This February, following several weeks of industry outcry, public protest, and political leader involvement, California’s Net Energy Metering (NEM) 3.0 was delayed indefinitely. Now, the California Public Utilities Commission (CPUC) is revisiting the issue and seeks feedback on a structure that is agreeable to the nation’s largest solar industry, representing 50% of all US rooftop solar, and its citizens.
As proposed, NEM 3.0 would have slashed the payments made by utility companies to rooftop solar owners for exporting their excess PV production back to the grid. EQ Analysts said the proposal would lead to a 57-71% overall reduction in solar savings across the state.
A provision that was particularly under fire was the grid access charge, an $8/kW solar capacity charge per month. The charge would apply to all solar customers, regardless of whether they have grid-supporting technology like battery energy storage. A typical 7kW system owner would pay an additional $56 a month under the proposal.
At the time, SolarReviews, a residential solar informational site, interviewed about 4,000 active solar shoppers in the state, and showed them what their solar savings potential looked like under the assumptions of NEM 3.0. The results were nothing short of damning for California rooftop solar, as 95% responded they would no longer purchase under the cost assumptions. In many cases payback periods were increased to as much as 20 years, a wait many viewed as unreasonable and too risky.
Image: Wikimedia Commons
After protest and industry comment, Governor Gavin Newsom said there was “work to be done” on the proposal, and CPUC President Alice Reynolds requested more time to consider changes.
Much of the foundation of the heavily protested NEM 3.0 was based on the concept of a “cost shift” created by net metering payments to solar customers. More on the utility-backed push of the cost shift, and a debunking of its core assumptions can be read here.
Feedback sought by CPUC
The NEM 3.0 policy will now open for feedback on proposed changes. Comments to the questions below are due June 10, 2022.
Three main elements are being explored in the policy revisit, namely the “glide path” approach, non-bypassable charges on gross consumption, and community distributed energy resources. The full scope of the issues being considered can be found here.
Glide path
The original NEM 3.0 decision structured in a “market transition credit” also referred to as a “glide path”, that would taper down payments for solar customers in increments over a four-year period, eventually reaching the “avoided cost” rate to the utility.
The new proposal mentions a boost to the value of the “market transition credit” but uses broad language and no concrete figures to explain how its new proposal, “Avoided Cost Calculator (ACC) Plus” would be implemented. Neither the length of the taper-down period, nor the value of the ACC Plus credits are mentioned in the proposal, and CPUC seeks feedback on how this could be structured.
Non-bypassable charges
The other issue at hand is that of “non-bypassable charges.” Proposed originally by the Sierra Club in an NEM 3.0 rulemaking process, the charges would be a possible alternative to the “grid access charge”, a fixed monthly fee that experts called a “tax on the sun.”
Replacing this would be a fee to offset costs for projects such as utility wildfire mitigation costs, retiring nuclear power plants, and funding energy-efficiency and low-income assistance programs. These charges would add a proposed $0.05/kWh to all customers, whether they own solar or not. The charges would even apply to power generated by the customer’s home solar system, which is unconventional considering the utility does not have ownership over the solar array, and did not invest in it.
The CPUC’s scope of issue report outlines several direct questions it will field related to these charges.
Community solar tariff
The third main issue under review is that of community distributed energy resources. Currently, the Commission offers a community solar program for low-income customers living in disadvantaged communities through the Community Solar Green Tariff (CSGT) program. The CSGT program enables residential customers in disadvantaged communities who may be unable to install solar on their roof to benefit from a local solar project and receive a 20 percent bill discount. Three major utilities are set to propose changes to the program by the end of this month.
Potential changes to CSGT include an expansion of program capacity, and eligibility requirements for customers, locations and technologies. The scope of issue report outlines several questions related to these proposed changes.
Guiding questions asked by the CPUC:
Additionally, the CPUC asks several questions to guide the overall structure of the eventual successor to NEM 2.0.
- What guiding principles (including those related to Assembly Bill 327 (2013, Perea), equity, environmental goals, and social justice) should the Commission adopt to assist in the development and evaluation of a successor to the current net energy metering tariff?
2. What information from the Net Energy Metering 2.0 Lookback Study should inform the successor and how should the Commission apply those findings in its consideration?
3. What method should the Commission use to analyze the program elements identified in Issue 4 and the resulting proposals, while ensuring the proposals comply with the guiding principles?
4. What program elements or specific features should the Commission include in a successor to the current net energy metering tariff?
5. Which of the analyzed proposals should the Commission adopt as a successor to the current net energy metering tariff and why? What should the timeline be for implementation?
6. Other issues that may arise related to current net energy metering tariffs and subtariffs, which include but are not limited to the virtual net energy metering tariffs, net energy metering aggregation tariff, the Renewable Energy Self-Generation Bill Credit Transfer program, and the net energy metering fuel cell tariff.
7. What additional or enhanced consumer protections for customers taking service under net energy metering and/or the successor to the current net energy metering tariff should be adopted by the Commission?
Comments are due June 10, 2022.
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The racheting mechanisms that places like Germany and Australia have used to get the back-feed remuneration down to avoided costs is the obvious place to start. Some grandfathering is appropriate but it should be a narrow window based on how old your system is – if your system is paid off you should immediately move over to a new ratcheting tariff… If your system was installed last year you get 5 years of the legacy rates before switching over.
Rooftop solar is a low-risk investment that currently results in profits that are in some cases higher than Berkshire Hathaway’s historical returns. We’ve got over a million I GOT MINE households in California who are impeding progress on all sorts of issues beyond just NEM. I see the posts from these folks talking about how they’re environmental heroes. Good lord… I just got new windows installed. Am I a hero or am I a dude who got new windows to reduce road noise and lower my heating bill? Please… My house is completely electrified. Do I deserve extra cookies?
We shouldn’t be building NEM 3.0. We should be designing completely new tariffs aimed at speeding electrification for ALL ratepayers. These tariffs should naturally include much higher fixed fees ($50/month as a placeholder guess) and far lower unit costs which are dynamic. The CPUC doesn’t have the power to implement these necessary changes so this entire debate is spitting in the wind to some degree. It’s like pretending the solution to pollution is dilution and building bigger smokestacks. This is a kicking the can debate.
I’m as pro-solar as they come and I supported rooftop PV for a long time. I never thought it would turn into such a regressive policy but it most certainly has. The CPUC can help correct things in the near term but they also need to tell the Legislature to: 1. Abandon a lot of the out-of-touch policy goals that were set ten years ago and 2. Replace the solar incentive policy with a policy prioritizing electrification.
Shouldn’t i be allowed by our state rulers to disconnect from the grid entirely? I mean, assumimg i invest to equip my home with newer technologies for panels, utilities, and batteries, then why would i need a grid connection in Southern California?
They are going to keep at this and we need to keep at it also. The oil and gas industry is relentless. Do not allow them to degrade the amount they pay for solar generation. Go on the offense and demand that there is an energy market where any residential solar customer can sell their energy directly to any other customer on the state grid, put CPUC and the oil and gas industry on defense instead of constantly reacting to these attacks from them.
Casey… You can try but I think you’ll find it’s not cost-effective. Depending on where you are there may be environmental considerations which hamper and/or prevent you from disconnecting.
One of the things you’ll need if you want to disconnect is a diesel generator to back-up your PV system. As you probably know, many communities have banned fireplaces and we’re starting to see natural gas banned. I could see something similar happening with non-emergency diesel generators.
What a bunch of total BS! Out-of -touch policy goals? Like moving the country and planet away from fossil fuels. The utility companies ALREADY benefit tremendously from net metering and California pays some of the highest electrical rates in the U.S. already. The utility companies have been and continue to gouge the consumers. Why would anyone support that. I’m HIGHLY suspect of your comment, and think you are most likely NOT a residential solar support, but much more likely a CPUC troll coming here to make misplaced, inaccurate comments to further their misguided plan. Pathetic!
NEM 3.0 would need to stop homeowners from just installing their system off-grid with their own batteries and having their utility service removed and fall back on gasoline generators for winter back up power. Everybody would become a “Cabin in the Woods” with airtight wood stoves, LP gas and gasoline backup power. With an off grid solar panel system prorated power output of 18 cents per kilo watt hour, when not connected to the grid, and replacing batteries periodically, and utility tariffs pushing 30 cents per kilo watt hour without solar, the CPUC could kill its own utilities with monthly fees or lower net metering compensation. The rest of the country gets 12 cent per kilo watt hour electricity so why are California utilities charging 30 cents or more per kilo watt hour for electric power? De-regulation was supposed to lower electrical rates, not double or triple them, for Californians. The system is broken starting with the CPUC. To stop people from becoming their own utility at home, utility rates would need to fall below the net cost of solar with batteries off-grid systems and that would mean 18 cents per kilo watt hour or less pricing from the utilities.
My understanding is that it is already prohibited by law to disconnect from the grid. So they can make us connect to a service we don’t need, so that they can make us pay them for that uneeded connection, so that they can pay themselves hundreds of millions in yearly bonuses.
I am on PG&E, in Northern CA, and as of 3-1-2022 they went from a tiered rate program to a time of use rate plans, so now I pay 41 and 50 cents per kw/hr for what I use from the grid. I don’t know where everyone is pulling these 27, 28, 29, or 30 cents per kw/hr rates from, but in San Joaquin County they are roughly 40% higher than that, and that is just the rate for electricity, so all of the taxes, fees, etc. are on top of that. Now tell me how the PUC can justify that? To rub salt in the wound, PG&E has already applied for another 22-25% rate increase next year, on top of whatever revenue is generated by NEM 3.0, it is utterly ridiculous. What I receive back in credits for excess power produced by my solar system averages about 4.5 cents per kw/hr because they only have to pay the cheapest wholesale rate available for the whole day. If NEM 3.0 goes through, coupled with another PG&E rate increase, I will very likely disconnect my solar system altogether as it will be cheaper than having solar, so in answer to Lee Kasten’s post, I think the economy is highly dependent on where you are located, and if you are happy to pay more to keep your solar, that’s great, but under current conditions I can barely afford to by food for my family and I’m paying 7% of my annual income in electric bills with solar, and I haven’t even talked about the propane bill yet. Then the state is going to force us to have electric vehicles which use more electricity? No way, at the rates I’m paying fuel will have to triple the current price to break even.
“My understanding is that it is already prohibited by law to disconnect from the grid. So, they can make us connect to a service we don’t need, so that they can make us pay them for that unneeded connection, so that they can pay themselves hundreds of millions in yearly bonuses.” There may be some states or communities that have that rule, but after de-regulation in California, you can buy your electricity from any supplier including yourself. just don’t pay your electric bill for two months and the utility will come and pull your meter and disconnect for you, at no cost, after a bunch of threatening letters they will do just that.
Mike, those are CRAZY electricity rates! I thought mine were bad here in Sonoma County. We’re at 31 cents per kWh.
The rulemaking for Net Energy Metering, the solar panels connected to the electric grid installation on privately owned land and structures, has issued a ruling asking for further comments. I think that the scope of the proceeding should be expanded. The environmental threats to our lives include climate change as well as alternate ways of generating electricity that are not integrated into our society as it exists. Just installing solar panels won’t work unless this is part of a new electric grid. The policy addressed by the net-energy-metering (NEM) proposal isn’t complete without considering how it will work in practice in our everyday lives. There is also a climate problem as evidenced by our drastically changed weather which includes drought and other attributes. This should all be addressed somewhere.
I am thinking about electric generation by power plants/desalination facilities that will intake ocean water as cooling water for electric generation and then desalinate it to augment our water supplies. Recently, the federal and State governments have approved the idea of floating wind turbines offshore, https://www.gov.ca.gov/2021/05/25/california-announces-historic-agreement-with-federal-partners-to-advance-offshore-wind-development/.
California Announces Historic Agreement with Federal Partners to Advance Offshore Wind Development
Agreement opens up the West Coast for offshore wind development for the first time in history, advances California’s clean energy goals and represents new opportunities for job creation
http://www.gov.ca.gov
After such an outrageous proposal as NEM 3.0, it’s evident that we need state level legislation to protect our rights as solar customers. As more households install solar, and as solar technology improves, the traditional energy providers will continue toward obsolescence. And those defunct energy companies will continue pilfering a captive California customer base to keep their antiquated business model generating revenue. We need our state to codify protections such as providing a fair and realistic process to disconnect from the so-called grid entirely. Time to get real about this situation and stop tapdancing around an obvious effort to refund the coffers for HUNDREDS OF MILLIONS in bonuses to electric company executives.
Lee Kasten, what on earth do you think rooftop solar owners are getting? We have 26 solar panels on a modest house in Calaveras County since 2012. We are connected to the grid and pay the same monthly grid fees as everyone else. Most of the power we use goes directly to our home without involving the grid. Some goes to the grid temporarily and back to our house later. We are not compensated anything at all for energy we generate to the grid and use later – we are charged, appropriately, a grid fee. If it costs more to run the grid, the cost should be borne equally by all who use the grid, but bundling mismanagement. litigation expense, and high salaries into the cost of the grid is a burden that should not be foisted on rooftop solar owners. In addition to solar energy we generate to the grid and use later, our panels produce considerable excess energy beyond what we use. PG&E sells our excess energy to our neighbors at retail rates. We are NOT compensated at retail rates for that excess, despite plenty of propaganda that seems to say so. We are compensated at a low wholesale rate. After monthly grid fees are deducted, NEM-1 wholesale compensation for this excess is a couple hundred a year for over a thousand dollars of energy, retail; hardly a great return on our investment. Should we be paying retail for energy we generate ourselves and then use ourselves? Should I pay Safeway if I stop shopping there and shop at Lucky instead? The sun’s energy is available and belongs to everyone.
Hi Nancy…
“A grid-tied system can pay for itself in around 3 to 6 years for DIY projects, and 5 to 9 years if you hire a contractor. Since solar panels are warrantied for 25 years, any energy you generate beyond the initial payback period represents a profit on your investment.”
https://unboundsolar.com/solar-information/return-on-solar-investment
These payback rates translate to ROIs that are much higher than the stock market.
No other large solar market has failed to adjust solar compensation so spectacularly as California. Solar homes in California are being compensated 5 times the value of the energy you are producing. In pioneer solar markets like Germany, Italy and Australia the compensation for feedback is around 5 to 7 cents/kWh and/or trending in this direction.
NEM should have been phased out 7 years ago and we should have transferred to a system where all backfeed, not just NET backfeed, was priced at wholesale. We also need to raise fixed fees up towards $50/month and simultaneously lower the unit costs of electricity. These adjustments won’t change the average monthly electricity bill but they will make electrifying heating and transportation a lot cheaper. NEM supporters are currently blocking these sorts of changes.
Activists have been fighting for many years to shutdown power plants that use the pacific as a heat sink. As we’ve been shutting down and/or blocking these coastal plants we’ve seen the work load on inland plants (in poor neightborhoods) go up. Incredibly, another group of activists are now pointing out the racial inequality of the pollution from natural gas… Yeah, duh, the rich NIMBYs put it there.
NEM is a similar yeah duh sort of policy. Look at the coalition that opposes this policy. It’s loaded with latino, black, senior citizen and rate advocacy groups pointing out the cost shift. You can close your eyes and cover your ears all you want but NEM is a highly regressive policy that hurts poor people.
https://fixthecostshift.com/supporters/
You are spot on. Let’s take it to the basics. If I change out an appliance for one that’s more efficient, should I pay a penalty to the Utility because I’m consuming less energy from the grid? Point is, local generation is the same (or should be) from the utility view as load reduction. It’s up to me to configure my system, on my property, to optimize my energy configuration. I actually don’t care if the utility pays me for unintentional export from my power system. All I want to do is rely on the utility for a voltage and frequency reference.
Changing out an appliance that reduces your consumption by 100 or 200 kWh a year is a heck of a lot different from zeroing out your previous consumption of 10,000 kWh per year. Do you realize electricity is a socialiazed service? It’s socialized such that the haves pay for the have nots. It’s been this way since FDR… NEM is is a structure which makes it so the haves step out out of the game.
Do you see all the black, latino, senior citizen and rate payer advocates you’re up against? This isn’t an astroturf group of fake activists. It’s real poeople who are experiencing real harm from NEM.
Where are your minds?
How do I comment, on this as an industry member? I can find no link to send comments here or on CPUC website.
Lee Kasten, I appreciate your response. I am looking at the links you provide. Who is “Fix the Cost Shift? Affordable Clean Energy for All?” online: “The state’s big three investor-owned utilities, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric, have gathered a coalition……” The utilities have invested a great deal in this campaign against rooftop solar and for NEM 3. For balance, please see https://calssa.org/blog/2021/6/5/debunking-the-cost-shift-debate.
I am not interested in closing my eyes or covering my ears. I am reading and thinking about what these sites have to say. I continue to work diligently to understand these issues. PG&E billing is complex, lists of various costs and conversion from negative retail credit to positive wholesale compensation causes confusion, and the language used by “costshift” folks seems inflammatory and misleading. Is a monopoly trying to whip up class warfare? We believe solar owners who use the grid should share the cost of the grid but should not have to take on a greater share of the burden. And what reasoning supports grid charges for solar panel electricity that never entered the grid? Right now we do use the grid. We have always felt that because we use the grid, we should share the cost of the grid. Even though we have no net usage at true-up, we do still pay the same grid fee as everyone else. Could an independent audit determine what the grid actually costs, what costs every grid-user should share equally?
I want to repeat again that PG&E pays us wholesale (0.04/kw at last true-up) but can charge our neighbors retail for the excess energy we generate. We should be able to evaluate the cost-effectiveness of staying on the grid or leaving it entirely. But we would prefer to share the sun’s energy with our neighbors, even if PG&E is profiting, and they are. We are NOT profiting, we are just spending less on electricity because we are getting it from the sun directly. Your link from the solar company is just substituting the word “profit” for “savings” to sell its products. It’s not the same thing. California is a leader in encouraging distributed solar. We cannot let misleading sales talk/propaganda get in the way of this progress. Let’s work to understand what is real and just.
Nancy…
The broad coalition of parties who belong to the Fixed the Cost shift group includes the IOUs, Utility Wind and Solar interests, Ratepayer groups, Black and Latino groups, Senior Citizen groups and several Environmental organizations. This is about as well-rounded a coalition as they come.
Here’s a list of articles from groups like AARP, NRDC opposing a continuation of the NEM policy. You’d be hard-pressed to find a group that fights the Investor Owned Utilities as vigorously as TURN and yet here they are agreeing wholeheartedly with the IOUs.
https://www.turn.org/policyvoice/modernize-solar-subsidies-for-climate-equity/campaign-for-solar-equity/
You could call it class warfare because that’s essentially what it is. The Utility Reform Network has literally described NEM 3.0 as “a “reverse Robin Hood scenario.” You may not count yourself in the upper class but most of the folk who have solar are rightly described as affluent.
All around the world advanced solar markets have revised their rules to pay backfeed 5 to 7 cent/kWh because this is roughly what the electricity is worth. California is still paying over 30 cent/kWh under the NEM policy.
“And what reasoning supports grid charges for solar panel electricity that never entered the grid?”
I’ve paid tens of thousands of dollars to insurance companies over the years but have never once made a claim on my car or my home. No one likes insurance but we have to pay for it regardless of whether we use it or not. The grid is essentially a form of insurance that you have to pay for regardless of how much you use it.
Traditionally electricity rates have been structured such that you pay for the grid via volumetric charges. Folks on NEM aren’t paying their fair share of the grid because they buy much less electricity than everyone else. Moving forward we need to pull the grid fees out of the volumetric rates and put them into a monthly fixed charge.
For example: Let’s say I use 500 kWh a month at a rate of 20 cents/kWh. Let’s imagine 15 cent/kWh is to cover grid costs (capacity payments, CARE, nuclear decommissioning etc) and 5 cents/kWh is to cover energy costs for a monthly bill of $100. A better billing structure would be to charge an access charge of $50 to 75 per month and bill energy at 5 to 10 cents/kWh.
In both of the scenarios in my example, the customer pays $100 per month for electricity but the second rate structure is much better at encouraging electrification. Think about the future… An average electric water heater uses about 3,000 kWh a year and EVs (2 per household eventually) also use about 3,000 hours a year. If this extra 9000 kWh of consumption was charged 20 cent/kWh you’re looking at $1,800/year but if it’s 5 to 10 cents/kWh you’re looking at $450 to $900.
I understand that PG&E pays you 4 cent/kWh for excess above and beyond net consumption but I also understand they’re paying you over 30 cent/kWh for most of your production. I believe PG&E should be paying you around 5 cent/kWh for all of your backfeed because this is roughly what it’s worth.
You may think this alternative structure of paying for electricity is discriminatory towards rooftop solar but I don’t think this is the case. First of all this new structure would apply to everyone. Second of all it would result in no net change for the average ratepayer. Thirdly, we’d set ourselves up for success when it comes to electrification.
I think a penny saved is functionally equivalent to a penny earned. If a company invests in a fleet of electric cars because they’ll save money on fuel it’s the same as a company investing in a fleet of electric cars to increase earnings.
Speaking of electric cars I drive a Volt. As you probably know, when you buy a gallon of gasoline you pay a bunch of taxes that help pay for road maintenance. I’m not buying any gasoline so I’m not paying my fair share for road maintenance. As more and more people start driving EVs we’re going to have to figure out a new way to pay for our roads. As the VMT tax has shown this is not going to be easy.
East Bay Community Energy, the energy supplier to Alameda County and parts of Contra Costa County and Tracy, supplies 100% renewable energy for 11.2 cents per kilo watt hour outside the distribution and transmission costs. The EBCE is a non-profit organization is making so much money that it is proposing to supply $27 million from its gains to children’s hospitals, and a dozen other energy programs for the poor and build education centers to show people the virtues of induction cooking to eliminate Natural Gas cooking that is the biggest polluter in most people’s homes. They are also supporting an assembly bill to take CARE from the utility’s tariffs to its customers and have the programs for the poor come from taxpayers rather than the rate payers. If they value the 100% renewable, clean energy at 11.2 cents per kilo watt hour, then why do you say it should only be worth 5 cents? If the programs for the poor are no longer on the rate payers’ backs and the utilities need to get more out of the people who produce solar to the grid from their homes, why not give the homeowners, with solar, one kilo watt hour for every two they send the grid in excess of what they use? They would need to allow the 200% of the pre-solar annual bill equivalent of the solar needed for the homeowner but would gain the equivalent of a whole house worth of electricity for free from the rooftop solar system and the homeowner would get the clean power they want. if a monthly solar fee of $8.00 per kilo watt hour was also added, this would go nowhere because there would never be enough payback for a grid connected system to make any financial sense to the homeowner. This would force all new rooftop solar systems to install batteries and run off-grid benefiting only the homeowner and not benefitting the rest of the customers or the utility at all. I know you are fighting for the IBEW lineman jobs created by the utilities and I am looking at the IBEW inside wireman jobs that all solar panels systems would benefit for expanding solar. We need a balance between creating jobs to replace Natural Gas with electric induction cooking, rooftop solar, large commercial solar and making the grid more reliable for all the new EV loads that are going to increase the utilities output needs over the next 50 years.
I get a daily report that lists the wholesale electricity price at the different trading hubs in WECC. There’s Mid-Columbia, Palo Verde etc. On an annual basis, the average wholesale electricity price is around 5 cents/kWh but it can spike up to much higher prices. If you look at the advanced solar markets in Europe and Western Australia you’ll see that back-feed from rooftop solar is trending towards wholesale pricing.
Once we start pricing backfeed closer to wholesale (a change that’s many years overdue) there will be a clear incentive for existing solar homes to minimize backfeed. Between electric water heating and smart EV charging it’s possible to boost self-consumption to over 75%. Non-solar households can similarly use these same sorts of self-consumption technologies to preferentially run on clean electricity. If we were pricing electricity more dynamically (something we’ve only just started doing) everyone would have an incentive to make hot water and charge their EVs when electricity is cheap. This is obviously where we’re headed.
My utility has estimated that EV load will add around 1 GW to peak load by 2030. For CAISO the estimate is roughly 5 GW. Our grids are challenged as it is without increasing peak load by 10 to 15%. We’re absolutely going to need to come up with a way to encourage EVs to charge when RE is plentiful and avoid charging when RE is scarce. I believe price signals are the obvious way to do this. NEM completely masks these necessary price signals. NEM creates ambivolence.
I don’t think it’s the job of regulators at the CPUC to strike a balance that preserves the economics of rooftop solar market. The basic goals of the CPUC are clean, affordable and reliable electricity.
I’m not fighting for the lineman or any other IBEW jobs. My arguments here are primarily aimed at the end-users and the bigger picture of electrification. That said, you should note the IBEW is part of the coalition fighting NEM.
Marv mentioned that installing rooftop solar is sorta like installing a more efficient appliance. This is funny because installing solar allows you to avoid paying into the programs that support efficiency upgrades. A little too ironic… Don’t you think?
I believe everyone who has invested their money into rooftop solar should be kept on the legacy rates and allowed to recoup their investments. Once that’s done you should all fold into the new rate schedules. I think this is entirely fair.
You are correct for the long-term goal of rooftop solar and grid resilience. I just think the monthly fee for owning solar panels is wrong. I feel the charges should be off the excess production that uses the grid as a form of long-term storage that would encourage home energy usage and storage rather than pushing the excess electricity to the grid except during times when the grid needs more power and is willing to give a watt per watt credit for the homeowner to participate like peak periods and peak “time of day” hours. The smart meters keep track of everything and could provide the greater credits during peak hours or grid emergency hours. Variable EV charging that could basically use every kilo watt hour a home produces as it varies through the course of the day from morning through evening when an EV is parked at home or a battery pack that could do the same to charge an EV at night. I like the idea of hot water heating using the excess electricity instead of natural Gas but i have not found a dual powered hot water heater that could use both electricity and natural gas because in the winter, on cold cloudy days, one would need to revert to natural gas or buy expensive grid electrical power. This is all a work in progress, and we should keep the conversation going and not end up like Western Australia where they are having grid reliability and power regulation problems because there is too much solar power flooding the grid at noon to 4:00 PM then none at night.
It would be better if we raised the fixed fees on all ratepayers but the CPUC doesn’t have the power to do this. We need to have the legislature make this change.
The monthly fee is a rough approximation of what the fixed fee would be. It’s actually smaller than it should be.
Alameda County Water used to have a $10.00 bi-month fee for water meter connections. They raised it to $57.00 bi-monthly or $26.50 per month to pay for infrastructure items since everyone cut their water usages by 40% because of the drought. Same could be done for electricity but every body pays based on the size of their service.
Lee it could make sense for buyback rates of 5-7c like elsewhere, but that’s assuming that the delivered rate for electricity is anywhere like elsewhere, like 12-15c.
So they get reimbursed at rates around 5-10cents less than they get charged… like the residential solar generators in California already do, due to the non-bypassable charges and other fees that the CPUC is attempting to increase even further.
If energy that a home generates is being sold to a neighboring home for $0.50/kwh, why would the generating home be only credited $0.05/kwh? Does it cost the utility $0.45/kwh to transfer the power over the 50ft between houses? Maybe your wholesale rates would make sense if those cost savings were passed on to the residential consumers, instead of the utilities themselves.
You’re asking where are our minds, where is yours? Pretty clear to me that it’s in the pocket of the utilities.
Steven
Imagine a pseudo-fictional scenario that’s demonstrative of what’s happened in California. Let’s start out by imagining it’s 1973 and there is no rooftop solar. Let’s say the average home in California uses 12,000 kWh per year and the monthly electricity bill is $100. Now let’s imagine there’s an Energy Crisis, oil prices spike and the government funds an Apollo Program such that everything gradually gets twice as efficient and homes go down to consuming 6000 kWh per year. Do you think electricity bills go do $50 per month? Gosh no…. The drop in monthly consumption doesn’t change the fact that you still have transmission towers, distribution lines, power plants, control rooms which manage these assets (my job), linemen, meter readers and so on with all the fixed costs.
Post-1973 the efficiency programs in California were driven in part by higher energy prices and environmental concerns but our high population density and unique geographical characteristics that trap pollution in the Inland Empire (Riverside and San Bernardino) and the Central Valley (Bakersfield etc) also played strongly into the equation. The drivers of policy were tangible and I would even say visual. I grew up in Southern California in the 1970s and 1980s. The pollution may have been worse in the 1950s and 1960s but it was still thick when I was growing up – the scarlet sunsets in Riverside were something else and the heavy haze in LA was brutal. Watch the opening credits to Born in LA or Beverly Hills Cop to get an idea for what the skies looked like back then. The ironic thing about the opening scene of Beverly Hills Cop is that the movie was contrasting our skies to Detroit but if you look at those Hollywood skies now you think… YUCK…
The average household electricity consumption in the United States is 10,700 kWh but in California the consumption is only 6,000 kWh thanks to what I’ve described above. While California uses almost half as much electricity as the US average the average California household has a bill which is average for the US. This average bill of $120/month falls out of the fact that the regulators have designed electricity rates such that the fixed costs of providing electricity are built into the volumetric price of electricity.
Rooftop PV is a new animal. It’s effectively a non-native species which is running amok because it has no natural predators. We designed NEM as a incentive program but it’s gotten totally out of control. There’s a positive feedback loop going on. This needs to stop.
Back in the day the efficiency rules in California made it so a consumer would decide to spend X on a new refrigerator to save Y. This small decision would result in a feedback loop. As consmption slowly decreased the rates shifted upwards and this encouraged yet more efficiency investments which most everyone could invest in. NEM isn’t like this. NEM is a program that’s only available to folks with roofs and a good deal of discretionary income. The more NEM grows the more the net consumption goes down and the more the volumetric rates will have to move up to pay for the system. It’s the same sort of price racheting that efficiency produced but it’s not shared as equally – it’s actually highly regressive which is to say it’s disproportionately impacting the lower income brackets.
As I said… NEM is a non-native species so far as our market environment goes. We need to change rate design to make it so fixed costs are broken out of the volumetric fees. This will have a negative impact on efficiency investments but at this point the reasoning for those investments (pollution) are no longer a high priority so it’s not critical. Think of it this way… Will we care about people driving electric trucks in the future? These trucks won’t be belching diesel soot into the air so who cares if they get 1 mile per kWh vs 2 mile per kWh. My point is that efficiency is no longer a policy priority because pollution isn’t involved.
Once you redesign the rates such that fixed costs are broken out you end up with volumetric rates that are 5ish cents/kWh and average monthly bills which continue to be roughly what they are currently. This is where I see things going.
I work for a utility but my utility is owned by the government so all of our revenue is neutral in the grand scheme of things. I sleep fine… Rate payer organizations like TURN and all sorts of black and latino advocacy groups have joined the coalition working on agressive NEM reform. These voices are only going to get louder. Arguably the most disappointing thing in this NEM debate is the inability of all the NEM folks to acknowledge all these voices. I’m quite certain your position is not going to age well…
This is an example of utilities paying less elsewhere but nowhere near the cutthroat rates the CPUC proposed in NEM-3.0.Site
pv magazine USA
Vermont expected to delay long-term changes to solar net metering
Ryan Kennedy
Jun 14
Net metering is a policy that has been critical to launching customer-owned solar across the nation, and that is no exception in Vermont. The state has seen steady growth in solar adoption, and impressively, over 16% of its electricity comes from solar.
Net metering is the process by which the electric utility purchases excess customer-sited solar energy production that is exported back to the grid. It’s a key feature in the economic benefit of rooftop solar, and it’s a policy that has been part of high-profile fights in California and Florida in recent months.
In Vermont, regulators at the Public Utilities Commission (PUC) have been actively considering changes that would reduce the payments made for net metering roughly one cent per kWh. Vermont reporter Howard Weiss-Tisman told Vermont Public Radio that he expects this provision to be passed at the PUC’s biannual ratemaking decision hearing.
Currently, utility Green Mountain Power pays about $0.15 per kWh, and Vermont Electrical Cooperative pays roughly $.16 per kWh for excess solar generation. The one-cent drop would equate to the loss of about 6% or so in value. This loss in value would not affect solar energy that is customer-sited and self-consumed.
Currently, the average price for electricity is $0.192 kWh in Vermont, so solar customers are paid roughly 80% of what the utility charges their neighbor for using the exported electricity. ”
The CPUC utility pushed program would only give back 20% to customers not 80% as in Vermont with a monthly sur-charge of $8.00 per kilo watt of installed solar. Where Vermont looks at keeping rooftop and other solar, California CPUC and its utilities are trying to kill it.
It’s not just the CPUC and the Utilities. We also have Ratepayer Advocacy groups like The Utility Reform Network (TURN) and the Office of Ratepayer Advocates (ORA) fighting NEM. We also have AARP fighting NEM. We also have DOZENS of Black and Latino groups fighting NEM. It’s only a matter of time before the NAACP gets involved. You guys keep trying to make NEM about the big bad utilities. It’s not… The Ratepayer Advocacy groups are literally telling it’s about fairness. The Black and Latino groups are telling you it’s a regressive policy. NEM is up against a Rainbow Coalition and it’s most definitely going to lose.
There’s a trifecta of goals with energy policy. The so-called trilemma includes affordability, sustainability and reliability. Rooftop solar may be sustainable but it’s not particularly affordable and it doesn’t produce a reliable supply of electricity. We need utility-scale solar and wind to provide affordability and a portfolio of resources to provide reliability. This portfolio of resources needs to be interconnected by a grid and the grid needs to be paid for.
Utility-scale wind and solar are over 5 times cheaper than rooftop solar and these resources deploy a heck of a lot faster. Utility solar and wind are cheaper despite paying union wages. Utility solar and wind benefit all customers – not just the wealthy. I think you guys are on the wrong side of history.
“Utility-scale wind and solar are over 5 times cheaper than rooftop solar and these resources deploy a heck of a lot faster. Utility solar and wind are cheaper despite paying union wages. Utility solar and wind benefit all customers – not just the wealthy. I think you guys are on the wrong side of history.”
The 5 times less expensive may be true per kilo watt hour today with larger, cheaper panels with tracking motors, but it was the overpriced Tiers that TURN made the utilities charge that initiated the rooftop solar boom 18 years ago. When everybody else was paying 12 cents per kilo watt hour, larger homes, with air conditioning and more electric appliances were paying 48 cents per kilo watt hour in Tier 5. Today, everybody is paying rates that high and that is because The Governor of California said the utilities could gouge all rate payers for the litigation costs and liabilities incurred by the utilities for fires they started with antiquated equipment. Instead of providing upkeep and old equipment replacements, the utility chose to make huge profits for their stockholders and pay executives million-dollar bonuses. All those organizations have been brain washed, by the utility’s propaganda, that rooftop solar is why they are paying so much when in fact only 3% of the electricity generated and used in California if from Rooftop Solar. This is like Putin calling Ukraine Nazis. The utilities have declared war on homeowner’s that are connected to the grid with rooftop solar. The thing is, Rooftop solar does not have to be connected to the grid to save the homeowner money, in California, where the utility rates are double what a stand-alone off grid system costs to produce energy for a home. Looking at the other 49 states, they have rooftop solar and have come to an accommodation with rooftop solar customers giving back 80% of what the rooftop sends to the grid and are willing to take the 20% for a fee rather than nothing if homeowners just kept it all and wasted it. I pay $80.00 per month for my off-grid batteries pro-rated over their lifetime so I just keep all of my power and light up my, home yard and neighborhood like Disneyland every night to cycle my batteries. When the utilities start buying their own batteries to soak up the excess electricity that their on-grid solar farms generate to put it back on the grid at night, then let’s talk about homeowners that do not have batteries and the need to pay more to support them.
You’re saying the diverse group of folks opposing NEM are like Putin and NEM is like Ukraine? Holy victim-shaming batman. Not sure if this is punching down or drinking the Koolaid?
Batteries are generally a terrible investment for homeowners and utilities alike. The utilization of grid batteries in the US is currently below 5% and it’s been trending down since 2017. Utilities will happily build and operate billion-dollar boondoggles like Moss Landing because these projects inflate their rate base. It’s relatively easy to show the utilization of these assets will continue to drop and they’ll likely fall below 1% in a cost-optimized grid. You can really see this when you model EV charging patterns. Twenty years from now the daily electricity demand of EVs in the US will be 1000, 2000, 3000 GWh or more. All of this extra demand will tend to take priority over grid batteries and this significantly reduces the number of cycles a grid battery can expect. This recent report mentions that even a small amount of bi-directional EV charging (10% of the fleet) would reduce grid battery capacity significantly.
https://www.aramis.admin.ch/Default?DocumentID=68985&Load=true
Here’s a funny article from today where Nextera uses the term “near-firm” to describe solar plus batteries. What nonsense… Pay no attention to the Gas Plants behind the curtain supplying power during extreme weather events.
https://pv-magazine-usa.com/2022/06/16/half-a-penny-for-near-firm-solar-and-trillions-in-renewable-opportunities/
YES. Today’s lithium batteries are overpriced but they are not the only storage systems out there.
https://pv-magazine-usa.com/2022/06/16/as-evs-drive-off-with-li-ion-supply-the-push-to-stationary-storage-alternatives-accelerates/
I used Lead Acid Deep Cycle marine/RV batteries for 15 years and other than replacing them every 6 years or so, they have been cheap and reliable. Heavy, non-flammable and easy to install and use for home solar, they have also been an industry standard for backup power for 100 years or more. I remember in 1976 installing them is racks for backup power for BART sidings so trains could be moved into stations and moved off track switches in case of a power failure to allow track repair vehicles do their work. Uninterruptable power supplies, both for home and for industry use lead acid batteries.
When you said, “You’re saying the diverse group of folks opposing NEM are like Putin and NEM is like Ukraine?” No, I said ” All those organizations have been brain washed, by the utility’s propaganda, that rooftop solar is why they are paying so much when in fact only 3% of the electricity generated and used in California if from Rooftop Solar. This is “LIKE” Putin calling Ukraine Nazis. The utilities have declared war on homeowner’s that are connected to the grid with rooftop solar.” Putin has brainwashed his citizens that the WAR is OK because all of Ukraine is full of NAZIS which is totally untrue. Just like the prices are so high because of the 3% Rooftop
Solar Customers are creating a cost shift of any consequence. “TURN” shifted the costs from the small household to the large Houshold with a 5-tiered system that penalized larger homes for existing and using power, so the larger homes installed solar. That is when the smaller Houshold paid only 12 cents per kilo watt hour, the large Houshold ended up at 24 cents per kilo watt hour or more averaged into their bills. That was a really big cost shift by “TURN” that is now crying that rooftop solar, that they helped create, by their huge cost shift, wants to shift again to the smaller homes by charging more again for larger homes with solar. What they want is for the rich to pay more so the poor don’t have to since their 5-tier system has been replaced by “Time of Day metering” with 3 tiers. They already have multiple programs like CARE that cut the bills from 20% to 50% and shift the costs, again, to the larger homes. The other organizations are truly brainwashed by the big three utilities about cost shifting on the 3% as if it was 50% of all produced solar is on NEM-2.0.
‘Holy victim-shaming batman”? Good point. The larger homes have been VICTUM of TURN and other wealth sharing scams, pushed by legislators and organizations, that really have only one agenda, to make utilities stronger and wealthier, take from those who have the most money and get VOTES.
The Big Three Utilities formed a sham group and paid ONE MILLION DOLLARS to form it, that used a Propaganda laced slide show, to get the other organizations to endorse it. I agree that NEM-2.0 needs to be modified going forward, like in Vermont, where they take 100% of the excess energy, sell it to the neighbors’ homes then return 80% to the customer when the solar panels are not producing and keeping the 20% profit for infrastructure. NEM-3.0 is just a money and power grabbing scheme that attacks every homeowner with solar panels.
I think you’re really out of touch with where things are going. You’re pointing at the consumer advocacy groups and saying they’re the bad guys. Not a good look.
I don’t know of anyone who has written as many paper about solar economics as Dr. Borenstein. Here’s his take.
“Vilifying utilities is a clever strategy, but the loudest calls for ending the current net energy metering system are coming from the leading consumer advocate organizations: The Utility Reform Network and the CPUC’s Public Advocates Office, which estimates the cost shift from rooftop solar households to everyone else is more than $3 billion per year and quickly rising.”
‘The Natural Resources Defense Council is also on board, in large part because of the equity issues. In fact, all the major environmental groups agree that the current net energy metering system creates a cost shift onto the poor, even if some of them objected to the CPUC’s December proposal.”
“The bottom line is that California’s net metering policy is a regressive cost shift. It’s also undermining the state’s goal of replacing greenhouse gas emitting cars and home furnaces with clean electric alternatives because those options get less attractive each time rates go up.”
https://www.latimes.com/opinion/story/2022-03-28/solar-rooftop-net-energy-metering-incentives-california-public-utilities-commission-cpuc-gavin-newsom#:~:text=California's%20solar%20rooftop%20incentives%20are,price%20for%20what%20they%20generate.
Bigger homes should pay more for electricity because they are more costly to serve – the tiered rates you keep complaining about are an attempt to capture these higher costs. California is an extremely progressive state so there’s also an element of weather transfer going on. Dynamic rates would be a much better way to capture these higher service costs but but NEM supporters don’t want dynamic rates either because it would devalue your backfeed. You’re complaining about a problem but you don’t want to believe the solution to the problem.
The 3 billion dollar cost shift isn’t the only problem with NEM. NEM supporters are actively working to thwart restructuring rates in ways that encourage electrification – i.e. raising fixed fees and lowering volumetric rates. These restructured rates would save consumers thousands of dollars a year in water heating and EV charging costs compared to the current rate design. In many cases the savings on electric water heating and EV charging would be significantly larger than the savings that NEM is delivering. These savings would accessible to everyone – not just homeowners with suitable roofts.
Rooftop solar is an interesting niche technology but we shouldn’t be bending over backwards to support it. I’d like to see NEM completely scraped. I’d like to see all homeowners paying much higher fixed fees and much lower volumetric fees. Rooftop solar won’t be nearly as attractive in this environment but this will be more than made up for by the improved economics of EVs, heat pumps and utility RE. It’s extremely disappointing to me that the people who have gone solar are the loudest voices in opposition to the changes we need to make.
Ahem… I meant to say Born in East LA… My dad had a home in Hawthorne which was (back then) right on the line between East and West. We were actuallly about 10 blocks from where SpaceX is not… The location was going through gentrification at the time (1983ish) . We had black neighbors to the right and latinos to the left. We were white in the middle. I was a kid. I didn’t care about color. I cared about toys.
There was a flower shop down the street on Hawthorne Boulevard. I was probably about 8 or 9 years old. My dad’s girlfriend (Donna) suggested I take the flowers out of the garbage that the flower shop was throwing away and sell them house to house. Some of the folks here may remember all the school programs which encouraged door-to-door sales of candies, raffle tickets and such…. So yeah, I was already familiar with the game… I dug out a bunch of flowers and walked around the block selling roses for $1 per bouquet. My scheme lasted one or two weekends. The owner of the shop confronted me and said you need to profit share… I said, it’s garbage… What do you care if I profit off your garbage?
Ahem, wrong answer… I should have profit shared. He installed a lock on his garbage and I couldn’t sell old flowers anymore. This story is 100% true. Had I compromised and learned from that flower shop guy I’d probably be a much weathier person. But I was 8 or 9 and I didn’t see the trajectory of the decision. I just thought he was a schmuck.
This story isn’t about NEM directly but the moral is roughly similar. I was a smart/dumb kid who didn’t recognize a reasonable compromise.
Good story. I would do the same thing at Christmas time using metal clothes hangers my mom would throw away from the dry cleaners and the scrap trimmings from Christmas Tree lots that were cut off from the bottom of the tree to attach a tree stand. I would tie them around the hanger add a couple ornaments sold for 2 cents each at Woolworths and sell the wreath for 50 cents. i was able to buy Christmas presents with the proceeds. The utilities should also go into partnership with the homeowners and split the profits. If a homeowner sends power to the grid, then whatever the retail price the utility is getting for that energy from the neighbors they are selling it to, the homeowner/produces should get 50% and the utility get 50%. That would be an incentive to build a bigger system on the roof so that both could benefit. NEM-3.0 offered such an incentive by allowing up to 200% of the previous year’s output to be installed on the homeowner’s roof instead of the current 115% now allowed under NEM_2.0. The utility wanted 80% leaving only 20% for the homeowner’s investment which is a non-starter, kind of like you’re not willing to compensate the flower shop with a compromise and they locked out their scrap bin. Homeowners would lock out PG&E and go “off grid” under the proposed NEM-3.0.
My water company, Alameda County Water District also had a dilemma when customers were asked to reduce water usage, because of droughts, while the utility was dependent on sales of water for revenue. They decided to separate 50% of the overhead into a fixed monthly charge and getting the rest from the commodity charge. Instead of a $5.00 per month residential fixed meter charge, they raised it to $28.00 fixed meter/connection fee and did not raise the commodity charge for two years. They did not single out people who had lawns from those who did not or who might have changed out their lawns to dry gardens to reduce their water usage but charged everyone the same base rate. The electrical utilities need to do the same with all customers to get their infrastructure financed outside of commodity rates. Raising the connection fee for 100% of the residential customers by $8.00 would raise the same amount as raising the rates on the 10% of their solar customers $80.00 per month and it would encourage solar installations rather than discourage them. Let’s compromise.
Federal investment tax credit, which is planned to phase out from 26% this year to 10% by 2024 for commercial and utility-scale solar, and 0% for residential solar. With 0% tax credit, an $8.00 per kilo watt solar panel fixed monthly bill and only a 14% of retail rates compensation for solar sent back onto the grid, Rooftop solar could only be done with batteries and off-grid standalone inverters with no power going back onto the grid. The kind of system that I used from 2007 to 2020 until when my Tesla Solar Glass Roof was installed that IS grid tied. Now I have both, running separate parts of my home. Under NEM-2.0, the Tesla Solar Glass Roof is less costly and has a faster payback. Under NEM-3.0, the off-grid system would have a faster payback than the grid-tied system but would require battery replacements every few years adding to the overall cost. Both the off-grid and on-grid systems are the same size, and both produce about the same number of kilo watt hours per year. Without the Federal Tax Credit but with lower cost Solar panels, the cost today for the off-grid system is about what I paid in 2010 threw 2014 with the tax credit for panels and equipment costing twice as much as it does today.
It is the Batteries, required, for the off-grid system, that is an ongoing concern for costs going forward. If I could have a Solar panel system, run it on-grid the full year and just have a monthly connection fee of $80.00, that would be equivalent the costs I now pay for batteries on my off-grid system as long as I did not have to take a hit on my energy sent to the grid when I purchased it back. That $80.00 would have to be for a 16,000-watt system because that is what I have now in total, so the battery substitution fee would have to be only $5.00 per kilo watt installed and not $8.00 as proposed and a kilo watt hour for kilo watt hour NEM-2.0 style exchange rate. If someone has batteries and is willing to sign up for the “Grid Emergency Feedback Program”, the $5.00 per month per kilo watt of solar installed fee should be waived in leu of a lower $2.00 per month fee per kilo watt hour installed to help with the cost of the batteries. How else could we give an incentive to install batteries rather than just have a gasoline backup generator and transfer switch?
NEM-3.0 is a work in progress and I hope they come to a decision that will allow rooftop solar to continue to be a grid tied option because we can use every kilo watt hour we can get. If we are going to eliminate natural gas from homes and gasoline form our vehicles, in the future, to stop global climate change from getting any worse, we need a good plan that works. California leads the Nation in air quality and environmental legislation and a good planed out NEM-3.1 could keep rooftop solar in the mix and provide the grid energy for the 21st century throughout the country and possibly, the whole world. I think that is why we all post on this site. A better future for everyone.
Thanks for all the information. I was not aware of any of this. I have two pv systems, one with a battery. The non battery one powers a swimming pool just fine. Seems like I could use more power when I convert to heat pumps and an ev in the future. I basically pay nothing to PG&E which from the sound of these discussions is going to end pretty soon. I’m not against paying for my share of the grid costs but seems like I should be compensated for power sent to the grid.
Yes, you should. If the compensation becomes less than what you paid to build and maintain your system selling power back to the utility, then you should hoard it all and keep it and not send any back. You paid a bundle of cash for your system, and they get it back on the grid, from you, discounted by lower values they say it is worth, or at lower compensation because you sell it to them at a low tier but sell it to your neighbor at a higher tier and that is all profits for them. Your existing system is grandfathered in, at this time, but adding to your system re-sets the NEM contract and you could be forced into a worse deal so getting it done and as big as you want right now, with the tax credits, you should jump right in and get a guaranteed completion date from your contractor. Also make sure you could go fully off grid with your system if they ever want to charge you a fee for the size of your system that is connected to the grid. No connection, no fee.
In one post, Lee Kasten says that PG&E pays over 30 cent/kWh for most of [non- excess] solar production. This statement is false and misleading. The non- excess portion of production is used by the solar owner and cannot be treated as PG&E buys all and sells all back to the owner at the same rate. Lee Kasten’s statement is a “buy all, sell all” scheme, which makes no sense.
The NEM2.0 is already very unfair to solar owners. For a month a solar production is more than usage, PG&E pays the excess production for 4-5 cents/kwh, but for another month when usage is more than production, PG&E will charge the excess usage at a 5-10 time higher rate based on TOU rates! The annual ture-up is misleading because it is actually a monthly true-up; a real annual ture-up should offset usage and production at annual basis, not monthly basis.
If a solar owner has benefits, they are from the sun, not from PG&E or the state government. On the other hand, PG&E has been trying to profit from the individual solar owners as much as possible. And the state government is trying to exploit solar owners to fund its programs. I do not disagree with the programs, but they should not put the burdens to the solar owners.