Dive Brief:

• California utilities and solar advocates presented widely different views on the approach the state should take to change its net energy metering framework in comments filed with the California Public Utilities Commission on Friday.
• The parties’ comments came in response to a May ruling from a CPUC administrative law judge, which asked them to weigh in on multiple issues, including how to transition from one net energy metering tariff to the other and how to collect public purpose charges under the new framework.
• The ruling essentially reopened the record in the commission’s net energy metering proceeding, so that regulators can accept new information to evaluate the best course of action, according to Seth Hilton, partner at Stoel Rives. After this, “we’re likely to see a revised proposed decision come out which will respond to the proposed changes in the comments in some fashion — either adopt those changes, or [it] won’t,” he said.

Dive Insight:

The CPUC released its proposal to revise California’s current net energy metering program in December, outlining a tariff structure that included an export compensation rate based on the avoided cost values of behind-the-meter systems. However, the proposal drew a lot of criticism from the solar industry and analysis from Wood Mackenzie found that if approved, it could cut California’s residential solar market in half by 2024. Eventually, the agency decided not to schedule a vote on the proposal, and instead consider revising it.

California’s net energy metering framework provides financial credits to customers who generate their own electricity and provide what they don’t need back to their utility. The current tariff has been in place since 2016, but according to the commission, its new proposal would provide “more accurate price signals.”

In their comments, California’s three investor-owned utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — urged energy regulators to adopt a new net energy metering framework “as expeditiously as possible.” The utilities argued that a year ago, they estimated the total subsidy paid by non-net energy metering customers was $3.4 billion. As of June, the annualized cost shift has grown to $4 billion, they said. 

The Solar Energy Industries Association and Vote Solar, however, said in their filing that the CPUC’s December proposal would “place the future of the solar industry in California in jeopardy.”

One key issue the parties disagreed on in their comments is transitioning customers from the existing net energy framework to a new one, which the commission calls the “glide path.” The agency’s original proposal would have adopted something called a “market transition credit” — a fixed dollar per kilowatt of solar system size, which would go to customers as a monthly credit on their electricity bills. However, the administrative law judge’s ruling asked the stakeholders to weigh in on a different approach, called Avoided Cost Calculator Plus or ACC Plus, which would provide a fixed cents per kilowatt hour export adder on top of hourly export credits — basically, an increased energy payment rather than a capacity credit, according to Hilton. 

SEIA and Vote Solar both voiced preference for the ACC Plus mechanism in a joint filing. If structured correctly over enough time, the ACC adder concept could provide “a reasonable transition” for the solar industry, they agreed. However, they urged regulators to make sure the mechanism incorporated realistic solar costs. 

The utilities, however, said in their filing that customers do not need transition credits. But if the commission does conclude that transition credits should be included in the new framework, they preferred the original proposal’s market transition credit approach, they said. 

Another point of contention is whether utilities should collect non-bypassable charges on each net energy metering customer’s gross consumption, including both imports and behind-the-meter electricity use. 

Non-bypassable charges include, for instance, charges to fund low-income and energy efficiency programs. Under the current net energy metering framework, customers only pay these charges on billed imports, which would be reduced by on-site solar generation, according to Hilton. 

The May ruling asked parties to comment on an alternate mechanism proposed by Sierra Club, by which utilities would collect non-bypassable charges on customers’ gross consumption. While the utilities supported such a proposal, SEIA and Vote Solar pushed against it in their filing, noting that the energy produced and consumed behind the meter does not interact with the systems of regulated utilities. 

“These generators are not electrical corporations (and thus public utilities) over which the Commission has broad sweeping regulatory authority,” they said. 

The California Solar and Storage Association also urged regulators to reject the non-bypassable charge proposal on legal grounds, stating that the commission does not have a clear statutory basis for extending its jurisdiction over behind-the-meter activity.