California utilities, solar industry square off over CPUC net metering revisions
The balancing act over who will pay for the greening of the U.S. energy grid continues its long-running engagement this week when the California Public Utilities Commission (CPUC) convenes to hear both sides of a proposed overhaul of the state’s solar net energy metering (NEM) program.
The CPUC last week unveiled a proposed decision (PD) it said would encourage residential solar users to up their game by installing battery storage along with their solar panels rather than going with just the panels. The 240-page order boils down to customer savings of much as $100 a month for the average solar-only customer and $136 a month for homes with both solar panels and a battery. At the same time, it reduces the compensation rate for the solar electricity placed on the grid.
“The proposal continues to support the solar industry while it pivots to a solar plus battery storage marketplace, which will bolster the local green energy economy,” the CPUC said in a Nov. 10 statement.
The commission will listen to oral arguments and proposals for changes on Nov. 15 at its annual Residential Electric Rate Summit in Sacramento and then vote on the proposal a month later on Dec. 15.
The hearing promises to not be routine. The new PD was not universally well received as solar industry groups predicted it would derail the progress the state has made in turning its trademark sunshine into clean electricity, while a utility-backed organization warned it would result in a greater share of the cost of maintaining the power grid being passed on to non-solar customers, particularly apartment dwellers and low-income families.
“The record in this extensive (CPUC) proceeding clearly shows that Californians with rooftop solar are not contributing their fair share toward the electric grid, wildfire mitigation, energy efficiency, and other public purpose programs (PPP) that benefit us all; those costs are being shifted to the electric bills of Californians without solar,” said Kathy Fairbanks, spokeswoman for Affordable Clean Energy for All, an advocacy group that receives support from the state’s investor-owned electric utilities (IOU).
Fairbanks told Daily Energy Insider the coalition planned to supply the regulators with additional testimony. “Yes, members of our organization will be there,” she said. “We also will be submitting a letter from the coalition to the CPUC.”
Clean Energy for All may have a lot to tell the commission. The utility companies in California are increasingly concerned about the evolution of renewable power, particularly rooftop solar, becoming something of a class issue that allows higher-income residents to use less utility power and, as a result, dodge the various charges and fees that are added onto a typical electric bill to finance different PPP programs for their less-fortunate neighbors and also for the heavy lifting the IOUs must do to maintain, expand and harden the grid.
Fairbanks said Wall Street’s reaction to the plan caused stock prices for solar companies to jump as much as 30 percent and showed just who would be reaping its benefits, and it’s not the IOUs. “The NEM PD may be good for solar profits, but those profits come at the expense of low-income Californians who continue to pay more than their fair share for this program,” she said.
Under the CPUC’s PD, the average net energy credit, which utilities pay for home-grown electricity sent into the grid, would drop from 30 cents per kilowatt hour to around 8 cents effective in April. The new PD also eliminated an earlier proposed monthly charge of $8 per kilowatt (Kw) of generation capacity, allowing the owner of an 8-Kw rooftop solar system to pay off their original investment more quickly and presumably make adding solar a more attractive option.
The changes would not apply to existing solar customers or to customers of municipal power companies such as the Los Angeles Department of Water & Power. But they are still seen as a tectonic shift that would discourage other homeowners from making an investment in rooftop panels or storage batteries.
California is committed to a significant increase in renewable energy and now requires new home construction to include solar panels. The CPUC said the bottom line of its PD was to encourage homeowners to include batteries with their solar setups by providing savings of $100 per month for solar panels alone but around $136 per month for a dual system with batteries included. “To support this evolution and the industry’s growth, the proposal provides extra credits to residential customer bills who adopt solar over the next five years, which allows the industry to gradually transition from solar-only sales to solar plus battery storage sales,” the CPUC said.
The solar industry, however, doesn’t see it that way and pointed out that many installation companies currently only sell solar panels and would lose business. “An immediate 75 percent reduction of net energy metering credits does not support a growing solar market in California,” said Bernadette Del Chiaro, executive director of the California Solar & Storage Association (CALSSA). “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.”
Del Chiaro also said in a written statement that protecting the IOUs’ finances and investor returns should not be the state’s top consideration when it comes to expanding renewable energy.
CALSSA argued the current system was working well and over the years had added 13 gigawatts of solar power in California, about six times the output of the Diablo Canyon nuclear power plant, plus nearly a gigawatt of battery storage capacity.
At the same time, California has been incentivizing residential solar power for some 20 years and the CPUC said it was time to expand the support that battery storage provides during times of peak demand or at night. “The proposal continues to support the solar industry while it pivots to a solar plus battery storage marketplace, which will bolster the local green energy economy,” the commission said.
Just how the balancing act in California will play out will depend a great deal on the compromise the CPUC finally agrees to by the end of the year.
