Distributed Generation

The future of rooftop solar in California was front and center this week at the California PUC’s first workshop on the design of the expanded net metering program. Following a strong recent decision keeping the rules stable for existing net metering customers for at least 20 years, the CPUC must next decide what the net metering rules will be for customers who install onsite renewable generation after the sunsetting of today’s net metering program, ie. after about July 2017. More than 60 people packed the hearing room for the workshop, including clean energy advocates, utility representatives, groups representing schools and other large customers that have gone solar, and ratepayer advocates.

First on the agenda, Commission staff asked for input on the ‘guiding principles’ to be used when designing the expanded net metering program (see below for our proposed guiding principles). Next, CPUC Energy Division staff discussed plans to develop a public spreadsheet tool by the end of this year that will help quantify the costs and benefits of various successor program structures. Since the Commission is also set to approve changes to residential rate design by spring 2015, assessing the costs and benefits of various program designs will be no small task, because the ratepayer impacts of net metering flow directly from the structure of underlying rates.

The reality is, no one – including the big utilities that argue so strenuously against the current net metering rules – has provided any real evidence that our current net metering program is anything other than a fair way to value rooftop solar and enable ordinary Californians to control their own energy future and help tackle our climate challenge. California is a solar leader due in large part to net metering’s success as a simple, predictable way to compensate solar customers for the valuable local power they feed back onto the grid — and we are all reaping the benefits of that success via cleaner air, local job growth and climate progress. No other method for compensating rooftop solar customers has achieved anywhere near that kind of real-world success in the U.S.

We think it’s smart that CPUC has kicked off public discussion on the future of net metering early, well in advance of its decision deadline of December 2015. But we also think the Commission must have strong evidence that something is broken before it makes big changes to a  program that has made solar a classic California success story.  Stay tuned as this critically important policy discussion continues to unfold. In the meantime, we leave you with . . .

Vote Solar’s Guiding Principles for an Expanded Net Metering Program in California:
1)      Protect customers’ fundamental right to use as much or as little energy behind the meter as they choose, including reductions in their demand from the grid using renewable self-generation and other clean distributed resources. Only customer generation exported to the grid is relevant for the successor tariff.

2)      Keep compensation structures simple, stable and predictable over the long-term so that solar customers, developers and investors can reasonably predict their return on investment.

3)      Encourage customer adoption of storage and other customer-side innovations that improve grid functionality and balance supply with demand.

4)      Minimize customers’ exposure to stranded assets. Utilities must plan for investments in the grid properly taking into account likely future growth in renewable behind-the-meter generation, storage, energy efficiency and other distributed resources. If a utility does not appropriately account for the benefits associated with distributed generation and other distributed resources, and the result is partially or fully stranded assets, then shareholders should bear the cost, not ratepayers.

5)       Ensure that customer-sited renewable distributed generation continues to grow sustainably, as required by AB 327. Statutory language states that the market for distributed generation must be uncapped after July 1, 2017, and implies that the installation rate should be similar to or faster than what we see today. In order to achieve the state’s sustainability goal of 80% reductions in greenhouse gas emissions from 1990 levels by 2050, studies show substantial increases in customer-sited and other renewable generation are likely to be needed in excess of current goals, in addition to electrification of the majority of the transportation sector.

6)      Ensure that the total benefits and costs of the tariff to all customers are approximately equal, as required by AB 327. Put another way, customer generators must receive fair compensation for the benefits of their exports. Updated analysis is needed to determine if benefits and costs will be approximately equal, assuming revised rates and including societal as well as grid benefits, under the current NEM tariff. If the updated study finds costs and benefits are approximately equal, no major policy change is warranted at this time.

7)       Encourage growth in customer-sited renewable distributed generation among disadvantaged residential customers, as required by AB 327.