California Net Metering Update

Supporters of California’s landmark net metering legislation, which currently allows for systems up to 1 MW to interconnect with utilities, are facing an uphill battle in the state legislature in their bid to avoid the automatic reduction in system size eligibility scheduled for the end of this year.

Sacramento, California – August 23, 2002 [] In 1995, California led the nation into an experiment with net metering, which helped grow the PV and small wind industry in that state. Since then, 36 U.S. States have followed California’s lead and passed net metering laws, enabling homeowners and business to receive a credit for energy their PV or small wind systems generate and pump into the grid. When passed, the legislation allowed for systems up to 10 kW, making it more than suitable for the average residential installation of 2 to 4 kW. In 2001, that limit was increased to 1 MW exploding the marketplace resulting in a ten-fold increase in large PV systems. The increase to 1 MW is set to “sunset” back to 10 kW at the end of the year, sending PV advocates scrambling to attempt to influence their legislators. Currently, Assembly Bill 58 is awaiting a hearing in a Senate/Assembly conference committee – likely to occur Monday – when six legislators will hear testimony crucial to the industry. Les Nelson, Executive Director of the California Solar Energy Industries Association, which sponsored the legislation, told Thursday, there are three main issues that the group is focusing on. First, maintaining true net metering for systems up to 500 kW (a compromise from the current 1 MW. All current systems would be “grandfathered” under any new legislation.) “The gen to gen metering is not true net metering at all,” Nelson said. “All the electricity going in gets billed at full retail, while the electricity going out to the utility is billed at generation rate, typically, a much lower number.” Second, instituting a 1 percent demand capacity cap, after which individual utilities would not have to offer net metering. (That would equal 568 MW, currently there are 20 MW installed.) Third, eliminate the sunset date. Kari Smith, Manager of Regulatory Affairs at PowerLight, which specializes in large PV systems, said the increase to 1 MW net metering has resulted in a 10-fold increase in large systems. “The intent (of the legislation) worked,” Smith said. “Now, there is a major push by the investor owned utilities to sunset the law – we’re hopeful that this doesn’t succeed.” Smith said among the benefits of distributed generation is a reduction in the typical 15 percent loss of energy over distribution lines and the decrease in demand during peak hours when large PV system users consume generated power onsite. “This was the first state to introduce very large scale net metering – it has been very successful,” Smith said. “Large scale (PV) systems accelerate production and cost reductions.” The legislature will begin the final steps to determining the future of net metering in California Monday. Meanwhile, Nelson and Smith are busy working the phones to assure constituents to let their voices be heard. “It’s at lightening speed right now,” Nelson said.
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