The debate on the future of distributed solar in California, which is by far the largest solar market in America, began in earnest this week at the state's Public Utilities Commission in San Francisco.

The commission convened a workshop in response to AB 327, legislation passed last year that requires a “successor tariff” to replace net metering by July 1, 2017, or when each utility hits a 5 percent cap.

At this early stage of the process, the discussion centered around principles, hopes and fears. Stakeholders from the solar industry, utilities, consumer groups, school districts, agriculture, and local government -- plus a lone voice for wind power -- parsed the meaning of “sustainable,” since that term is a key component of the statute: “In developing the standard contract or tariff, the commission shall ensure that the standard contract or tariff made available to eligible customer-generators ensures that customer-sited renewable distributed generation continues to grow sustainably.”

There were sharply divergent, though largely abstract, views on what sustainable growth means for DG. Solar advocates said it means an ever-expanding market with long-term prospects. 

“We have a different perspective on what is sustainable,” said Dan Halperin, director of distributed generation for PG&E. “Recent exponential growth is not sustainable.”

There was another tug of war over whether the successor tariff should be more complex, in order to better address specific needs, or whether it would benefit from simplicity.

A number of parties reiterated the need for flexibility to adapt to new technologies. One key technology issue was the system size cap of 1 megawatt, which is inhibiting the use of distributed wind systems by industrial customers. AB 327 allows larger systems if conditions are met.

Dave Peck of the Office of Ratepayer Advocates, a division of the PUC, argued that new technologies or combinations could add value, like solar combined with storage or smart inverters, or even west-facing PV systems. “We should influence customer behavior with the incentives that are provided,” he said.

Others proposed providing incentives based on location, to encourage more DG in constrained areas of the grid (load pockets), or to create set-asides for technology diversity.

“We would support a program that has some flexibility so that it can adjust over time, depending on impacts on all stakeholders,” said Halperin of PG&E.

On the other hand, simplicity and transparency were key goals. “Net metering has served the U.S. and California very well,” said Peck of the ORA.  “A large part of that is simplicity. It doesn’t require another meter; it’s easy to understand, easy for utilities to implement. There are no tax implications for participants."

He continued, “It avoids the messy and somewhat futile effort to determine the value of solar. [Net metering] doesn’t care about value of solar. If we could have a new rate that was just as simple, that would be great.”

“I vote for keeping it simple,” concluded Jason Keyes of the Interstate Renewable Energy Council (IREC).

The ongoing argument about net metering impacts on low-income customers continued. Utility representatives complained about cost-shifting, contending that poor customers are forced to subsidize the wealthy who can afford to put solar on their roofs, while solar companies hotly denied this claim.

The legislature addressed low-income customers in a different way in AB 327. The law requires the CPUC to develop “specific alternatives designed for growth [of DG] among residential customers in disadvantaged communities.”

Rick Brown of TerraVerde Renewable Partners, an "independent energy advisor representing schools and other public agencies,” pointed out that most public school districts have a high proportion of low-income students, especially in the sunny Central Valley. As climate-induced drought impacts agriculture, resulting in layoffs of migrant farm workers, these low-income communities are disproportionately impacted. “These schools are looking at net metering to help save money.” 

Jason Keyes of the IREC reminded the commission of his “CleanCARE” proposal. Low-income customers in California get a 20 percent discount on utility costs under the California Alternate Rates for Energy (CARE) program. IREC has proposed shifting some of those funds to a package of shared renewable energy facilities, energy efficiency measures, energy storage and demand response. 

“Rather than receiving a rate discount as under the traditional CARE program,” IREC writes, “participants who elect the CleanCARE option would be allocated shared renewable program shares, in effect providing a bill discount.”

The commission announced the pending creation of a “value of solar calculator,” called the NEM Alternatives Public Tool. The new software model would allow users to change key variables to analyze the cost-effectiveness of NEM. A report released last year by consulting firm E3, which was commissioned by the legislature, evaluated the costs and benefits of net metering. The report was widely criticized at the workshop, saying it was obsolete when released due to changes in residential rate structures.

The new Public Tool is an attempt to provide greater transparency, stakeholder input, and flexibility, according to Sara Kamins, Supervisor of Customer Generation Programs for the CPUC.

Consultant bids have been received to develop the tool, with a kickoff workshop slated for this summer and a first draft expected by the end of the year. AB 327 requires the commission to issue a final rule on the NEM successor tariff by the end of 2015. 

Tags: cpuc, net metering, solar policy