries Association (CALSEIA), the commission officially voted to extend net metering for solar customers indefinitely and rejected proposals from the state’s investor-owned utilities (IOUs) to replace net metering with complicated schemes that would have put solar out of reach for most consumers.
CALSEIA says this decision puts California in stark contrast to neighboring states, such as Nevada, which recently went in the opposite direction, cutting net-metering rates and shutting down the rooftop solar industry there.
“We all know that California is a world leader when it comes to being ‘green’,” says Bernadette Del Chiaro, executive director CALSEIA. “But today’s vote is more than that. It is about California continuing to champion innovation and a different way of doing things – in this case, building a smarter energy grid and allowing individual consumers to generate their own clean electricity.”
Under the decision, the utility meter will continue spinning backward at full retail rates for solar customers when they are generating more electricity than they are using; however, a new fee will partially offset the value of those credits. Solar customers will be required to pay increased charges for upkeep of the grid, as well as public purpose programs like energy efficiency rebates and low-income bill assistance.
“The commission agreed that tying solar credits to retail rates is important because it is simple and proven effective,” explains CALSEIA Policy Director Brad Heavner. “In the debate over net metering that is flaring up in states across the country, California has said yes to continuing net metering, and that’s very significant.”
CALSEIA says the new rules also create an application fee of up to $150 and requires residential solar customers to be on “time-of-use rates” that vary depending on the time of day. Commercial and agricultural customers are already on mandatory time-of-use rates, the group notes.
“The utilities are upset because they weren’t successful at killing rooftop solar like some of their counterparts in other states have done, but the commission determined that net metering should change only gradually,” adds Del Chiaro. “This decision takes significant steps to change net metering over time, but we are confident it will maintain the opportunity to go solar for most types of customers.”
In its own press release, the commission says, “The CPUC today established a NEM successor program that continues the existing NEM structure while making some adjustments to align the costs recovered from NEM successor customers more closely with those from non-NEM customers.”
According to CALSEIA, the NEM 2.0 decision does the following:
– Maintains full retail credit for net metering and guarantees that customers who install solar under these rules will not be subject to future changes to these rules for 20 years.
– Creates an interconnection fee between $75 and $150 and assesses “non-bypassable charges” that equate to $8-9/month for most residential customers.
– Rejects utility proposals for demand charges, capacity fees, grid access fees, standby charges and monthly netting.
– Requires residential NEM 2.0 customers to be on time-of-use rates.
– Expands access to solar for renters and retains access for farmers.
– Defers work to expand solar in disadvantaged communities to the next phase of the proceeding.
In a press release, the Solar Energy Industries Association (SEIA) has commended CPUC for voting to maintain net metering in the state.
“By voting to continue net metering in California, the CPUC is driving a stake in the ground and solidifying its place as America’s leading clean energy state,” says Sean Gallagher, SEIA’s vice president of state affairs. “Today’s decision hands Californians a projected $1.6 billion a year and seizes upon a golden opportunity to enable Golden State’s homes, and businesses of all kinds, to choose to go solar.”
The changes included in NEM 2.0 do not affect customers who already have solar or who install solar before utilities meet certain thresholds. CALSEIA estimates these thresholds will be met in April 2016 for San Diego Gas & Electric, August 2016 for Pacific Gas & Electric, and early 2017 for Southern California Edison.
CPUC’s final decision was put in motion by A.B.327, passed by the California state legislature in 2013. That law removed the cap on net metering, previously set at 5% of a utility’s peak load, and directed the CPUC to create an uncapped program that was guaranteed to allow rooftop solar to continue to grow sustainably. The CPUC will revisit the net-metering rate for review in 2019.
The state IOUs had been advocating against the current net-metering program and pushing to impose new fees for solar customers. In December, CPUC issued a proposed decision that generally did not side with the power companies’ wishes. The IOUs recently redoubled their efforts and proposed a compromise. In the lead-up to CPUC’s final ruling, solar advocates worked hard to make their voices heard, submitting petitions and even holding concert events. Although CPUC made some small changes to its proposed rules Wednesday, the final decision ultimately bodes well for solar.
However, CPUC President Michael Picker points out in a release, “Our course is not for the rooftop solar industry or for the utilities or the community clean energy aggregators. Our decision today is another big step toward giving California consumers more choice, more control, and more responsibility over energy and climate change issues. It’s a big step, but it’s only one of many.”
For its part, San Diego Gas & Electric (SDG&E) calls the CPUC’s decision “flawed” and claims the utility’s customers will likely have higher bills as a result.
“San Diego Gas & Electric strongly supports renewable energy, including rooftop solar, but also we strongly believe that the growth of rooftop solar should not penalize customers who do not own a home or are unable to afford or accommodate rooftop solar,” the utility says in a statement.
“Today, the California Public Utilities Commission ignored state law and the clear direction from the state legislature, which called for them to reform net energy metering to ensure the benefits are balanced with the costs of the program,” the company continues. “While we are still evaluating the decision, it appears to largely maintain the current program, penalizing the 95 percent of our customers who don’t have solar by adding an extra $300 on their utility bills by 2025.
“We are encouraged by and applaud the two CPUC commissioners and consumer advocates who recognize that today’s decision is flawed and will only further penalize the majority of our customers and grow the cost shift. This decision will likely be celebrated by vendors profiting from today’s decision, but moving forward, it becomes increasingly important for all parties to work together to develop a modern solution to this outdated program – one that complies with state law and balances everyone’s interests.”
Pacific Gas and Electric (PG&E) has echoed SDG&E’s sentiments.
“PG&E strongly supports the continued, sustainable growth of rooftop solar in California,” says Donald Cutler, spokesperson for PG&E, in a statement. “We are extremely disappointed that the CPUC did not take the opportunity to meet the important goals set out in A.B.327 and make the smart energy reforms that are needed to ensure a sustainable market for solar in California.
Cutler continues, “PG&E is committed to working with all parties to find the right balance to support continued growth of solar and evolve regulations that reflect the market dynamics of 25 years ago and to help ensure that rates for all customers are equitable.”
“Some parties positioned this issue as the utilities versus solar. That was never the case,” adds Pedro Pizarro, president of Southern California Edison (SCE), in a separate statement. “SCE supports solar and has helped more than 158,000 customers go solar. This decision puts the burden of subsidizing solar on low-income customers who can least afford it, and SCE believes that policy is unwise and unfair.”
Meanwhile, Environment California, a regional unit of advocacy group Environment America, calls the CPUC decision “a big win for solar energy” and a rejection of “a high-profile lobbying push” by the state’s IOUs.
“Today will shine bright in California history, bringing cleaner air, more local jobs and a more secure energy future for all Californians,” says Michelle Kinman, clean energy advocate for Environment California, in a press release. “We applaud the CPUC for listening to the outpouring of support from Californians all over the state to protect net metering and uphold Governor Brown’s vision for climate and clean power leadership.”
“Utilities should be encouraging more people to go solar, not fewer,” adds Bret Fanshaw, coordinator for Environment America’s solar program. “State leaders around the country should follow California’s example.”
The Alliance for Solar Choice has also praised the decision.
“We commend the commission for upholding net metering and protecting solar choice for Californians,” says Bryan Miller, president of the alliance and Sunrun’s senior vice president of public policy and power markets, in a release. “While today’s decision is a compromise that will require the solar industry to adapt, it rejects the utilities’ anti-solar proposals and continues California’s renewable energy leadership.”
