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

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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.

California pool owners disproportionately affected by net metering
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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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