CPUC Releases Proposed Decision on Net Energy Metering, with Comments Due November 30 | Buchalter


On November 10, 2022, the CPUC released its long-awaited and reworked proposed Net Energy Metering (NEM) “3.0” ruling on a successor tariff. The origin of California’s NEM tariff was to incentivize Californians to install onsite renewable energy resources such as rooftop solar to meet some or all of their own electricity needs. The NEM tariff works by allowing utility customers to receive a financial credit on their bills for the excess energy they generate and feed back into the utility’s grid. The NEM program has played a key role in the deployment of distributed generation and has enabled nearly 1.3 million customers to install approximately 10,000 megawatts of renewable generation on site. However, as the state’s climate agenda has evolved, regulators have recognized that the NEM program must also evolve to incentivize customers to make new and different choices. In addition, the proposed decision also finds that there is a “significant and growing cost shift” that benefits participating NEM customers at the expense of non-participating customers, particularly low-income customers. The CPUC expressed concern about this transfer of costs and the draft decision indicates that it remains, but to a lesser extent, in the new tariff.

The successor NEM tariff is intended to advance the state’s building and vehicle electrification goals and provide a downhill path to support the transition from stand-alone solar to solar coupled with storage (which is expected to have grid stabilizing effects and help mitigate the need for distribution improvements to support electrification).

A key aspect of the ruling proposal is the retail export offset rate, which is the rate paid to customers for energy-generated feedback to the utility grid. It also establishes that NEM imports and exports will be calculated on the basis of no offsetting of consumption and production, which means that all imports recorded on the first meter channel are charged at the retail price of the imports and that all exports recorded on the second meter channel are credited with the retail price. export compensation rate. The new tariff will include the following:

  • Retail Export Clearing Rate based on hourly values ​​from the avoided cost calculator averaged over the days of a month, differentiated by weekdays and weekends/holidays.
  • For the first five years of the new tariff (i.e. the transition to glide path period), retail export compensation rates for residential net metering customers will be based on a schedule of nine years of values ​​for each hour from the most recent avoided cost calculator. .
  • For commercial customers, avoided cost calculator values ​​are locked in for five years. After the lock-in period, retail export compensation rates will be based on average hourly avoided cost values ​​from the most recent avoided cost calculator, adopted as of January 1. period for the avoided cost calculator values.
  • An added “Avoided Cost Calculator Plus”, based on cents per kilowatt-hour exported, as a downhill path to allow for a transition period for the solar industry to adapt to a solar market coupled with storage. It is designed to target a simple payback period of nine years for all successor tariff residential customers.
  • Highly differentiated rates according to the hour of use;
  • Four non-avoidable charges (the Public Purpose Surcharge, the Nuclear Decommissioning Charge, the Competition Transition Charge, and the Wildfire Fund Non-Avoidable Charge);
  • Minimum bill or fixed costs; and
  • Annual adjustment dates for residential and non-residential customers.

To ensure the affordability of the successor rate and fairness among all customers, this decision directs an evaluation of these elements preceded by a three-year data collection period. A later decision will address additional or enhanced consumer protections for customers taking service under NEM.

Comments on the proposed decision are awaited November 30 and the proposed decision should be voted on at the CPUC December 15, 2022 voting session.

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