The California Public Utilities Commission yesterday adopted – by a 3-2 vote – a proposed decision revising the net energy metering (NEM) tariff for customers of the state’s three largest utilities who install renewable distributed generation (DG) on their properties. To the dismay of the dissenting commissioners, the final decision adopted late proposed changes that exclude transmission costs from the non-bypassable charges that will be imposed on NEM customers.

Here is a summary of key provisions in the decision:

  • Pursuant to the decision, NEM customers will continue to be paid the retail rate of energy for excess generation sent back to the grid.  In doing so, the CPUC adopted a different approach then the Nevada PUC, which recently decided to end payments at retail rates for excess generation from net metered systems in favor of payment at wholesale rates.
  • The decision declined to impose any demand charges, grid access charges, installed capacity fees, standby fees, or similar fixed charges on NEM residential customers, at least under the latest NEM tariff.  This aspect of the decision also differs from the recent decision out of the Nevada PUC, which imposed fixed charges on NEM customers.
  • The decision contains a new requirement that customer-generators “pay a reasonable interconnection fee” to the applicable utility estimated to be about $75-$100, and also imposes non-bypassable charges for each kilowatt-hour of electricity that the customer-generator consumes from the grid, regardless of how much they export to the grid, which will likely add approximately $4 to the customer-generator’s bill each month. The Commission found that “[c]ontinuing net energy metering with NEM customers paying charges for interconnection and paying nonbypassable charges for all electricity consumed from the grid is likely to allow customer-sited renewable DG to continue to grow sustainably.”
  • The decision also includes an expansion of the NEM tariff to include customer-generators with systems larger than 1 MW, so long as the customer pays all Rule 21 interconnection costs.
  • The decision will also require all NEM customers in SCE and PG&E service territories to take service on a time-of-use (TOU) rate as soon as such rates are available, while SDG&E customers can remain on tiered rates for the first five years after the new TOU rates are approved in 2017.
  • The Commission will revisit the NEM tariff for review in 2019, due to the coinciding institution of default TOU rates at that time.
  • The decision rejects requests by Pacific Gas and Electric (PG&E), Southern California Edison (SGE), and San Diego Gas and Electric (SDG&E) for many changes to the current framework, including one that would have allowed them to charge customer-generators at the retail rate for electricity they consume from the grid and pay a lower rate for energy that customer-generators export to the grid.  However, the CPUC rejected that proposal for now by “[d]eclining to impose any demand charges, grid access charges, installed capacity fees, standby fees, or similar fixed charges on NEM residential customers while the Commission is working on how, if at all, any such fees should be developed for residential customers.”