The battle over rooftop solar is coming to a head. Looming decisions in three states are set to decide the fate of net metering, the mechanism which allows consumers to effectively sell energy generated by their rooftop solar panels back to the grid. This allows consumers to use energy when they need it, not just when it's produced. Some utilities have not warmed to this idea, fearing that consumers will no longer need them. 

These three decisions will not only decide the fate of net metering in California, Colorado and Arizona, but also shape the future of both rooftop solar and electric utilities across the U.S.

Here's what you need to know:

1. CALIFORNIA—THE SUNSHINE STATE?
 

The debate over net-metering in California is approaching its conclusion. The current bill on the table will make net metering a mainstay for the three big utilities in California, but that hasn't always been the case. Some allege the bill was originally made to kill California solar but multiple controversies, such as the commercial "Edison Hates Rooftop Solar," led to its amendment.

What's in the bill: Proposed by Assemblyman Henry Perea (D-Fresno), Assembly Bill 327 was primarily a two-tiered rate bill that created two categories of flattened electricity rates for high-use and low-use customers. But the bill also proposed utilities could petition the CPUC to charge customers with rooftop solar panels a flat monthly fee up to $10 for fixed costs of delivering electricity. Solar advocates said the tiered pricing would create high block pricing for solar array users and that, combined with the monthly fixed-cost charge, would strip solar of its economic benefit to rooftop system owners. 
 

A CPUC-imposed deadline would have suspended net metering starting in 2014, but that deadline has now been changed by new amendments to AB 327. The amended bill now protects net metering and clarifies how the net-metering cap—or the total number of megawatts from rooftop solar that utilities are required to compensate their customer for—must be calculated.

AB 327 also provides a process for uncapping net metering in the future. The California Public Utilities Commission (CPUC) will track the cost of net metering over time and produce a study analyzing its costs and benefits. Using the study, California's three main investor-owned utilities—San Diego Gas & Electric, Pacific Gas & Electric, and Southern California Edison—must then design and implement new net-metering programs by 2015 and 2017, respectively.
 

Despite changes to the bill, 

What will happen next: The current legislative session ends September 13, so legislators will have to act soon if they want to vote on AB 327.

What are the implications: A caveat for both utilities and solar advocates is that AB 327 "doesn’t change rates at all,” according to Bryan Miller, vice president of public policy at SunRun. “Rate reform is going to be decided by the CPUC. All that AB 327 does is give the CPUC some more tools in that process.” 

If passed to law, the bill will provide utilities with limited leverage, leaving most of power in the hands of the CPUC. California currently boasts half of the country's 297,000 net-metered homes and, as a vote on the bill draws near, AB 327 has the power to make California a model for how states deal with net metering.

Further reading:

• Assembly Bill No. 327 - California Legislative Information (Last updated: Sept. 4, 2013)
• Documents associated with AB 327 - California Legislative Information (Last updated: Sept. 4, 2013)
• AB 327: The Dark Side for California Solar - Greentech Media (Sept. 4, 2013)
• AB 327: From California Solar Killer to Net Metering Savior? - Greentech Media (Sept. 3, 2013)
• AB 327 Author Perea On the Record About California Energy Rates - The Independent Voter Network (Aug. 30, 2013)

2. SOLAR BATTLE GETS HEATED IN ARIZONA

In July, the Arizona Public Service (APS), the state's largest utility, went on the offensive against net metering by submitting a plan to the Arizona Corporation Commission (ACC) that would change the policy.

What's in the proposal: In its proposal, APS outlined two potential options:

1. Rooftop solar owners can continue to participate in net metering programs but will be charged a fee for “for their use of the grid, based on how much electricity they use.” 
 

2. Rooftop solar owners would receive a bill credit for the energy they generate at a price set by the ACC based on market rates that APS pays other generators. 

Chuck Miessner, pricing manager at APS, said the average net metering return is currently $0.15-$0.16 per kWh, saving customers about 70% of their bill. Miessner said the first option lowers customers' return to $0.06-$0.10 per kWh while the second option would reduce customers' savings to about 30%-40% of their monthly bill. 

What the reactions were: Solar advocates weren't buying the plan and rejected APS CEO Don Brandt's assessment that the proposal ensures “everyone who uses the grid shares in the cost of keeping it operating reliably for the future.” Opponents said the utility's plan will deter new installations, endanger Arizona's 10,000 solar industry jobs and stifle free market competition.

The Alliance for Solar Choice and a renowned U.S. tax law firm filed a brief with the ACC concluding that "tariffs proposed as an alternative to net energy metering could complicate residential solar system owners’ federal tax credits and force them to pay income tax for the electricity their systems produce," according to Greentech Media.
 

Meanwhile, on the sidelines, lobbying groups on either side have launched attack ads targeting their opposition, ensuring this will be an ugly victory no matter who wins. 

What will happen next: The commission is currently reviewing the APS proposal and will hold public hearings before voting within the next few months.
 

What are the implications:  APS is close not only to tarnishing ties with the fast-growing solar industry, but with their own customers. 62% of Arizona residents support solar electricity, while utilities have typically seen far lower favorability ratings. Arizona and other states are showing that the battle over rooftop solar is no longer taking place behind closed doors, which is not to any utility's advantage. 

Further reading:

• Sunset for solar? APS proposal threatens sustainability - Arizona Daily Sun (Aug. 27, 2013)
• Attorneys: Using Solar Tariffs to Replace Net Metering Could Create Tax Headaches - Greentech Media (Aug. 20, 2013)
• Arizona Public Service proposes cuts to NEM for residential customers - PV Tech (July 12, 2013)
• Arizona's Biggest Utility Proposes a Cut to Net Metering - Greentech Media (July 12, 2013)
• APS plan offers sustainable, fair choice for Arizona - APS Press Release Archive (July 11, 2013)
• Republicans Revolt as Arizona's Utility Proposes Cut in Solar Programs - Greentech Media (April 18, 2013)

3. COLORADO EXAMINES ROOFTOP SOLAR'S TRUE VALUE

After conducting a study on the cost and benefits of net metering, Xcel Energy Colorado submitted a proposal, the 2014 Renewable Energy Standard Compliance Plan, to the Colorado Public Utilities Commission (PUC) to trim the compensation paid to customers giving energy back to the grid. 
 

What's in the proposal: While net metering advocates argued the credit is simply a fair payment for electricity put back on the grid, Xcel calculated the contribution of rooftop solar users is not significant enough to avoid new transmission investments. Currently, residents and business owners with solar systems get a $0.104 credit per kWh, but this only generates a $0.059 cent per kWh benefit, according to Xcel, and is not even enough to cover the costs of the net metering program. Xcel is ultimately seeking to trim net metering credits down, but not eliminate them. 
 

What the reactions were: From the start, Xcel said the proposal was intended to spark debate about the impact of net metering. More than debate, however, the proposal garnered major opposition from 22 trade groups and clean tech companies. Xcel has been actively presenting a by-the-numbers case in the news while simultaneously threatening to scale back its Solar Rewards program from 36 MW of arrays developed to 6 MW if the proposal is not approved.
 

What will happen next: The PUC has referred Xcel's proposal to an administrative law judge, who will then set the date for a hearing.
 

What are the implications: If the PUC approves Xcel's plan, net metering will be rolled back across Colorado for all solar owners, no matter their utility company. A victory for Xcel won't mean a reduction in rootop solar installations, however, and this is where balance between the needs of both sides comes in. Xcel has been mandated to get 30% of its electricity from distributed sources by 2020 and Colorado has set a target for installing solar on 1 million rooftops by 2030.

The battle in Colorado shows that even utilities supportive of distributed solar are still struggling to define their value to rooftop solar owners, which is why Xcel is looking to restrict the parameters of net metering. Observers are watching Colorado to see how they calculate the value of rooftop solar and the value of utilities' infrastructure.

Further reading:

• PUC sends Xcel net-metering plan to administrative judge - Denver Post (Sept. 4, 2013)
• Colorado solar-energy groups oppose Xcel plan to trim credits - Denver Post (Aug. 30, 2013)
• Xcel Colorado Responds to the Solar Industry on Net Metering - Greentech Media (Aug. 1, 2013)
• RMI: New Insights Into the Real Value of Distributed Solar - Greentech Media (July 29, 2013)
• Xcel wants to extend Solar Rewards, slashes incentives - Denver Post (July 24, 2013)
  
   

Would you like to see more utility and energy news like this in your inbox on a daily basis? Subscribe to our Utility Dive email newsletter! You may also want to read Utility Dive's look at 4 challenges the utility business faces today.