UPDATE: Feb. 7, 2022: The California Public Utilities Commission will not schedule a vote on a recent, controversial proposal revising its net energy metering framework “until further notice,” according to an email sent out by Administrative Law Judge Kelly Hymes last week.
The CPUC’s recently appointed president, Alice Reynolds, has asked for more time to consider potential revisions to the proposal, according to the email. Regulators plan to conduct a hearing with all five commissioners in attendance to receive oral arguments from invovled parties.
“We are glad to hear that the commission is working to get this proposal right,” Laura Deehan, state director of Environment California, said in a statement.
- The proposed net energy metering tariffs California regulators put forth in December could cut the state's residential solar market in half by 2024, according to a new analysis from Wood Mackenzie.
- The California Public Utilities Commission (CPUC) proposal to revise the current net energy metering framework could have been brought before commissioners for a vote today at the earliest, per agency rules. However, the proposed decision — which received strong backlash from solar companies and others — was not put on the agenda for that business meeting.
- "I think the fact that it didn't show up on the agenda is a sign that the commission is evaluating whether they're going to revise the proposed decision or [if] there's going to be an alternate," said Seth Hilton, partner at Stoel Rives, adding that the controversy the proposal caused could be having some effect.
California's current net energy metering tariffs — which provide a credit for customers who generate their own electricity and feed it back to their utility — were adopted in 2016, but a more recent analysis by the commission indicated that the tariff has a negative effect on customers who don't participate in the program as well as on low-income ratepayers.
In December, the commission released a proposal to replace the current structure with a tariff that is based on the avoided cost values of behind-the-meter resources — a move that was welcomed by investor-owned utilities but drew immediate backlash from solar advocates and other quarters. Earlier this month, while presenting the state's new budget, California Gov. Gavin Newsom, D, said that there is "more work to be done" on the net energy metering framework.
Hilton said he'd characterize the overall public response to the proposal as "very, very strong — and much stronger than would be typical with a commission decision."
The other dynamic at play here, he added, is that the CPUC now has two new commissioners, one of whom, Alice Reynolds, is a former energy advisor to Newsom.
"Newsom has in the past been criticized for being a little too involved in an independent agency's decisions, and so I think his comment was pretty careful … but I think that would have some weight, especially with the new commissioners, and especially in light of the backlash this decision got," Hilton said.
While the final structure of the net energy metering proposal may be in flux, the current version would more than double the payback period of solar projects, according to Bryan White, research analyst with Wood Mackenzie.
"Our analysis for the two largest utilities — Pacific Gas & Electric (PG&E) and Southern California Edison (SCE) — reveals payback periods for typical residential solar projects built this year will increase from five to six years under current net metering to 14-15 years, depending on the utility," White said in a statement.
If the proposed decision is approved soon enough that it begins having an impact in July or August this year, solar installers will spend the first six months of the year selling systems and submitting interconnection applications under the current rates, according to Wood Mackenzie. This could lead to record capacity additions before the market shrinks in the second half of the year.
Solar advocates in California also have urged the commission to reconsider the proposal, with the California Solar and Storage Association saying in comments filed with the agency earlier this month that it will be "a potent weapon in the hands of utilities across the country seeking to snuff out customer-sited solar."
Other stakeholders, however, have raised concerns about the equity implications of the existing net energy metering framework. The Natural Resources Defense Council pointed to the commission's analysis of the issue in its comments, stating that the current structure disproportionately benefits wealthier solar adopters without addressing the difficulties low-income customers face when it comes to installing solar systems.
"People who live in disadvantaged communities have largely missed out on the benefits of rooftop solar, but still pay excess costs through undue rate increases," NRDC said.
As California navigates its economywide decarbonization goals, electrifying the built environment and transportation sector will be critical, and "to get there, electricity must be affordable and cheaper than alternative fuels; otherwise, customers won't have the right incentives to move away from fossil fuel-powered cars and buildings to ones powered by clean electricity," NRDC added.