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PUC May Decide California's Fight Over Net-Metering

As California continues to inch toward its 33 percent renewables target, a particularly contentious battle over the future of net-metering could soon be finding a resolution.

The California solar industry and the state’s top utilities have been locked in a standoff over an existing net-metering cap that threatens to limit the financial benefits of future rooftop installations. Now, California Public Utilities Commission Chairman Michael Peevey has introduced a proposal that would more clearly state the Net Energy Metering law’s intentions, and if approved it could provide a long-term boost to the residential market.

As written, the law caps net metering at 5 percent of “aggregate customer peak demand.” After that, there is no guarantee that utilities will allow new solar customers to sell their unused power back to the grid.

The implications of the ruling can be measured in gigawatts. A change in methodology is projected to allow a cumulative capacity of 4,600 megawatts of mostly residential installations. That figure, which also includes a limited amount of small commercial projects that qualify for net-metering, would be about 2,100 megawatts higher than if the current law stays as is.

The question before the PUC is how the 5 percent cap is calculated. Right now, the state’s three big utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — each has a different way of measuring “aggregate customer peak demand.” Leaders in the state’s solar industry, including Vote Solar, SEIA, IREC and the Sierra Club, contend that there needs to be a uniform methodology. In the end, utilities are looking to continue their more restrictive interpretation, which solar advocates say results in almost 50 percent less net metered solar energy than would otherwise be allowed. According to Carrie Hitt, Vice President of State Affairs for SEIA, the methodology currently being used overestimates the amount of solar on the grid.

The solar industry, though, has Peevey in its corner. He’s recommending that the Net Energy Metering statutes written in 1995 and revised in 1998 include clarity about how “aggregate customer peak demand” is defined and calculated. According to his written proposal, Peevey concludes that utilities “should use the highest recorded sum of non-coincident peak demands in a calendar year as the denominator for their NEM cap calculations.”

Peevey writes in his report that according to PG&E, the solar industry is attempting a strained interpretation that is not reasonable or sensible.

The full commission will vote no earlier than May on whether to accept the proposal. When they do so, they’ll be looking closely at the original intent of the law. Comments from former Assemblyman Fred Keeley, the author of the original net metering law, makes that intent rather clear.

“When we crafted California’s original net metering law, the goal was to maximize the amount of clean distributed energy on the grid,” said Keeley in a quote posted on the Vote Solar website. “By proposing this methodology, the CPUC is complying with the original legislative intent and helping California lead the way toward a clean energy economy.”

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