According to Vote Solar, a solar lobbying group, "Major utilities are working hard in Sacramento to undo our huge solar victory at the CPUC."
The victory Vote Solar refers to is a solar-industry-favorable definition and calculation of the 5 percent net metering cap.
It might sound like an arcane and wonky policy issue -- but according to a note from law firm WSGR, "The revised method for calculating the statewide capacity cap for the net metering program could have the effect of increasing the total capacity of distributed renewable energy generation eligible for this program by more than 2 gigawatts."
Vote Solar wrote in an email, "While the legislature was focused on solving the state’s budget issues, the utilities quietly amended AB 2514 -- formerly a bill that would have simply studied the impacts of net metering. The new language reverses the CPUC’s unanimous pro-solar decision by ordering the Commission to use the more restrictive approach favored by the utilities. If it goes through, half as many California homes, businesses, schools and public agencies would receive credit on their power bills when they go solar."
California has a net energy metering (NEM) program that allows owners of distributed generation systems of up to one megawatt in capacity, like small wind turbines and rooftop solar systems, to reduce their electricity bills. For the kilowatt-hours they send to the grid, system owners’ meters turn backwards as they are credited at the same retail rate they pay for the kilowatt-hours they consume.
There is a 5 percent cap on the amount that can be net metered by California's investor-owned utilities (IOUs), but the ambiguous calculation of exactly how that cap is determined was a contentious issue between utilities, solar advocates, and consumer advocates. (For more details on the calculation and the difference between “coincident" and “non-coincident” peak demand and the definition of "aggregate customer peak demand," see this article by our reporter Herman Trabish.)
It seemed as if California's net energy metering (NEM) issue was settled when the California Public Utilities Commission (CPUC) defined “aggregate customer peak demand” on May 24 in what looked like a win for distributed solar power.
But apparently not this case.
California's investor-owned utilities such as PG&E have argued that of the three parts of the standard electricity bill, only one covers the price of electricity generated. The other charges cover the costs of delivering electricity through the transmission and distribution infrastructure. When net energy metering customers’ bills are reduced by the retail rate, they escape paying their fair share of costs for the infrastructure that they use as much as non-NEM customers do.
And, the utilities say, it shifts costs to other ratepayers.
It's a fair argument. But other arguments can be made. Jigar Shah, the founder of SunEdison and a solar industry veteran, wrote in a recent GTM guest piece:
"Net metering was really created as a compromise to utility companies to account for energy sent back to the grid; as I said before, a compromise accounting method. It just assumed that the costs are equal to the benefits. It was never considered a subsidy as the utilities are claiming now. The reason we have this compromise of net metering is that utilities have antiquated billing systems. In fact, much of their billing systems are programmed with Cobol-based software systems and then augmented with hand tabulations. Cobol systems originated in 1960."
Shah continued, "If the utility companies want to start charging solar PV real-time pricing, they first have to upgrade their billing systems to handle the data. At that point, we should all be happy to appoint an independent consultant to account for the full benefits and costs of net metering -- offsetting any lost revenues to the overall system costs with cost savings on system upgrades and reduced operation costs -- we can then get a more precise assessment of how this net metering nets out. The bottom line: once the utilities actually enter the 21st century, I would be happy to move away from net metering. If net metering truly costs the utility companies more, the solar producers (and others) should pick up the tab. If net metering is a bonus to the utility companies, they should pay the renewable energy producers the real value for their solar electricity. Deal?"
In any case, the amended bill, AB 2514, introduced by Assemblyman Steven Bradford, is set for its first Committee hearing the day before the July 4th holiday -- that's today.
The amendment to the bill reads: “In evaluating program costs and benefits for purposes of the study, the commission shall consider all electricity generated by renewable electric generating systems, including the electricity used onsite to reduce customers' consumption of electricity that otherwise would be supplied through the electrical grid, as well as the electrical output that is being fed back to the electrical grid for which the customer receives credit or net surplus electricity compensation under net energy metering. The commission shall use the peak demand reported by those electric utilities filing a Form No. 1 with the Federal Energy Regulatory Commission to determine aggregate customer peak demand, and shall use the Energy Commission’s alternating current ratings to determine the total generating capacity of eligible customer-generators, for purposes of calculating the 5-percent limitation in paragraphs (1) and (4) of subdivision (c) of Section 2827.”
The bill used to read: “In evaluating program costs and benefits for purposes of the study, the commission shall use the peak demand reported by those electric utilities filing a Form No. 1 with the Federal Energy Regulatory Commission to determine aggregate customer peak demand, and shall use the Energy Commission’s alternating current ratings to determine the total generating capacity of eligible customer-generators, for purposes of calculating the 5-percent limitation in paragraphs (1) and (4) of subdivision (c) of Section 2827.”
Adam Browning, the Executive Director of Vote Solar, called it a "stealth effort ... to restrict solar in California," writing in the The California Majority Report.
Browning asked in an interview with GTM, "With SONGS [the San Onofre Nuclear Generating Station] out for the foreseeable future, why are policy makers taking out peak generation right where it is needed?" He called the situation "far more acute right now, an imminent crisis." He called the present juncture "a time when we should be putting our foot on the gas and not on the brake. Solar has a solution and we should be doing all we can to facilitate more solar development."
David Rubin, PG&E Director of Service Analysis, points out that PG&E has 66,000 rooftop solar installations in its service territory -- about 30 percent of the nation's rooftop solar -- and supports various types of solar policy. The utility simply "has a concern" over the current NEM approach. Rubin said, "We need a post-5-percent version of NEM -- call it NEM 2.0."
PG&E has offered to extend NEM through the end of 2014 while working on a successor mechanism. According to Rubin, this would achieve the same practical outcome as the Commission’s decision, but without the legal challenges.
Herman Trabish contributed to this article.
Tags: aggregate customer peak demand, california, california public utilities commission, capacity, coincident peak demand, combined heat and power systems, commercial, commercial peak, commission president michael peevey, commissioners, cost-benefit analysis, cpuc, crossborder energy, dg, distributed generation