California Utilities Launch Legal Battle Against NEM Ruling

Three of the largest investor-owned utilities in California – Pacific Gas & Electric (PG&E), Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) – have submitted a legal challenge opposing the California Public Utilities Commission’s (CPUC) Jan. 28 decision to continue net metering.

On March 7, PG&E filed a rehearing application for the net energy metering proceeding, referred to as NEM 2.0, asking the CPUC to vacate its decision. According to the California Solar Energy Industries Association (CALSEIA), this would effectively prevent customers from installing solar after the current rules expire if the CPUC’s legal division agrees to further review. The other two utilities, the group adds, are calling for major changes that would make solar inaccessible to a majority of customers.

According to Bernadette Del Chiaro, executive director of CALSEIA, “The utilities are continuing their legal maneuvers because it is disruptive to the solar industry. Rather than working in partnership with solar companies and striving to reduce costs for customers, utilities would prefer to be obstructionists and muck up the market.”

CALSEIA asserts that the proceeding to consider net metering changes has already lasted 22 months and has extended one month past the state legislature’s deadline. After deliberation, the CPUC decided to reject the utilities’ proposals to replace net metering with what CALSEIA says are complicated schemes.

However, a spokesperson for PG&E says, “With their final decision, we are extremely disappointed that the CPUC did not take the opportunity to meet the important goals set out in Assembly Bill 327 and make the smart energy reforms that are needed to ensure a sustainable market for solar in California.”

“PG&E advocates that the CPUC re-evaluate their decision in order to address the cost incurred by non-solar customers and determine the appropriate subsidy for solar customers,” the spokesperson adds.

Brad Heavner, policy director for CALSEIA, refutes this argument, claiming that the utilities’ actions will unfairly deprive their customers of solar opportunities.

“The utilities continue to use false analysis to claim that net metering is a massive subsidy,” says Heavner. “Rather than accepting the commission’s decision and allowing their customers to go solar under fair rules, the utilities are fighting to keep opportunities away from their customers.”

Although the CPUC ruling rejected the utilities’ proposals, CALSEIA notes the decision does make significant changes to net metering, requiring customers to pay both an upfront and an ongoing monthly fee and to be subject to time-varying rates.

The CPUC says it will continue re-evaluating the rules but intends to make changes gradually so that customers will still have the opportunity to install solar and the industry will have time to continue lowering prices.

The new net metering rules will not affect current solar customers or those who install solar before the utilities meet their caps – April for SDG&E, October for PG&E and early 2017 for SCE – on the current rules. If the CPUC does not grant the applications for rehearing, the new rules should be in place in time to enable a seamless transition.


  1. More of the same from so-called “we love solar” utilities whom have fought and have been dragged kicking and screaming against customer owned, distributed solar for decades. They can only claim large cost shifts by over stating the costs and neglecting the benefits. As Dave Freeman, former head of SMUD, LADWP, and TVA used to say, “According to utility economists, on a net value basis the world is not worth saving”. The utilities should quit rear guard defending their horse and buggy utility models and help usher in a 21st Century energy system model with real two way flows and full accounting of benefits as well as costs, including externalities. The Governor, the Legislature, The CPUC, and their own customers tell them to find ways to support the Solar Century not throw up roadblocks.

  2. Net Metering is not a permanent thing, nationally, so we do have to face some level of what I call “Gross Metering” down the road where credit is not given for transmission costs, only generation costs.

    Also – power companies face another hurdle – LED lighting. It is taking away a large amount of funds from power companies – and doing good in the long run.

    Solar prices are well down from 2010-2011 prices where it started to grow. I don’t believe changes to Net Metering are a bad thing. They are an inevitable thing for customers. I expect to be losing both SREC sales value and also loss of credit for transmission costs by 2020 in my state. These changes can lower the future potential for residential solar installations because people aren’t “getting as much”. But when per-Watt costs have come down from $5.50/Watt to under $2.50 in some cases – I suspect people are protesting too much.

    • But the excess electricity that my solar PV system occasionally delivers to my closest neighbor is generated and “transmitted” from a few hundred feet, not 10-100s of miles away. Isn’t there a better value of that electricity delivered very close to the load vs wholesale generation from far away?

  3. It is time to convert all California IOUs to municipal-utilities. Their current model (decoupled) is incompatible with life for both people and the planet. Their belief that they and their shareholders are entitled to a profit, regardless of the consequences, is what is at the heart of the problem.

    Companies like LADWP and SMUD do not have the same conflict. The shareholders of IOUs can invest in solar farms and, if intelligently done, will give them the profit they so desperately desire and GET THEM OFF OF OUR BACKS. We who actually care about the planet and future generations are sick and tired of dealing with their greedy attitude.

  4. Your article says existing customers won’t be affected, which is not true. Existing PG&E customers will be moved from E-6 to E-TOU starting in 4 years. E-6 is much more favorable to solar than E-TOU.

  5. The utilities make me smile – they want to put everyone on Time of Use rates because they know everyone’s rates go up when they do that – but – thats not the case with net metered solar.

    I’ve lived in a house with TOU-DEV that was net metered for an electric car – using the confiscatory rates they charge with TOU.

    Of course- I moved into a house without solar – and then installed it – my bill went down to zero with just 5.16Kwh installed – why?

    Well – with TOU they have to buy back your generated power at their TOU rates – so I ran a spreadsheet knowing that I use about 1kwh during the day with no AC. I can keep the AC most of the time – maybe it runs a total of a month of days here and there –

    I have 1000 square foot of south facing roof. I start generating in excess of 1.5kwh about 10am and it goes back under around 6-7pm. so for a miniimum of 8 hours a day I”m net metering.

    We average about 33kwh a day of power use. Of that 15kwh gets used for the car charge every working day. But thats at .14kwh. The TOU usually shows:

    Super Off Peak: 18kwh
    Off Peak: 10kwh
    Peak 6 kwh.

    The average day is: 34kwh, or $7.40 a day,

    Installing a 5.13kwh solar system [about half the size the solar guys wanted to sell me] we see:

    10a-18: net meter 24kwh = $7.44 a day.

    This does not take into accounts when the car is not charged – or days where the AC gets used – its a wash ultimately. My total 12 month last year was $284 – include the $16 min charge, plus the various charges minus the energy credits they gave us – thats about $20 a month.

    Bill before that was about $240 for the tiered 34kwh – so payback is 5.64 years.

    This is why TOU is going to burn both the solar companies [because you need a smaller system than they say] and the power companies – no one has thought this through.


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