The net metering battle, round 2: the transition from NEM 1.0 to 2.0

February 4th, 2014 | by K Kaufmann | Comments

If you’ve got time on Wednesday, you might want to listen in to the meeting of the California Public Utilities Commission, kicking off at 9:30 a.m., with video or audio live streams available.

Solar supporters will be presenting a petition to the commission on an upcoming decision over net energy metering, the key incentive for rooftop, under which solar owners get credit for the excess power they feed back into the grid. (Desert Sun file photo below by Omar Ornelas)

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The petition from Vote Solar, with 50,000 signatures, calls on the commission to ensure that any changes in net metering it may approve in the coming one or two years will not effect customers who already own solar installations under an existing net metering contract.

Net metering rates may be changing after 2017 under Assembly Bill 327, which Gov. Jerry Brown signed into law in October, and the PUC is now debating how to grandfather in ratepayers who install solar after that date.

The utilities are proposing various approaches to what is being called the transition period between Net Metering 1.0 and version 2.0, limiting how long solar owners would be compensated for their excess generation under the current net metering rules, capping it at 6-10 years. Solar advocates instead want the commission to let all current solar owners stay on the existing net metering rules for the life of their systems, which they say should be figured at 30 years — the position supported in the petition.

All the briefs submitted to the PUC on this issue, pro and con, are available on the agency’s website here. And yes, there’s going to be a major battle over this decision, which the commission is supposed to make by April, but will not be voting on it Wednesday.

AB 327 struck an uneasy compromise between solar advocates and utilities on net metering in general, preserving the incentive until 2017 and beyond, but opening the door for major changes in utility rate structures that could eventually make rooftop solar a less appealing option as a way to cut electric bills.

Exactly how net metering will change has yet to be determined, but one can only presume the rates will not be as advantageous as they are now.  Up until they zero out their electric bills, solar owners are compensated for their excess power at the same rates they would pay for electricity. If you actually generate more than you use in a whole year, you are also compensated, in cash or with a bill credit, but at wholesale electric rates, which are significantly lower, which is all to say, no one is getting rich off net metering.

Still a recent cost-benefit analysis on net metering done for the PUC seems to bear out the utilities’ argument that net metering does shift some costs to non-solar owners.

The possible, dollar-and-cents impacts for current and future solar owners is that it may take longer for a rooftop solar system to pay itself off, which in turn could prompt some potential owners to back off a big upfront investment.

This is not a battle limited to California. Solar advocates and utilities in other states have been fighting over net metering for the past year, with mostly positive outcomes for rooftop advocates. A recent vote at the Colorado Public Utilities Commission appeared to go in favor of net metering, splitting a decision on the issue off of a larger proceeding on the state’s renewable energy targets. In Arizona, the Corporation Commission, the state’s PUC, hit a compromise, maintaining net metering but allowing utilities to charge solar owners a small fee.

Based on AB 327 itself, some kind of compromise can be envisioned for California.

But a more significant decision is in offing at the Wednesday meeting, when the PUC votes on whether to approve a power purchase agreement for San Diego Gas & Electric to buy power from the proposed Pio Pico Energy Center, a natural gas power plant to be located in Otay Mesa, an unincorporated community in San Diego County.

According to a recent article in the San Diego Union-Tribune, the commission had previously voted against building the 300-megawatt peaker plant, but could be reversing itself in the wake of the permanent closure of the San Onofre nuclear power plant.  State energy agencies seem to be moving head with plans to replace San Onofre’s 2,200 megawatts of power with a 50-50 mix, half energy efficiency and renewables and the other half, natural gas power plants.

Whether more rooftop solar would mean the need for more or less grid back-up, in the form of natural gas power plants, remains another open and hotly debated issue.

Suffice it to say, no vote the commmission takes, on natural gas power plants or net metering, can be seen totally in isolation.


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