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Summary:

California regulators on Thursday essentially increase the amount of solar power generation that could qualify for net metering, but they left unresolved a contentious issue over whether people who don’t have solar or other renewable energy systems are subsidizing those who do.

SolarCity installation

California regulators on Thursday decided to expand a popular program that allows owners of solar panels to sell electricity they don’t use back to the utilities at retail rates. While the program, called net metering, is popular with solar panel owners, it’s a source of conflict for utilities. In addition, regulators left a contentious issue unresolved over whether people who don’t own solar panels will be subsidizing those who do.

The California Public Utilities Commission voted 5-0 in favor of expanding the current “cap” on net metering, which requires utilities to allow for net metering for just 5 percent of the total electricity demand from its customers. The previous cap was determined by taking the highest peak demand ever recorded in the utility territory.

But solar energy proponents have argued that utilities should calculate the cap by adding up the peak use of individual customers instead of using the highest peak. Using this method will take into consideration that each customer’s peak demand varies at different times. The commission approved this new method on Thursday, and this could in effect double the amount of electricity (in terms of megawatts) that utilities could allow in the net metering program. Without the new method, Pacific Gas & Electric, for example, could stop accepting new applications in 2013 because it will likely have reached the cap.

The net metering program is open to home owners, commercial building owners and schools, and it includes all renewable energy generation equipment (the majority is solar panels) of 1 MW or less. Customers who enroll in net metering don’t get a check for the electricity they export to the grid, but get credits on their utility bills. The commission sees the program also as a way to create jobs.

Utility push back

Lawmakers have raised the cap for net metering before, and such an effort faced strong resistance from utilities. Part of the argument against expanding the program is who will provide the cost for maintaining the electric grid for the program. Net metering customers don’t pay a grid maintenance charge even though they rely on it to export excess electricity and draw power from it when their solar panels aren’t producing power. That means customers who are not part of the net metering program may in fact be footing a significant cost of the program.

Some critics also contend that affluent customers are more likely to install solar panels and take advantage of net metering. People on different side of this debate have certainly offered numbers to bolster their arguments, but the commissioners say they want to do their own study and figure out if they need to modify the program. The commission staff will do a new cost-and-benefit analysis on this topic.

“The report should quantify the costs and benefits of (net metering) to participants and non-participants and should further disaggregate the results by utility, customer class, and household income groups within the residential class. The study should also seek to gather and present data on the income distribution of residential (net metering) participants,” according to the written decision the commission approved Thursday

The commission wants the study done by Oct. 1, 2013, and it would suspend the net metering program for new enrollees starting on Jan. 1, 2015 if it needs more time beyond that to reform the program.

Images courtesy of SolarCity.

  1. PG&E charges me about $12.83 a month for being on their net-metering program. Since the billing is automated, I know that it doesn’t cost them that much do so. Ie, I AM paying for use of the grid….

    From the bill itself: Distribution $12.00, Public Purpose Programs $0.18, Nuclear Decommissioning $0.01 and Generation $0.64

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    1. @Me:The fact that you are exporting and then drawing power throughout the day is a burden on the grid that you aren’t paying for. As a net metering customer, you are not paying the interconnection fee and the standby charge, two types of payments that utilities are typically entitled to but are prohibited from including for the net metering program. It takes time to review interconnection applications and to makes sure there is capacity on the grid to accommodate the growing number of solar systems being plugged into the grid. Standby charge is to reimburse your utility for having the power plant and the grid ready to deliver electricity to you whenever your solar system isn’t producing. Your solar system doesn’t produce steadily throughout the day. So your utility can’t say, well, since you have your own power plant, then we aren’t going to worry about serving you during the day time. It still has to spend the money maintaining the grid and getting ready to serve you at a moment’s notice.

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  2. Deconfusion Friday, May 25, 2012

    Ucilia,

    That is very oversimplified. While it is true that DG can create costs that are borne by other ratepayers via net metering, it is also true the DG can create benefits in excess of the retail rate owners are being paid for exported power. In the latter case it is the PV system owners who are subsidizing other ratepayers. The most comprehensive analysis of this to date was put together by Tom Beach of Crossborder Energy, and concluded that it is basically a wash. It is worth reading this report in its’ entirety. The CPUC study is intended to look at the same question. The answer is by no means as obvious as one might think. It is also worth pointing out that cross-subsidization is generally a feature of any utility rate structure, and is no means unique to NEM. Interesting indeed that there is such an intense concern about it in this particular case.

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