By - Michael Drost

California utilities propose net-metering reforms

Energize Weekly, August 5, 2015

California’s two biggest utilities urged state regulators to make sweeping changes to the way residential solar customers get compensated for returning excess energy to the grid, citing the improving economics of solar power along with the cost shifting effect of increasing distributed generation.

“Solar is an essential part of our clean energy future,” said Anthony Earley, Pacific Gas & Electric’s (PG&E) chief executive officer. “We need smart energy reform to sustain its long-term growth in California.”

PG&E and Southern California Edison (SCE) both submitted plans before the California Public Utilities Commission (CPUC) this week outlining how they’d like to reform the solar electricity system in the state. The CPUC is required by the end of 2015 to create a successor net metering tariff to take effect once the three biggest utilities in the state reach 5 percent installed capacity under net-metering or in mid-2017, whichever comes first. Both PG&E and SCE say that current net-metering rules shift costs of connecting residential solar customers to the gird onto non solar customers, costs which are only going to increase over the next decade.

To address this, both utilities want to charge customers with residential solar systems a maximum $3 per kilowatt per month in order to pay for fixed costs associated with maintaining transmission and distribution grid infrastructure. PG&E will assess this charge according to a customer’s demand usage, or the peak amount of energy they consume during the month, while SCE will base this charge on the installed capacity of the involved distributed generation system.

The estimated impact of the proposal will be hard to quantify. According to a hypothetical example provided by PG&E, the average solar customer with an electricity bill of $180 per month saves about $110 off that bill. Under PG&E’s proposal, those savings will be reduced to about $90 per month. Solar customers are also currently credited about 17 cents a kilowatt hour for excess energy returned to the grid. PG&E’s proposal would reduce that credit to 10 cents per kilowatt hour, while SCE proposes to pay solar customers an “export compensation rate” of 8 cents per kilowatt-hour.

Both companies also proposes to bill customers once a month as supposed to the current system of billing customers once a year. They also maintain that the proposals would not impact current solar customers or those who install systems before July 1, 2017 or before state caps are reached.

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