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.