California doubles net energy metering program

California regulators have changed the way rooftop solar output is capped, which could lead to a doubling of the number of homes eligible to participate.

The California Public Utilities Commission (CPUC) on May 24 issued a ruling to clarify rules governing the net energy metering (NEM) program, which gives customers a bill credit for excess energy produced by their home solar systems.

The change in calculations essentially doubles the number of homes eligible to participate in the program.

However, California’s investor-owned utilities say the program’s expansion will shift $1.3 bn in annual costs from solar customers to non-solar customers.

California law states that electric utilities are only obligated to offer NEM to customers until the amount of installed solar capacity equals 5% of the utility’s “aggregated customer peak demand.”  Prior to this decision, electric utilities interpreted “aggregate customer peak demand” to mean the highest demand from all customers at any one time.

The cap would have been reached in 2013 in the Pacific Gas & Electric (PG&E) territory and would have prevented the admission of new NEM customers, limiting the potential solar market. The decision clarifies that aggregate customer peak demand means the aggregation, or sum, of individual customers’ peak demands.

CPUC also started a formal proceeding to determine the effect on customers who are not participants , and said it would suspend the program in 2015 if those costs are found to be excessive.

 “Solar energy provides a clean, renewable source of electricity for California homes and businesses. NEM is critical to the ongoing success of California’s solar industry, which employs thousands of workers across the state.  Today’s decision ensures that the solar industry will continue to thrive for years to come, and we are fully committed to developing a long-term solution that secures the future of the industry in California,” said CPUC President Michael Peevey.

Sempra Energy‘s (NYSE: SRE) San Diego Gas & Electric utility, PG&E Corp.‘s (NYSE: PCG) utility and Edison International’s (NYSE: EIX) Southern California Edison have estimated the recent decision will shift $1.3 bn a year in costs from the utilities’ solar customers to their non-solar customers.

California utilities, including national leader in solar output PG&E had argued the new calculations unfairly shift costs to non-solar customers.

“PG&E is a strong supporter of solar,” said David Rubin, the utility’s director of service analysis. “At the same time, PG&E believes everyone should be concerned about this proposal that would change the current, long-held and appropriate methodology for calculating California’s Net Energy Metering program cap.”

The issue is one of fairness, PG&E, San Diego Gas & Electric, Southern California Edison and The Utility Reform Network (TURN) argued in comments before the CPUC.

A solar trade association agreed the cost-sharing formula may need to be addressed, but praised the boost to solar power.

 “This decision is a positive step forward for clean energy jobs, for ratepayers, and for our state,” said Sara Birmingham, Director of Western States for the Solar Energy Industries Association. “The commissioners noted that there is wide disagreement on the issues related to the cost shift between solar and non-solar customers. SEIA looks forward to working with stakeholders on the study of costs and benefits, and believes the study will report these costs as minimal.”