On Monday, the California Public Utilities Commission (CPUC) proposed common-sense reforms to the state’s policy on net metering. This policy refers to situations where rooftop solar consumers are paid for excess electricity they produce and sell into the grid.
In Monday’s released proposal, the CPUC couldn’t have been more lucid in describing the underlying inequities in California’s current net metering tariff, stating, “Our review of the current net energy metering tariff, referred to as NEM 2.0, found that the tariff negatively impacts non-participating customers; is not cost-effective; and disproportionately harms low-income ratepayers.”
Over our decade-plus history, we’ve written many articles about the inequities of many states’ net metering policies.
In 2015, Energy Fairness discussed a study published by the Louisiana PSC that found a cost-shift of more than $2 million from rooftop solar owners to non-solar customers. This cost-shift was in addition to the $42 million annual cost of the state’s tax credit for solar installations.
On the heels of this report, Arizona was the first to address the cost-shift from rooftop solar to regular utility customers.
In 2016, the Arizona Corporation Commission (ACC) voted 4-1 to end net metering for all new rooftop installations in favor of a rate that was closer to paying the avoided cost/wholesale rate for all future rooftop installations. In addition, the ACC grandfathered in net metering rates for existing rooftop owners for 20 years to ease the transition.
Three years later, following Arizona’s lead, the Michigan legislature abolished net metering. Its PSC reduced its net-metered rate to more of a wholesale rate while grandfathering existing rooftop systems at the net-metered rate for ten years. Following up on its 2015 report, the Louisiana PSC took similar action by adopting a wholesale rate and grandfathering in existing net-metered systems for 15 years.
So what prompted California to take action on its outdated net metering policy? Perhaps it was because the CPUC had finally realized that the state’s roof-top solar market had matured and their new proposed tariff “…ensures all customers pay for their usage of the grid.” Or, as the Natural Resources Defense Council aptly noted, “it[the net metered rate] overpays solar customers and shifts fixed grid and societal charges that solar customers should pay onto other customers.”
We couldn’t agree more!
All policies compensating roof-top solar systems for electricity sold into the grid must 1) Treat all customers fairly by avoiding cost-shifting, 2) Accurately reflect the benefits and costs to the grid of rooftop solar, and 3) Avoid distorting the energy marketplace with inequitable rates for excess rooftop generation. If policymakers fall short of these principles, they risk saddling many customers with higher costs.