California PUC Rules in Favor of Net-Metering

The commission clarifies language that will unlock gigawatts of distributed solar in the state.

Steve Leone, Associate Editor, RenewableEnergyWorld.com
May 24, 2012 | 18 Comments

California net-metering gained a resounding victory on Thursday when the state's Public Utilities Commission voted 5-0 to accept a proposal that clarifies how utilities should measure the net-metering cap.

While the ruling dealt with the arcane language within the original law, the clarified interpretation is expected to provide a long-term boost to the state’s residential market.

The issue has proven to be a major sticking point between the solar industry — especially those in California — and the state’s powerful utilities, which have argued that accepting more net-metered solar would hurt ratepayers.

PUC Chairman Michael Peevey submitted the approved proposal in April. 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 question thus far has been in how utilities have chosen to interpret the law.

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 had the law not been clarified.

Sara Birmingham, the Solar Energy Industries Association Director of Western States, released the following statement after the vote:

“This decision is a positive step forward for clean energy jobs, for ratepayers, and for our state.

“The commissioners noted that there is wide disagreement on the issues related to the cost shift between solar and non-solar customers. SEIA looks forward to working with stakeholders on the study of costs and benefits, and believes the study will report these costs as minimal.

“We are hopeful the Commission will resolve additional technical issues raised by the decision to ensure the growth of solar energy jobs in California and maintaining our state’s leadership in this sector.

“On behalf of the solar industry, residential customers, schools, businesses and more than 60,000 Californians who urged the PUC to make solar energy credits more widely available and to boost one of our brightest job-creating industries, we thank the Governor and the Commissioners for their support today.”

image: Home with Solar Power via Shutterstock

18 Comments

Michael Faber
July 12, 2012

And still,the fox guards the chicken house. When do the rules change, to NOT allow industry representatives to make the rules that benefit themselves and their shareholders instead of the people. Get PG&E out of the commisioners office for good. When will the production of energy become for the good of the country, instead of the corporations? We should demand the rules change to allow alternative energy producers to feed into the grid for the good of our country, not allow the companies to use this one rule to control the high price of power. That price is now about to really start increasing, like we've never seen before, and it won't stop untill we change.

Peter Bradshaw
June 4, 2012

Two thoughts.
1. Clearly my utility company needs some reimbursement for handling the flow of my excess generation (summer days) and excess consumption (nights, winter). My net metering bill from PG&E in CA seems to include a minimum monthly charge (a bit over $12) in months were I generate more than I use. The details escape my ability to understand, but I think PG&E gets something extra from that.
2. As an (somewhat) early adopter, my PV system costs are higher than even current systems. I (and other PV system purchasers) are effectively subsidizing the utility's generation costs with our capital equipment, even after the state and federal subsidies. The electricity we generate is at roughly the times of the utility's highest cost supplies.

jvd prasad
June 4, 2012

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ANONYMOUS
May 31, 2012

I would not necessarily agree that California electrical utilities have unfettered power. They do have service monopolies, but their rates are controlled by the state. If you are an electrical power customer in California, you'd understand just how complex the tiered/baseline rate structure can be.

I agree that distributed PV solar has some real benefits for locations like California. It provides additional capacity without the huge cost of adding transmission infrastructure.

I also agree that any surplus power put back into the grid by private PV solar installations should be credited at the same rate schedule as it would be purchased.

However, in all fairness there are a couple other things to consider. Since the capital cost of PV solar installations are heavily subsidized by ratepayers and taxpayers, shouldn't a portion of the value of any excess power credits received be paid back to reimburse the subsidies? And if the excess power credits result in a net capital financial gain, should state taxes be paid on those gains?

ANONYMOUS
May 29, 2012

I agree with RichMignogna's comment #13. Surely when the legislature was drafting the cap they were thinking in terms of coincident peak demand (to assume otherwise would be to assume the law was drafted by utter morons) so if the commission had acted rationally they would have backed the definition of the utility company. There is nothing preventing the legislature from raising the cap above 5% (something that in CA would probably enjoy broad support and gain rapid passage) and such decisions should rest in the hands of elected representatives rather than an unelected panel that is using a contrived interpretation of the legislative wording to advance the goal of a special interest group.
Steven

Richard Mignogna
May 29, 2012

Right problem, wrong solution. It seems to me that, from a technical standpoint, using coincident peak demand as the utilities have done is the correct approach. Peevey's solution to sum the peaks that occur at different times makes no sense. But, the 5% cap was also arbitrary. What they should have done is change the cap, not the calculation.

ANONYMOUS
May 28, 2012

I just had installed a PV grid connected system to my home in Maryland also last week. The system is under final inspection before activation by SolarCity. I too like richard-tedrow-56018 of Maryland above have Potomac Electric Power Company (PEPCO) as our electrical utility. I am under a lease program with SolarCity, but PEPCO does have a very unique program you or given a "credit" per KWH that is shifted to the grid with no $$$ value to it, and in return your consumption off the grid against your "credits" is calculated. One would wonder how in the heck can PEPCO make any money with a Net-Metering program like this, but PEPCO has fix fees in place plus state taxes added to your electrical utility bill each month. The bottom line the less energy output by PEPCO as the utility in the form of fuel to produce electricity is a savings and extended profit for the utility. "It Works"

Maury Markowitz
May 28, 2012

"whereby if demand declines below certain levels its revenues are supplemented as if the decline had not occurred"

I'm surprised MS didn't patent that.

J F
May 28, 2012

Expect that limit to be reached within 2012.
While I cannot understand the extremely high cost per kW in the California program, large scale developers will bring lease-based systems to the roofs at less than 2 $/W.

Peter Bradshaw
May 27, 2012

Addendum: by clicking on the utility-based chart above,or going directly to

http://www.californiasolarstatistics.ca.gov/reports/agency_stats/

you can check the status of "Residential" and "Non-residential" and also "Installed" and "Pending" category installations by utility company. The non-residential installations are a bit larger than my prior estimate, i.e. more than the residential ones.

Peter Bradshaw
May 27, 2012

According to an article in the San Jose Mercury News, PG&E has more than 65,000 net metering customers in Northern California, and is adding about 1000 per month. Most domestic systems are probably about 2kW to 3kW peak output, suggesting about 120 to 200 MW. The bigger systems (small commercial sites) seemed to me to add about as much again, when I looked at a table of systems some while ago. Earlier articles suggested that the net metering capacity was getting close to the earlier limit for PG&E, of 1044MW, and now the new limit is 2414MW for PG&E. Presumably the other CA utilities are comparable.
Another source of data is
http://www.californiasolarstatistics.ca.gov/
which lists the statistics for solar installations that have received state rebates under the CSI. This shows 115,392 installations, and 1197 MW installed statewide. I am not sure if all of that is on net-metering, but probably most of it. There were some installations before the CSI program, which may be included, I think. There is a chart showing the amounts by utility company, which supports my guesses above, roughly.

Marc Michon
May 26, 2012

my question is net metering cap is 4,600 Mgw
what has been installed to date?
I'd like to have an idea how much left before reach cap
so the ruling close to doubled amount of amount can be net metered?

william hughes
May 26, 2012

Net metering, which implies a single meter that can turn in either direction, depending on whether you are making or consuming energy is the only way to go. Double metering, such is practiced in Germany, is a scam on many levels and this seems to be unnoticed by most of the Germans with solar panels who are extremely grateful to be getting three times the tariff for the power they produce than for the power they use. Are you ever suspicious when you seem to be getting something for nothing
http://mtkass.blogspot.co.nz/2008/04/double-metering-its-insidious.html

Richard Tedrow
May 25, 2012

robert-ukeiley-35718 is completely correct. What we have here are utility officers, etc., fighting for the life of the company rather than getting proactive. Soon, given very efficient solar cells and battery storage, the utility customers will be able to take themselves off the grid and so escape the utilities apparent tyranny. Here in Maryland the Potomac Electric Power Company has snuck in a sweetheart arrangement whereby if demand declines below certain levels its revenues are supplemented as if the decline had not occurred.

Robert Ukeiley
May 25, 2012

Saying that "issues relate[] to the cost shift between solar and non-solar customers" frames the issue incorrectly. Net meter customers are people who are using their own capital to add generation capacity to the utility system. The issue is whether customers should be allowed to directly spend their capital rather than paying for the capital the utility invests, plus the interest on that capital from third parties like banks or the utility's shareholder, through their rates. Customers have always been allowed to alter the electric system by spending their own capital to increase or decrease demand. There really should be no difference between customers spending their own capital to decrease demand or customers spending their own capital to increase generation via distributed generation.

Richard Tedrow
May 25, 2012

This sounds like (a) a small breakthrough for solar and (b) a very hard regressive limitation on the replacement of fossil fuel fired energy with an abundant renewable, i.e., solar.

Rich Barbarics
May 25, 2012

There should be 'no' cap. Utility protectionism of their turf made sense until the world realized the non-renewability of fossil fuels and global warming problems. It's hard to satisfy conflicting objectives and sticking to the 'old way' of doing things is short sighted. It is time to start thinking about going 'all in' and eliminating structural rules to inhibit the process. Cal. has the world's 8th largest economy and needs to continue their leadership in the process of abandoning the old for the new. There's no gordian knot here .. only tradition that no longer makes sense.

Jigar Shah
May 24, 2012

This is a huge win for the Solar Industry. The data will show that for now, the solar industry subsidizes the electric systems by:
1) providing peak power
2) reducing the cost of wholesale power during the day for everyone
3) reducing need for distribution system upgrades
4) allows utilities to not update their software

Go Solar!

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Steve Leone

Steve Leone has been a journalist for more than 15 years and has worked for news organizations in Rhode Island, Maine, New Hampshire, Virginia and California.