California PUC President Proposes Grandfathering Current Net Energy Metering (NEM) Tariff for Solar

Posted by Laura Arnold  /   February 24, 2014  /   Posted in 2010 Mid-term Election & Candidates, Net Metering  /   No Comments

Solar bargain to last 20 years, for some

By Morgan Lee 8:44 P.M.FEB. 22, 20
Rooftop deck with solar panels and vegetated roof. MANDATORY CREDIT: Pablo Mason

Rooftop deck with solar panels and vegetated roof. MANDATORY CREDIT: Pablo Maso

Rooftop solar customers can hold on to a popular tariff that reduces their power bills for 20 years as the state reconfigures the tariff for those who adopt solar in the future, under a proposal from the president of the California Public Utilities Commission.

The current "net energy metering" tariff allows rooftop solar customers who feed excess electricity into the grid to receive credits against consumption that substantially reduce bills. The proposed grandfathering clause would apply for 20 years starting with the plug-in date of individual rooftop solar arrays.

The current tariff has underpinned a boom in solar-electricity generation by utility customers, but will be reconfigured by order of the state governor and legislature after investor-owned utilities complained that solar customers were avoiding their fair share of costs for maintaining the electrical grid.

Homeowners, businesses and public agencies have worried their investment in rooftop solar, with a payoff calculated under the old tariff, would be undercut under the new credit system still being drafted.

The 20-year grandfathering period was designed to ensure customers get "reasonable payback that includes some return on the customer's investment," Utilities Commissioner Michael Peevey's wrote in a recommended decision released late Thursday. He based the time period on a "conservative" estimate of the functioning life for solar equipment, along with common 20-year terms for solar loans and financing agreements.

The five-member commission may vote on the measure as soon as March 27, with a last minute flurry of written petitions and lobbying efforts expected from interest groups before then.

Evan Gerza, director of government affairs for San Diego-based rooftop solar installer Sullivan Solar, characterized the proposal as positive step.

"We think it's a good start," he said. "They very clearly did not side with the utility proposals, which would have been damaging to solar."

Other pending regulatory decisions could substantially alter the economic payoff of rooftop solar, as California rewrites its electricity billing system for residential customers and considers a shift to time-of-use pricing.

In his recommendation, Peevey dismissed concerns raised by utilities of a possible "gold rush" of solar installations to take advantage of the existing tariff before it expires.

The new net-metering tariff is scheduled to take effect on July 1, 2017. That would be the cutoff date for the old tariff, or sooner for customers of a particular utility if rooftop solar generation expands past 5 percent of peak demand.

Utilities would be required to clearly report their progress toward that cutoff threshold to the public through their websites, under the decision. The proposal also outlines legal and ethical responsibilities for solar installers to disclose applicable tariffs and terms for the transition to a successor tariff. Terms of the new net metering tariff are supposed to be finalized by the end of 2015.

Solar installations would be grandfathered under the current tariff for the full 20 years even if the house or property changes hands. Repairs and equipment upgrades can be performed without losing the tariff if they don't expand generating capacity more than 10 percent or 1 kilowatt.

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