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Published on January 17th, 2019 | by Charles W. Thurston


PG&E Bankruptcy Impact On Rooftop Solar Is Limited — So Far

January 17th, 2019 by  

When a behemoth electric utility like Pacific Gas & Electric goes bankrupt, rooftop solar owners may be understandably worried about the future of their array and their financial arrangement with the company.

With an estimated $30 billion in potential liability damages from California’s wildfires over the past two years, compared to a stock value of only $3.5 billion, the utility announced plans to file for bankruptcy by month’s end.

PG&E previously filed bankruptcy in 2001 resulting in a 2003 settlement in which the California Public Utilities Commission (CPUC) allowed the utility to pass on about $7 billion in costs to its customers through increased rates.

Given the uncertain future of PG&E or whatever may follow it, there are several key areas of concern to rooftop solar customers: net metering, the self-generating incentive program, and new grid interconnection requests.

However, Bernadette Del Chiaro, the executive director of the California Solar & Storage Association (CALSSA) in Sacramento has some calming views on these issues.

NEM2: Net metering allows residential, commercial, and agricultural customers to install and interconnect a renewable generator, most often solar/photovoltaic (PV), sized to meet their annual load, and receive credits to offset the costs of their energy usage. In January 2016, the CPUC issued Decision D. 16-01-044 providing direction on the state’s Net Energy Metering Successor Program, setting up the latest compensation agreement, called NEM2.

NEM compensation is required under California State Assembly Bill 920, which allows PG&E to make payments to NEM customers who generate more electricity than they use over their 12-month billing cycle. The compensation received is called Net Surplus Compensation (NSC). The NSC rate is based on a 12-month average of the market rate for energy. The rate is about two to four cents per kilowatt-hour (kWh).

Expected NEM2/NSC impact? “We do not see any potential impact to NEM or NSC for existing or future solar installations. PG&E has an obligation under state law and CPUC decisions to continue calculating customers’ credits under he approved NEM and NSC formulas,” says Del Chiaro.

Another area of concern to rooftop solar is the CPUC’s Self-Generation Incentive Program (SGIP), which provides incentives to support existing, new, and emerging distributed energy resources. SGIP provides rebates for qualifying distributed energy systems installed on the customer’s side of the utility meter.

Expected SGIP impact? “Because the funds used for the incentives and the administration of SGIP are collected by a separate adder on utility bills and the funds are reserved under state law for the purposes of SGIP, we do not foresee any impact on the program,” says Del Chiaro. “Suspension of the program would not help PG&E cover any of its general debt obligations because PG&E cannot redirect SGIP funds for that use,” she adds.

Interconnection access is a third rooftop solar concern. Those seeking to add a new solar system must go through the utility for permitting and interconnection approval.

Expected interconnection impact? “We do not anticipate any direct impact of the filing on interconnection processing. Like SGIP, the main impact that could arise is if interconnection departments suffer from staff defections. This could further extend interconnection processing timelines and exacerbate attempts to resolve disputes about specific interconnection projects or other issues,” Del Chiaro says.

The impacts of the PG&E bankruptcy are emerging far and wide, and the long-term view is inspiring some municipalities to consider forming their own utility, as Alameda already has done. San Francisco is among these cities considering independence from a regional utility like PG&E.

“The San Francisco Public Utilities Commission (SFPUC) is studying the near and long-term impacts of a PG&E bankruptcy and identifying all possible options to ensure continuity for all San Francisco power customers … including the possibility of acquiring or building electrical infrastructure assets,” said a recent statement from the agency.

San Francisco already has set up a clean energy based Community Choice Aggregation (CCA) program, CleanPowerSF, which is managed by PG&E. “At this time, PG&E will continue to manage billing and payment for CleanPowerSF customers,” the agency said. Since the city already operates the CCA, the step up to an independent utility is less likely to occur in the near future.

CALSSA has already called for solar to become a larger player in the CPUC’s consideration of what may follow for PG&E or its successor. Splitting gas and electric services could leave PG&E in control of gas in the region but not electricity generation, transmission, and distribution. 

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About the Author

Charles specializes in renewable energy, from finance to technological processes. Among key areas of focus are bifacial panels and solar tracking. He has been active in the industry for over 25 years, living and working in locations ranging from Brazil to Papua New Guinea.

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