ARTICLE
Last week, the California Public Utilities Commission finalized a decision that has been in the process for two-plus years. That decision will slash the state’s Net Energy Metering (NEM) tariff paid to residential solar power users who (by Commission regulations) are allowed to sell any excess solar power back to the utility. We have discussed this policy issue in great detail at the Chamber’s Community Affairs Committee (CAC) meetings over the past year. We concluded that NEM 2.0 in its current formula needed some modification, however, not to the detriment of the solar industry. You can read the CPUC press advisory here: https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-modernizes-solar-tariff-to-support-reliability-and-decarbonization The NEM program has been a difference maker in ensuring that California leads the country in solar installations. Back in the early 2000s, under Governor Arnold Schwarzenegger’s era, he pushed for 1 million solar rooftops as the incentive for Californians to adopt solar energy for their homes and businesses. Governor Brown and for what seemed essential, Governor Newsom continued on that path — until the investor-owned utility companies began citing equity concerns that solar roofs were mostly for the higher income families. Coupled with state and federal tax benefits, the solar energy industry took off like a rocket to propel us into a renewable energy future and address climate change. So, why would the CPUC do this? After all, California has some of the most ambitious climate goals in the world. Don’t we need to keep NEM in order to remain on track to meet those goals? The answer is yes. But, as environmental leader Terry O’Day explained to us, as people reduce their reliance on the Electric Grid, the Grid becomes more expensive per ratepayer. The CPUC decision for Net Energy Metering 3.0 (NEM), implementing a net billing mechanism and slashing payments for excess solar production sent to the grid by 75%. Based on an internal and external analysis, the new decision would cut the average export rate in California from $0.30 per kWh to $0.08 per kWh, making the cuts effective in April 2023. Bernadette Del Chiaro, executive director of the California Solar & Storage Association (CALSSA) said, “The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a steep solar decline. An immediate 75 percent reduction of net energy metering credits does not support a growing solar market in California.” NEM has been a critical policy in launching the California rooftop solar market, which has grown to a robust 1.3 million homes covered in panels, representing about 50% of the US residential market. It has also been instrumental in launching the state’s commercial and industrial solar market. As the CPUC says in its final Rate-setting Decision, “As multiple parties have acknowledged, the net energy metering program has assisted the State in meeting its energy and climate goals. However, because the Commission is mandated to create a tariff that adheres to the entire statute — including equity concerns — the growth of the market should not come at the undue and burdensome financial expense of nonparticipant ratepayers. Allowing the net energy metering tariff to result in growing costs shifted to nonparticipant ratepayers is not sustainable to the overall health of net energy metering.” The Chamber’s solar energy companies aren’t buying the argument. Let’s hear from the other side who supported a more robust shift in policy. According to San Francisco-based The Utility Reform Network (TURN), the CPUC didn’t fully shift rates back to being in enough balance among all income levels. Dr. Mark Toney, TURN’s Executive Director, said, “While last week’s decision represents a small step in the right direction, TURN is disappointed that the CPUC’s decision fails to significantly reduce the rapidly growing portion of retail rates that all customers pay to subsidize participation in the Net Metering program. These costs will instead be disproportionately borne by the 45 percent of Californians, and two-thirds of low-income customers, who rent their homes, cannot install solar, and will be left to pick up the tab.” Further, the move by CPUC does nothing to help lower-income neighborhoods or businesses acquire and benefit from solar. So does slashing incentives rates lead to more equitable access to solar installations? The short answer is NO. California has committed to achieving 60% renewable electricity by 2030 and 100% clean zero-carbon electricity by 2045 Modeling conducted for the state of California assumes that to meet those goals, California will need to continue to add nearly as much rooftop solar as we currently do, every year through 2045. That’s not going to happen under the current NEM 3.0 decision. Environment California also warns of a “solar cliff” we’ll see unfold with such huge cuts to NEM, which exactly happened in Nevada. They dramatically cut their NEM tariff several years ago, and new solar installations dropped off so precipitously that they had to reverse their decision the following year. The CPUC does refer multiple times in their lengthy decision to a “successor tariff,” but is there a timeline or self-imposed deadline to create a new incentive program? The answer again is no. Is there a role for the state legislature to address the shortcomings of the CPUC decision and would the Governor reverse course from the Governor-appointed CPUC members? Along the Central Coast, solar industry companies see this as a bad decision that could dramatically slow the growth of solar in California. The solar companies are now pressured to push out as many solar installations using the NEM 2.0 before the NEM 3.0 decision takes effect in April 2023. What is lost on the CPUC decision, most solar companies are small businesses that employ thousands of highly skilled people. At a time of deep concern about soaring energy prices, inflation and a slowing economy, this is not the time to put a hold on California’s solar industry’s growth, increasing solar installation on homes, businesses, schools and multi-family buildings, and increasing battery storage development that are all critical in the next decade. What a missed opportunity by the CPUC.
Last week, the California Public Utilities Commission finalized a decision that has been in the process for two-plus years. That decision will slash the state’s Net Energy Metering (NEM) tariff paid to residential solar power users who (by Commission regulations) are allowed to sell any excess solar power back to the utility. We have discussed this policy issue in great detail at the Chamber’s Community Affairs Committee (CAC) meetings over the past year. We concluded that NEM 2.0 in its current formula needed some modification, however, not to the detriment of the solar industry.
You can read the CPUC press advisory here: https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-modernizes-solar-tariff-to-support-reliability-and-decarbonization
The NEM program has been a difference maker in ensuring that California leads the country in solar installations. Back in the early 2000s, under Governor Arnold Schwarzenegger’s era, he pushed for 1 million solar rooftops as the incentive for Californians to adopt solar energy for their homes and businesses.
Governor Brown and for what seemed essential, Governor Newsom continued on that path — until the investor-owned utility companies began citing equity concerns that solar roofs were mostly for the higher income families. Coupled with state and federal tax benefits, the solar energy industry took off like a rocket to propel us into a renewable energy future and address climate change.
So, why would the CPUC do this? After all, California has some of the most ambitious climate goals in the world. Don’t we need to keep NEM in order to remain on track to meet those goals? The answer is yes. But, as environmental leader Terry O’Day explained to us, as people reduce their reliance on the Electric Grid, the Grid becomes more expensive per ratepayer.
The CPUC decision for Net Energy Metering 3.0 (NEM), implementing a net billing mechanism and slashing payments for excess solar production sent to the grid by 75%. Based on an internal and external analysis, the new decision would cut the average export rate in California from $0.30 per kWh to $0.08 per kWh, making the cuts effective in April 2023.
Bernadette Del Chiaro, executive director of the California Solar & Storage Association (CALSSA) said, “The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a steep solar decline. An immediate 75 percent reduction of net energy metering credits does not support a growing solar market in California.”
NEM has been a critical policy in launching the California rooftop solar market, which has grown to a robust 1.3 million homes covered in panels, representing about 50% of the US residential market. It has also been instrumental in launching the state’s commercial and industrial solar market.
As the CPUC says in its final Rate-setting Decision, “As multiple parties have acknowledged, the net energy metering program has assisted the State in meeting its energy and climate goals. However, because the Commission is mandated to create a tariff that adheres to the entire statute — including equity concerns — the growth of the market should not come at the undue and burdensome financial expense of nonparticipant ratepayers. Allowing the net energy metering tariff to result in growing costs shifted to nonparticipant ratepayers is not sustainable to the overall health of net energy metering.” The Chamber’s solar energy companies aren’t buying the argument.
Let’s hear from the other side who supported a more robust shift in policy. According to San Francisco-based The Utility Reform Network (TURN), the CPUC didn’t fully shift rates back to being in enough balance among all income levels. Dr. Mark Toney, TURN’s Executive Director, said, “While last week’s decision represents a small step in the right direction, TURN is disappointed that the CPUC’s decision fails to significantly reduce the rapidly growing portion of retail rates that all customers pay to subsidize participation in the Net Metering program. These costs will instead be disproportionately borne by the 45 percent of Californians, and two-thirds of low-income customers, who rent their homes, cannot install solar, and will be left to pick up the tab.”
Further, the move by CPUC does nothing to help lower-income neighborhoods or businesses acquire and benefit from solar. So does slashing incentives rates lead to more equitable access to solar installations? The short answer is NO.
California has committed to achieving 60% renewable electricity by 2030 and 100% clean zero-carbon electricity by 2045
That’s not going to happen under the current NEM 3.0 decision. Environment California also warns of a “solar cliff” we’ll see unfold with such huge cuts to NEM, which exactly happened in Nevada. They dramatically cut their NEM tariff several years ago, and new solar installations dropped off so precipitously that they had to reverse their decision the following year.
The CPUC does refer multiple times in their lengthy decision to a “successor tariff,” but is there a timeline or self-imposed deadline to create a new incentive program? The answer again is no.
Is there a role for the state legislature to address the shortcomings of the CPUC decision and would the Governor reverse course from the Governor-appointed CPUC members?
Along the Central Coast, solar industry companies see this as a bad decision that could dramatically slow the growth of solar in California. The solar companies are now pressured to push out as many solar installations using the NEM 2.0 before the NEM 3.0 decision takes effect in April 2023.
What is lost on the CPUC decision, most solar companies are small businesses that employ thousands of highly skilled people. At a time of deep concern about soaring energy prices, inflation and a slowing economy, this is not the time to put a hold on California’s solar industry’s growth, increasing solar installation on homes, businesses, schools and multi-family buildings, and increasing battery storage development that are all critical in the next decade. What a missed opportunity by the CPUC.