New California Law Addresses Solar Net Metering Issues
A recent change in California state law provides an interesting and useful case study of the ongoing clashes across the country among utilities, renewable energy groups, solar manufacturers and consumer groups regarding solar net metering, utility rates and renewable energy programs. The complex new law, a result of multiple compromises, has been portrayed as a victory for solar advocates, utilities, and consumers. Although the purpose of the change is rooted in California’s energy crisis in 2000-2001, the positions taken by the different groups throughout the process and the resulting compromises may be indicative of what will occur in similar battles in other states.
After the California blackouts of 2000-2001, which were caused in part by market manipulation and capped electricity prices, the California legislature established tiered electric rates that resulted in high summer rates for consumers in certain areas in California. Under these tiered rates, the more electricity consumers use, they more they pay. In recent years, rising costs have thus hit higher-use consumers the hardest. California already had net metering for rooftop solar installations, and the high utility rates provided a strong selling point for rooftop solar companies that promised lower energy costs.
California electric utilities had taken the same position as electric utilities around the country – that consumers with rooftop solar systems should not be allowed to escape paying the costs incurred by utilities in maintaining transmission lines and the distribution grid. Solar power advocates and solar manufacturing groups, on the other hand, were concerned that the cap on net metering would soon be met and the residential solar industry would come to a standstill. Consumer advocates sought a fairer distribution of consumer rates.
The law that was ultimately passed paid tribute to all of these differing interests. The primary win for utilities was authorizing the California Public Utilities Commission (CPUC) to approve up to a $10 fixed charge on residential customers to compensate utilities for fixed costs. The renewables industry obtained favorable changes as well, in that the law (a) authorizes the CPUC to raise the Renewable Portfolio Standard percentages from previously required levels and (b) allows the CPUC to remove limits on consumer participation in the net metering program. However, the law leaves implementation of almost all changes to the CPUC, likely leading to future conflicts between the solar industry, utilities and consumer advocates. Adding fuel to the fire is a recent draft study commissioned by the California Public Utilities Commission to determine who benefits, and who bears the economic burden, if any, of the state’s net energy metering program. The study found that 99% of net metering customers were using solar, that net metering customers had annual incomes well above the state average, and that by 2020 the net metering program would cost non-solar customers $1.1 billion a year. View the study by clicking here.