The new NEM 3.0 proposed decision has been released. The decision implements a net billing format with a five year glide path that lowers rates based on the “avoided cost” calculator.
The California Public Utilities Commission (CPUC) has released its proposed decision for Net Energy Metering (NEM), implementing a net billing mechanism and slashing payments for excess solar production sent to the grid by 75%. Based on an initial analysis, the new proposed decision would cut the average export rate in California from $0.30 per kW to $0.08 per kW, making the cuts effective in April 2023.
Bernadette Del Chiaro, executive director of the California Solar & Storage Association (CALSSA) said, “The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a steep solar decline. An immediate 75 percent reduction of net energy metering credits does not support a growing solar market in California.”
NEM has been a critical policy in launching the California rooftop solar market, which has grown to a robust 1.3 million homes covered in panels, representing about 50% of the US residential market. It has been instrumental in launching the state’s commercial and industrial solar market, as well.
Under the new net metering structure, payments for excess solar production to the grid will be cut to the “avoided cost” to the utility, a minute fraction of the retail rate paid by customers for electricity supplied by the grid. CPUC said the new proposed decision will lead to an average payback of nine years for residential rooftop solar, based on an assumption of a $3.30 cost per Watt. Read the complete proposed decision here.
The net metered payments will be based on hourly Avoided Cost Calculator rates, averaged over days in a month with separate rates for weekends and holidays. An avoided cost “ACC Plus” adder will be applied to boost net metering payment rates as a constant for nine years and varies by utility. Low-income customers are offered a higher adder rate. SDG&E customers do not receive an adder.
The proposed decision comes after a year of rulemaking battles waged between investor-owned utilities and rooftop solar advocates, including environmentalists, employment and labor groups, small businesses, and concerned citizens. A year ago, the proposed NEM 3.0 was introduced as CPUC determined rooftop solar customers cross-subsidize customers who source their energy from the traditional centralized power grid.
(Read: “Coalition received $1.7 million from three California utilities to push NEM 3.0, a rooftop solar ‘killer’“)
CPUC determined that the NEM 2.0 structure “negatively impacts non-participating ratepayers; disproportionately harms low-income ratepayers; and is not cost-effective.” These assumptions, which were determined by CPUC in a “Lookback Study” have been challenged by the rooftop solar industry. CALSSA said a number of the study’s assumptions are flawed, and the source code necessary to investigate or replicate the study’s main conclusions is not provided. It said the CPUC also failed to make the Lookback Study analysts available for discovery or cross-examination.
Protect Our Communities (PCF) said the Lookback Study underestimates the benefits of behind-the-meter generation because the calculator does not adequately quantify avoided transmission costs or the resiliency benefits of net energy metering solar, or account for the air quality and climate benefits.
CPUC’s NEM 3.0 decision said the new structure should, “should promote equity, inclusion, electrification, and the adoption of solar paired with storage systems, and provide a glide path so that the industry can sustainably transition from the current tariff to the successor tariff and from a predominantly stand-alone solar system tariff to one that promotes the adoption of solar systems paired with storage.”
“If passed as is, the CPUC’s proposal would protect utility monopolies and boost their profits, while making solar less affordable and delaying the goal of 100 percent clean energy. California needs more solar power and more solar-charged batteries, not less,” said Del Chiaro.
Rooftop solar is vital to reaching California’s clean energy goals. With the promise of battery storage for grid reliability, and new federal incentives for going solar, a wide coalition of solar supporters are calling on the CPUC to keep solar growing and affordable for all Californians. More than 160,000 people submitted comments to the CPUC and Governor Newsom calling for a strong NEM-3 decision, the highest count in CPUC history.
“We urge Governor Newsom and the CPUC to make further adjustments to help more middle- and working-class consumers as well as schools and farms access affordable, reliable, clean energy,” said Del Chiaro.
Oral arguments, limited to three minutes, will be held by CPUC on November 16 10 a.m. to 12 p.m. PST. Register to view the proceedings here.
This is a developing story. More pv magazine analysis, industry reaction, and updates to the rulemaking procedures will follow.
