PG&E Wants California’s Net Metering Fixed by 2014

May 16th, 2012 by Susan Kraemer

Artist David Hockney: California pool series

A fundamental change in how Californians get electricity is shaking up the largest utility in the country, and one that will be getting 17 percent of its power from utility scale solar by 2020.

PG&E is the nationwide leader in distributed solar, where it credits solar ratepayers for their production via net metering, running their meters backwards by day, forwards by night.

About a third of all the rooftop solar nationwide is located in PG&E’s territory in Northern California, where 65,000 solar rooftops (including mine) generate clean electrons for the California grid, and about 1,000 new ones are coming on line every month.

Distributed solar systems have put the equivalent of 3 or 4 natural gas power plants on the California grid, about 1 GW of clean energy, according to Vote Solar, and about 560 MW of that is “behind the meter” in PG&E’s utility district.

As well as the PPA contracts it has with utility scale solar developers, PG&E has been permitted by the CPUC to own 250 MW of small scale utility-scale solar plants, at the rate of 50 MW worth a year over five years, and it has also invested $100 million in SunRun – and tried to invest in solar manufacturing.

So when PG&E is resisting extending the 5 percent cap in net metering, it is a far cry from the usual solar foes like the Koch brothers or the Republicans in congress.

Solar rooftops provide benefits to all ratepayers in the state by providing clean energy for the grid, which displaces dirtier energy like natural gas (PG&E uses less than 1 percent coal).

But the amount of distributed, behind the meter solar on the California grid will surpass the 5 percent ceiling of peak demand cap by 2014, according to David Rubin, director of service analysis for PG&E.

On May 24th a CPUC decision on whether or not to allow that to go up to 10 percent could fundamentally change solar economics for consumers by then, because the 5 percent cap will have been met.

According to the solar industry, the CPUC says the law means the aggregate capacity of all net metering systems divided by the aggregate of individual customer peak demand, and the utilities say it means the aggregate capacity of all Net Metered systems on the grid divided by utility system peak demand, which yields a lower number.

But according to Rubin, there is no change in the definition. Both agree that it amounts to raising the cap from 5 percent to 10 percent. PG&E wants to keep the cap where it is but find a different policy to drive new solar adoption. It has worked with the Rocky Mountain Institute to find a better way to expand distributed “behind the meter” solar.

The CPUC will decide on May 24th. Whatever is decided will have major impact. Once the cap is reached, utilities would no longer have to credit new solar roofs for the power they generate every month.

That will be either in 2014, or later, when the next, 10 percent cap is breached. It will happen at some time over the next years, forever dividing those who went solar in time from those who didn’t.

The end of net metering eliminates the financial incentive for new individuals to go solar, because you would still be paying the utility for electricity, even though your solar roof is also contributing electricity to the grid. Solar customers are credited by the utilities for adding to grid power in the daytime, and debited for the power used at night.

If your solar system cannot cut (or eliminate) your electricity bill, then the financial incentive is gone, unless you go back to the old days of using batteries for storage, and going off the grid. But batteries are a step backwards; impractical for urban settings, bulky, dirty and toxic, only appropriate for off-grid situations where there is no choice.

Rubin says the ratepayers who will bear the brunt of the rise in costs are those in the top tiers of usage, meaning they use the most electricity. The California average home uses 550 kilowatt hours a month.

Rates can only be raised on those in the top three tiers of energy usage, because the CPUC requires that the bottom two tiers of energy use cannot be charged more, in order to protect low income users.

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The extra costs will therefor go disproportionately only to people who can put away up to 1,000 kilowatt hours monthly – perhaps in a huge house with a swimming pool – but who are unable to sign a lease or a PPA for no-money-down solar.

These ratepayers with very high energy usage could be unable to cut those costs with solar for several reasons, he says.

They could have poor credit ratings, since you need a reasonable credit rating to sign a contract for no-money-down solar with SunRun, SolarCity or Sungevity, or because they rent, or because their homes are not appropriate for solar (shaded by trees or other buildings, or with gables that are too multidirectional or facing the wrong way, for example.)

PG&E wants a new fix for distributed solar, that allows for its expansion, but in a way that is fair to all ratepayers – including high energy users who cannot go solar – either those in rentals, in homes with no solar capability, or with bad credit.

Several ideas for this kind of new policy, that allows for the expansion of distributed energy in a way that is fair to every ratepayer are currently under way in the California legislature, such as a new bill enabling ratepayers to contract directly for solar power with developers, using shares in community solar. But that’s a story for another day.

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Tags: CPUC, decision May 24th, net metering cap, PG&E, Vote Solar

About the Author

Susan Kraemer writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

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http://tkindustrialdesign.com/ Temujin Kuechle

If a person decides to buy and use an E.V. (electric vehicle) or a PHEV (plugin hybrid electric vehicle) then the Solar Panels (Photo Voltaic system) can charge up their car during the day. If more people could work from home then this scenario makes more sense.

Put it this way, as soon as I get an electric vehicle and start charging it with the solar panels on my roof is the day I start saving $210 per month in petrol/gasoline ($2520 year).

Let’s say that the cost of my solar panel system installed is $18,000 and lasts about 30 years (or until the panels only output about 60% of what they did new), then I’m only really paying about $50 a month for my Solar Panel system ($600 year), and nothing to charge up my EV. EV’s don’t need to be smog checked, there’s no transmission, no oil changes, no waiting in line at the gas station because you can charge at home (in my scenario). There might be a coolant change, tires get worn down, wiper fluid runs out too.

It all starts to make sense when you realize that most people in the US don’t drive more than 100 miles a day commuting (which is where most people burn away their money). So those solar panels might start to make sense financially in the long run, whether or not PG&E try’s to advance another unfriendly policy change. I think PG&E should pay me for producing electricity what they charge others to consume, not less. It would be fair. Right now the policy seems unfair.
- Bob_Wallace
  
  Panels that have been in service for as long as 30 years haven’t lost anything like 40% of their performance.
  
  And don’t forget that when you get your solar system that you’ve locked in the price of ‘fuel’ for the life of the system. The price of gas will almost certainly keep rising, but the cost of charging will stay the same.
  —
  
  As far as PG&E paying you what they sell electricity to others, remember that they are furnishing the transmission and backup. IMO they should be paying you the wholesale rate for the hours when you are supplying them electricity. Then charging you retail when you take back.
  
  You would still get to avoid the highest TOU or top tier rate and buy at the lowest retail price point while also saving a tremendous amount on ‘fuel’.
  
  Win-win as I see it.
  - Ross
    
    Your opinion sounds good to me.
  - http://cleantechnica.com/ Zachary Shahan
    
    Sounds logical.
    - Julien Pierre
      
      And it would completely eliminate any incentive for anyone to go solar. The wholesale rate is ridiculously low.
      - http://zacharyshahan.com/ Zachary Shahan
        
        Huh? Don’t catch your point.
      - Guest
        
        It’s really quite simple.
        
        PG&E charges its residential customers in excess of 50 cents/kWh in some rate schedules, like TOU summer peak.
        
        Even their so-called “aggregate rate” is about 17 cents per kWh for all their residential customers, on average, regardless of season, TOU period, and tier.
        
        The wholesale rate is on the order of 3 cents/kWh.
        
        I am not home during the day, and most of my electricity usage is outside sunshine hours.
        
        With Bob’s proposal, most of my solar generation would be paid at the ridiculous “wholesale rate” of 3 cents per kWh.
        
        And most of my consumption would be billed at the nightly rate, which would still be far higher. While I wouldn’t ever pay the highest TOU rates as those are daytime, I could still hit high tiers in the nighttime. Note that you always hit the same tier for each TOU period in PG&E’s awfully complicated calculations.
        
        Let’s say you consume 10000 kWh a year, all at night, and produce 10000 kWh a year from your solar system, all during the day. Ie. your net usage is zero.
        
        10000 kWh during the day gets credited at 3 cents/kWh.
        
        Net annual credit : $300.
        
        10000 kWh consumed at night gets billed at PG&E’s average retail rate of 17 cents/kWh.
        
        That’s a $1700 bill .
        
        Net bill : $1700 – $400 = $300 .
        
        So, now, even though you are actually using any net energy from the utility, you have a $1400 utility bill.
        
        The annual bill was reduced only by 300/1700 = 17%.
        
        Now, you are producing 100% of the energy you need, just at different times. But you still pay 82% of the cost as if you weren’t producing anything.
        
        Sound fair to you ? Don’t you see a problem ?
        
        If the CPUC and PG&E implement this, 2 things can happen :
        
        1) those that don’t have solar yet will not make the investment for a mere 17% bill reduction.
        
        2) those that already have solar power will be looking at
        disconnecting from the main grid completely, removing power from the utility at peak times.
        Wasteful batteries that should never be necessary in the first place will be bought.
        Neighborhoods will also setup their own private grids to be free of the nonsense of the big utilities.
      - http://zacharyshahan.com/ Zachary Shahan
        
        ah, i see what happened: i didn’t read Bob’s full comment from 2 years ago again, and didn’t get what your comment last month was in reference to without reading to the end of Bob’s.
        
        2 years ago, that sounded logical to me. nowadays, i think solar power producers should be paid for the *value* of the electricity they produce, which i think is actually generally above the retail rate of electricity. http://cleantechnica.com/2013/02/21/the-value-of-solar-could-be-worth-much-more-than-austin-energy-pays/
        
        but, in any case, now that you’ve explained all this, i’m curious about the wholesale rate. the wholesale rate of electricity in the middle of the day is only 3 cents/kWh there? that’s surprising.
      - Julien Pierre
        
        Check out
        http://www.pge.com/myhome/saveenergymoney/solarenergy/afterinstalling/ab920/
        
        Quote :
        
        “How will my net surplus compensation (NSC) rate be determined at the time of my true-up ”
        The Net Surplus Compensation rate may fluctuate monthly, as it is based
        on a rolling 12-month average of spot market prices. Your Net Surplus
        Compensation rate is determined by using the average day-ahead spot
        market prices (between 7 am and 5 pm) of procuring electricity for the
        previous 12 months from the time of your true-up. For example, if your
        true-up is in the month of October, prices from September of the
        previous year to the September of the current year will be used to
        calculate the rate that will then be applied for customers truing-up in
        the month of October. Given fluctuations in energy costs over time, your
        Net Surplus Compensation rate will also vary from year to year,
        possibly rising or falling along with market costs of energy. Based on
        current market prices, the rate would be approximately 4 cents per kWh.
        
        Looks like actual wholesale prices are closer to 5-7 cents/kWh depending on day of the year :
        http://www.eia.gov/electricity/wholesale/
        
        Very interesting to see a spike to 12 cents/kWh around 9/11 . Seems like there is some market manipulation going on.
        
        Either way, those rates aren’t anywhere close to the retail rates.
        
        The utilities can’t have their cake and eat it it too. If I put power into the grid during the day that I don’t use, they charge my neighbors that do use it for that power at the retail rates. It’s fair enough that they credit me at the retail rate, too.
        
        For surplus energy, crediting at wholesale rate is a little more justifiable. Most solar residential users don’t oversize their systems, though. They produce less kWh than they consume on an annual basis.
        
        For the last 11 months so far (calendar 2013) my system produced 15165 kWh . And I also pulled a net 1365 kWh from the grid. This means my solar system is providing 91% of my power
        
        As of my last bill I had a $203 net metering credit on my E-6 (TOU) bill.
        
        If I was using E1 rate (non-TOU) I would have a positive $261 bill.
        
        If I didn’t have solar, and was on E1 (non-TOU), the electric bill would have been $4830 for the last 11 months. So my solar system is reducing my electric bill by 104% .
        
        Of course, at the end of the year, any excess NEMS credit gets zeroed, and I don’t have surplus energy, so there is no net surplus compensation.
        
        The credit will probably shrink to near anyway by December 31, depending on my usage this month and how much rain we get.
      - http://zacharyshahan.com/ Zachary Shahan
        
        geez, what craziness. thanks for all this detail! fighting for you and others to get an even better deal (more commensurate value) on your solar power…. but looks like the main fight this coming year is going to simply be keeping ALEC & its utility friends from chopping into current net metering policies…
        
        btw, you own your system, right? any interest in providing a guest post on why you chose to buy rather than lease?
      - Julien Pierre
        
        Yes, I own my system. At the time I first bought it in 2010, the technology used by the few leasing companies was inferior.
        I chose Enphase micro-inverters and 28 US-made Sharp panels.
        
        I believe I am living in my last house and the system will still be producing power longer than the duration of any of the leases, also.
        
        I think the landscape has changed somewhat since 2010 though. One year ago, I expanded my system when I got an electric vehicle, and still chose to buy. I added more Enphase micro-inverters, and 12 chinese-made Talesun panels. Of course I charge my EV at night, and that’s a big chunk of my electricity usage right there.
        
        I think the deals on solar are already pretty good, especially because of PG&E’s high rates. If their rates weren’t so high to begin with, solar wouldn’t be as cost effective – it isn’t as competitive in many other states with less sunshine, and less expensive power sourced from dirtier sources.
        
        Ultimately, two things can happen. The major utilities can lower their prices which will reduce the uptake of solar.
        
        Or they can keep increasing their prices more and more, until almost everyone has a solar system on their roof.
        
        At that point they will mainly be charging for distribution, and will do a lot less generation than they do now, at least on most days.
      - http://zacharyshahan.com/ Zachary Shahan
      - Julien Pierre
        
        It’s really quite simple.
        
        PG&E charges its residential customers in excess of 50 cents/kWh in some rate schedules, like TOU summer peak.
        
        Even
        their so-called “aggregate rate” is about 17 cents per kWh for all
        their residential customers, on average, regardless of season, TOU
        period, and tier.
        
        The wholesale rate is on the order of 3 cents/kWh.
        
        I am not home during the day, and most of my electricity usage is outside sunshine hours.
        
        With Bob’s proposal, most of my solar generation would be paid at the ridiculous “wholesale rate” of 3 cents per kWh.
        
        And
        most of my consumption would be billed at the nightly rate, which would
        still be far higher. While I wouldn’t ever pay the highest TOU rates as
        those are daytime, I could still hit high tiers in the nighttime. Note
        that you always hit the same tier for each TOU period in PG&E’s
        awfully complicated calculations.
        
        Let’s say you consume 10000 kWh
        a year, all at night, and produce 10000 kWh a year from your solar
        system, all during the day. Ie. your net usage is zero.
        
        10000 kWh during the day gets credited at 3 cents/kWh.
        
        Net annual credit : $300.
        
        10000 kWh consumed at night gets billed at PG&E’s average retail rate of 17 cents/kWh.
        
        That’s a $1700 bill .
        
        Net bill : $1700 – $300 = $1400 .
        
        So, now, even though you are actually using any net energy from the utility, you still have a $1400 utility bill, 83% of the bill you had before putting in solar. The annual bill was reduced only by 300/1700 = 17%.
        
        Now, you are producing 100% of the energy you need, just at different times.
        
        But you still pay 83% of the cost as if you weren’t producing anything.
        
        Sound fair to you ? Don’t you see a problem ?
        
        If the CPUC and PG&E implement this, 2 things can happen :
        
        1) those that don’t have solar yet will not make the investment for a mere 17% bill reduction.
        This is surely what the utility want.
        
        2) those that already have solar power will be looking at
        disconnecting from the main grid completely, removing power from the utility at peak times.
        
        Wasteful batteries that should never be necessary in the first place will be bought.
        
        Neighborhoods will also setup their own private grids to be free of the nonsense of the big utilities.
- http://muckrack.com/dotcommodity Susan Kraemer
  
  Bob is right. Solar loses only half of 1 percent a year, so in 30 years a 10 KW system would still be rated at 8.5 KW.
http://pulse.yahoo.com/_LA6YNTINKMSXQUD4DYUVJXIDKY Common Sense

So does the net metering cap mean that whatever credits that are produced by the panels goes away. In other words, say I produce power during the day and therefore don’t pay for power during the day, but at night when I don’t produce power, I will have to pay for that power?? Or is it still netted out of the power I produce during the day?
- http://muckrack.com/dotcommodity Susan Kraemer
  
  No, it will only apply to new people who go solar after the cap is breached.