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The California Public Utilities Commission will be reviewing proposals to reform the state’s net energy metering program, which was established to incentivize rooftop solar installation. Steve Puterski
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Energy utilities, groups file reform proposals for net energy metering

REGION — A number of proposals submitted to a state agency regulating privately owned public utilities are looking to change the future of net energy metering and help manage a massive cost shift.

Net energy metering (or NEM) is a 25-year-old program established by the state to encourage residential solar panel installation by giving homeowners credit for the energy they produce and put back onto the grid.

However, as more homeowners have installed solar panels, individuals living in apartment complexes who cannot install their own solar panels, or those living in other residential complexes without solar, have paid $3 billion more over the years, according to Helen Gao, senior communications manager for San Diego Gas & Electric (SDG&E).

SDG&E, Pacific Gas & Electric and Southern California Edison filed a joint proposal to the California Public Utilities Commission (CPUC) aiming to alter costs each of those utilities are currently required to pay. The proposal would not impact existing NEM customers, only to future solar customers, Gao said.

At 16%, SDG&E has the most rooftop solar customers in the state.

“Solar customers … they are being compensated for all those other things that go into the retail rate,” Gao said. “They are getting a credit that is compensating them way beyond the commodity than the electrons they put on the grid.”

The state’s net metering program started in 1997 via Senate Bill 656 and was revised in 2016 to include tracking a number of issues, including cost shifts. Assemblywoman Lorena Gonzalez (D-San Diego) also has submitted Assembly Bill 1139 to address ratepayer relief.

The utilities’ joint proposal includes updating compensation for excess energy created by customers, offering discounts for lower-income ratepayers, encouraging solar adoption, creating a monthly grid charge and a monthly cost to cover customer service and support, according to the proposal.

Gao said SDG&E pays $0.31 per kilowatt/hour to buy back excess electricity from solar customers, but the market rate is between 5 to 6 cents per kWh. The excess cost is shifted to non-solar customers, who carry the burden to cover the cost, which is used for upgrading lines, wildfire mitigation, transmission, distribution and public purpose programs, according to Gao.

“Proportionally, you’re paying a lot less for fixed costs that are needed to operate the grid,” Gao added. “The customers who don’t have solar systems are carrying a bigger portion of the fixed cost.”

Hene Kelly, the legislative director for the California Alliance for Retired Americans, said it is critical for the CPUC to include a fair and equitable solution, especially for seniors on fixed incomes who cannot afford solar energy.

Kelly said her organization is an advocate for solar, but seniors on fixed incomes take the brunt of higher energy costs due to net energy metering.

Additionally, individuals who belong to homeowner associations have no recourse if the HOA decides to install solar and apply an assessment to the property, which has led to foreclosures, Kelly said.

“We really believe in incentives for people to put in more solar, we’re not against that,” Kelly said. “What is happening, though, if you give incentives to people, what we’re worried about is the prices for people who don’t have it will go up.”

Kathy Fairbanks, spokeswoman for Affordable Clean Energy for All (ACEA), said the big concerns of the coalition are the cost shift and subsidy. The coalition is made up of clean energy, low-income, senior, faith-based, business, taxpayer groups and three major utility companies.

ACEA doesn’t have a proposal but is working to get the public engaged and to learn about net energy metering.

“We think once people learn more about it, they will advocate for reform,” Fairbanks said. “We think it’s too generous and it is allowing people with rooftop solar very small, nominal utility bills. They’re not paying for the fixed costs needed in California to keep our system running. It’s transmission costs, but also costs for … public purpose programs.”

Also, the Natural Resources Defense Council, an organization dedicated to ensuring the rights of people to access clean air, water and healthy communities, also is calling for reforms.

The organization’s proposal includes fairly compensating solar customers without raising rates; implementing up-front incentives so solar adopters can make back their investment within 10 years; and developing a clean energy equity fund to benefit low-income ratepayers.

Other groups who have submitted a proposal are The Utility Reform Network and American Association of Retired Persons (AARP).

For non-solar customers not enrolled in the California Alternative Rates for Energy (CARE) program, though, the UC Berkeley-Next 10 report shows SDG&E customers pay an average of $230 more per year, while CARE customers pay an extra $124. SDG&E customers, coupled with PG&E and SCE customers, account for a $3 billion cost shift.

The CARES program is a subsidy offered to those who qualify economically at a significantly discounted rate.

A white paper by the CPUC reports NEM allows customers who install solar to serve onsite energy needs to receive credits on their electric bills for surplus energy sent to the electric grid.

An independent research firm, Verdant Associates, commissioned to write the white paper, found the cost to the electric utilities — and their customers — of providing these extra electric bill savings is greater than the energy’s value, i.e., the utility pays more to NEM customers than it would pay elsewhere for the same amount of energy and other electric grid benefits.

The CPUC’s final decision on the joint proposal will be announced by November. The regulatory agency can go with one specific proposal, a mix of several or one designed by the CPUC.