Updated May 11

After months of delay, a regulatory proposal released May 9 reopens the record on the controversial proceeding to reduce payments to rooftop solar owners to keep other customers from paying a larger share of the electric system’s costs.

The guiding principles of a Net Energy Metering update seek to create a successor tariff that “will strive to both ensure equity among all ratepayers and expand net energy metering to disadvantaged communities,” states California Public Utilities Commission Administrative Law Judge Kelly Hymes’ proposal.

Last December’s proposed changes to Net Energy Metering, known as NEM 3.0, has led to ongoing debates about the value and benefits of solar sent to the grid from small systems, be they increased resilience or lower emissions from fossil plants, as well as its costs to those without solar rooftops.

Hymes seeking more input on a “gradual transition” to revised payments to rooftop owners for exported solar power, including how much to charge them for grid services, was welcomed by solar advocates. It was given the thumbs down by a large coalition of interests supporting the proposed NEM 3.0 decision and two long-time energy economists.

“Our large and diverse coalition of solar supporters is glad the CPUC recognized just how far out of step the first proposed decision was with California’s clean energy goals and equity values,” Bernadette Del Chiaro, executive director of the California Solar & Storage Association, stated. “Californians strongly support rooftop solar and will not accept a decision that taxes the sun or slows our state’s clean energy progress by making solar unaffordable.”

But the group representing California’s three investor-owned utilities, and consumer, environmental, low-income, business and community groups objected to the continued delay.

“While we appreciate the Commission is taking time to try to get this right, the sooner they take action to fix the cost shift the better,” Kathy Fairbanks, Affordable Clean Energy for All spokesperson, stated in an email. Every day “without NEM reform imposes more cost burden on non-solar customers,” which she said has reached $1.8 billion since last December.

For Ahmad Faruqui, an energy economist formerly with Brattle Group, the latest twist in the NEM proceeding remains stuck in the CPUC’s “ridiculously harsh proposal on studies they had funded themselves, that told them what they wanted to hear.” The CPUC did not even review Sacramento Municipal Utilities District’s NEM update, which lowered payments for exported solar while providing incentives for battery storage, he said.

Environmental justice issues have “become a stalking horse for those wanting to preserve their status quo privileges,” added Richard McCann, an economist with M.Cubed.

Hymes seeks input on recommended adjustments to the NEM 2.0 tariff, including how to collect public purpose charges, and from which customers, and best options for community solar photovoltaic systems for those without solar roofs.

All parties agree that the NEM payments for exported solar energy should be lowered, but by how much is center stage. Rooftop solar owners are 10% of all customers, with 1.3 million small systems.

Solar and local clean power advocates have warned that the proposal to slash credit for the exported solar and significantly increase monthly charges would wreak havoc on small solar development, which the state has spent billions of dollars subsidizing. They have faced off with regulators, utilities, their workers and environment and ratepayer advocates who object to the NEM burden on those without solar rooftops, particularly those with financial struggles. Solar advocates reject opponents’ claimed costs, noting they fail to include the system and environmental benefits of rooftop systems.

The December proposal would have added an average monthly cost of $57 to owners of small solar systems. It was set for a vote in late January but postponed because of the backlash.

On the table is a fixed bill credit on top of hourly export credits that reflect the fluctuating price of solar energy, the per kilowatt-hour price and how fast and by how much it should be lowered for new customers. A revision may include an alternative glide path that factors in a fixed export adder along with the avoided cost calculator value of solar.

Hymes’ December proposed ruling also supports encouraging pairing solar with storage and adding a “grid benefits charge” to attain “just and reasonable rates for all customers.” 

Del Chiaro noted that the distributed market in California now has more than 800 MW of storage installed, with more than 1 gigawatt of additional energy storage expected by 2024.

Fairbanks said the coalition isn’t commenting on the various provisions in this new ruling because it’s “more concerned with the overall effect.”

Party comments on the ruling are due on June 10, 2022, with reply comments due June 24.