The current compensation rates utilities must pay solar owners for the excess power they feed into the grid could remain unchanged for up to 20 years, under a proposed ruling from the California Public Utilities Commission.
The tentative ruling, issued Thursday, is the first in a series of decisions the PUC will make over the next two years about the rules and rates for excess generation compensation, called net metering, as part of a slate of potential reforms allowed under Assembly Bill 327, a law passed last year.
As the first step toward this system overhaul, setting up the transition period has been a fiercely debated issue. On the one hand, it potentially affects the bottom-line decisions homeowners may make when considering to buy or lease a solar system and the kind of payback current and future solar owners can expect from their systems. For the utilities, it could also affect their bottom lines as rooftop solar continues to change the revenue-generating landscape for traditional, large power producers.
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As Peevey notes in his ruling, after the commission first issued a call for comments on the transition period in December, it received 17 comments, followed by a second round of 15 reply comments and then one more round of seven more reply comments — a total of 39 in all. All the documents can be found here, showing that on the key issues, Peevey appears to have attempted a compromise.
The ruling would allow homeowners who currently have solar panels on their roofs, and those who install them before Jan. 1, 2017, to stay on the current net metering rates for a transition period of 20 years. Here, the compromise is between the considerably shorter periods the big utilities wanted — based on a conservative definition of what a reasonable payback period would be — and the 30 years or longer solar advocates wanted, arguing that the current net metering rates should hold for the life of the system.
At present, when rooftop installations feed power back into the grid, owners get a credit equal to the amount the utilities pay per kilowatt hour to procure power at peak times, which can then be used to offset the cost of any electricity the owner takes off the grid at night or other times when their panels aren’t pumping out electrons. This is all done on a yearly basis, so if you feed more power into the grid than you use, you not only zero out your bill but get an additional credit or compensation.
Exactly how the rate structure will change under the overhaul remains to be seen, but generally, it will probably not be as generous.
The transition period will be measured from the day a rooftop system goes online — rather than having one date when all systems would transition from the current rates to the future, as-yet-to-be decided rates, the utilities’ favored option. Solar owners will also be able to maintain and repair their systems, and even increase the amount of power they generate by a small amount — 10 percent of their current system capacity, up to a maximum of 1 kilowatt — without losing their current net metering rate.
Another big point, the transition period will stay with the system, so if solar owners sell their home, the transition period for the system will stay in force for the new owners. However, owners will not be able to move their system to a new location and keep the net metering rate.
Solar owners will also be able to add storage to their systems without affecting the transition period, but the commission has postponed a decision on exactly how that will work until another proceeding.
The core arguments underneath all of this is whether net metering represents a price-shift, with non-solar owners picking up some of the tab for the compensation solar owners get for their excess generation, and whether solar owners pay their fair share of costs for the transmission system, which they still use, even if they zero out their bills. The PUC, utilities and solar advocates will be wrangling over all these questions as the commission tries to come up with a more equitable formula for net metering.
AB 327 opens the door for rate changes that might lengthen payback periods for rooftop solar installations and allow utilites to charge all customers, solar and non-solar, a monthly fee for maintaining the transmission system.