Utilities challenge Calif.’s net-metering protection

Source: Anne C. Mulkern, E&E reporter • Posted: Thursday, March 10, 2016

A program that pays California residents for the extra electricity made by their rooftop solar panels came under renewed attack yesterday.

Utilities and others appealed the California Public Utility Commission’s January decision that largely preserved net energy metering, or NEM. The rule in the Golden State requires utilities to pay solar customers retail rates for the electricity they send back to the grid.

Pacific Gas and Electric Co. (PG&E) said that the decision should be thrown out and a new one adopted. San Diego Gas & Electric Co. and Southern California Edison Co. in a joint filing sought changes to the January ruling. Consumer group the Utility Reform Network, or TURN, and the Coalition of California Utility Employees also criticized the NEM decision.

The utilities and others said CPUC’s 3-2 approval failed to analyze properly how much NEM shifts costs for grid support to electricity consumers who lack solar. The utilities argue that there are fixed expenses of power distribution not shared equally by people who own photovoltaic panels. State law A.B. 327, passed in 2013, ordered CPUC to review NEM’s effects on all ratepayers.

“The Decision did not comply with the requirements of A.B. 327,” PG&E said in its filing. “That statute required the Commission to evaluate the costs and benefits of NEM, and balance those costs against what is needed to continue a sustainable solar industry. However, the Decision did not make any findings on either set of issues. In so doing, it failed to comply with AB 327.”

Ari Vanrenen, a spokeswoman at PG&E, said that customers without solar will be subsidizing those with solar by as much as $5 billion per year by 2025.

“To put this into perspective, by 2025, this adds about $50 to the average residential customer’s monthly bill, and about $30 to the average low-income customer’s monthly bill,” Vanrenen said in an email.

CPUC could act on the NEM decision or ignore the filings, said Brad Heavner, policy director at the California Solar Energy Industries Association, or CALSEIA. If CPUC doesn’t reopen the NEM ruling, utilities or others that want to proceed further would have to go to the California Court of Appeal.

California ranks No. 1 in the United States for total installed rooftop solar, with more than 450,000 systems, according to the Solar Energy Industries Association. The challenge to CPUC’s decision came as utility regulators in several places are looking at revisions to net metering. It’s a benefit available in some form in 44 states.

Solar backers see net metering as a key incentive to add rooftop solar on homes. A 2013 report from the Edison Electric Institute warned of a “death spiral” for utilities that could be created by more customers adding distributed generation. Bernadette Del Chiaro, executive director at CALSEIA, said a multi-state effort was launched by utilities that “put net metering in the crosshairs” (EnergyWire, Jan. 29).

CPUC’s January decision on what’s been called NEM 2.0 made a few changes to the policy. The ruling required net-metering customers to switch to time-of-use electricity rates that vary according to demand. It also allowed utilities to charge an interconnection fee of $75 to $150 and granted the ability to add fixed charges of about $8 to $9 per month for residential customers.

Acting as ‘obstructionists’?

If the CPUC agrees to review its NEM decision, that would effectively prevent customers from installing solar after the current rules expire, CALSEIA said. The major changes to NEM sought by utilities “would put solar out of reach for a majority of customers.”

CPUC’s proceeding to consider changes to net metering has already spanned 22 months and involved a “mountain of filings from the utilities and others,” the solar trade group said.

“The utilities are continuing their legal maneuvers because it is disruptive to the solar industry,” Del Chiaro said in a statement. “Rather than working in partnership with solar companies and striving to reduce costs for customers, utilities would prefer to be obstructionists and muck up the market.”

Heavner at CALSEIA said that the utilities are using false analyses to claim that net metering is a massive subsidy.

“Rather than accepting the commission’s decision and allowing their customers to go solar under fair rules, the utilities are fighting to keep opportunities away from their customers,” Heavner said.

Consumer group TURN in its appeal of the NEM decision said it appeared that “the ultimate outcome was driven primarily by politics at the expense of the law.” TURN has said that NEM helps those who can afford solar while forcing others to pay more.

“The victims of this outcome-based approach are the general body of ratepayers who will be required to pay higher rates to support the cross-subsidization,” TURN said.

TURN said that the CPUC decision appears to conclude that the state Legislature intended to place “primary weight on language in A.B. 327 seeking sustainable growth of the solar industry,” versus equal emphasis on that and the cost-shift problem.

“This conclusion is based on wishful thinking and constitutes legal error,” TURN said.

All the requirements of A.B. 327 “were intended by the Legislature to be co-equal in their application,” TURN said. “The Commission lacks any rational basis for assigning primary emphasis to the goal of ‘sustainable growth’ and ignoring two other provisions that explicitly require a reconciliation of ‘costs and benefits.'”