Staff Report Item 12
TO: East Bay Community Energy Board of Directors
FROM: Michael Quiroz, Regulatory Analyst
SUBJECT: Informational Discussion on Proposed CPUC Net Energy Metering Decision (Informational Item)
DATE: December 14, 2022
__________________________________________________________________ Recommendation
No action is needed at this time.
Background and Discussion
The current IOU Net Energy Metering (NEM) tariff, widely known as “NEM 2.0,” has been in place since 2016. Seeking to revise the existing tariff, the CPUC initiated proceeding 20-08-020 in 2020.
Following public comments, several workshops, analyses of NEM 2.0, party proposals, and evidentiary hearings, two proposed decisions for the NEM successor were produced by this proceeding, one on December 13, 2021 (“original decision”), and another on November 10, 2022 (“new decision”).
The CPUC must balance several different design aspects, competing priorities, and statutory obligations in adopting a NEM successor. EBCE, among other CCAs, submitted opening comments on the original decision, as well as opening and reply comments on the new decision. This presentation seeks to provide relevant information on the proceeding, the new decision, as well as EBCE’s positions on both decisions.
Fiscal Impact
No budget impact is identified at this time.
Committee Recommendation
No recommendations have been made at this time.
Attachments
A. PPT: An Overview of California’s Evolving Net Energy Metering Tariff An Overview of California’s
Evolving Net Energy
Metering Tariff
Attachment Staff Report Item 12A
Evolution of NEM in California
2 1995: CA establishes NEM program for small solar
customers through the passage of SB 656.
Between 1995 and 2016: several incremental policy
changes.
2016: Significant changes come in the form of NEM 2.0.
Customers are moved to time-of-use rates.
2021: CPUC releases a proposal for NEM 3.0. It does not come to a vote.
2022: An alternative proposal is released and could be
adopted by the CPUC on December 15th. If
approved, this proposal would be implemented
within a year. EBCE, among other CCAs, is
submitting comments on this proposal.
0 1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0 2
4 6
8 10
12 14
16 18
20 2008 2010 2012 2014 2016 2018 2020
Installed NEM Solar Capacity (MW)
Soar System and Retail Energy Prices
Cumulative Installed NEM Solar
Average Retail Energy Price (₵/kWh)
Median Residential PV System Price ($/W)
Sources: CA Distributed Generation Statistics, Energy Information Administration, Tracking the Sun Attachment Staff Report Item 12A
3 Key Issues in a NEM 2.0 Successor
• How much to pay customers for excess electricity sent back to the grid • How to promote sustainable growth of solar adoption
• What type of rate to enroll NEM customers in
• How to recover costs associated with distribution and grid maintenance • How to address potential cost shifts
• How to ensure low-income customers have access to distributed generation and storage • How to balance the costs and benefits associated with distributed generation In drafting a revision to the existing NEM policy, the CPUC must consider several different design aspects and competing priorities.
Attachment Staff Report Item 12A
4 Comparing Proposed Decisions
Issue 2021 Proposed Decision 2022 Proposed Decision
Export compensation
How much to pay customers
for excess energy
• Based on avoided costs. Lower than in NEM
2.0. • Rates will be locked in for the first 5 years
• Based on avoided costs. Lower than in NEM
2.0. • Rates will be locked in for the first 9 years
Glide path approach
How to ensure sustainable
growth of solar adoption
• Customers receive a monthly bill credit
• Available for the first four years of NEM
3.0, stepping down by 25% each year.
• Customers receive additional $ for each
unit of energy they sell back to the grid.
• Available for the first five years of NEM
3.0, stepping down 20% each year.
Rate Structure
What type of rates to
enroll NEM customers in
• Customers are required to use time-of-use
rates, EV2-A for PG&E customers.
• No changes to billing or interconnection
fees.
• Customers are required to use
electrification rates, E-ELEC for PG&E
customers.
• No changes to billing or interconnection
fees.
Attachment Staff Report Item 12A
5 Comparing Proposed Decisions
Issue 2021 Proposed Decision 2022 Proposed Decision
Fixed Charges
How to recover costs
associated with distribution
and grid maintenance
• NEM customers pay a monthly fixed charge
for ten years
• No fixed charge specific to NEM customers
Equity
Ensure low-income
customers have access to
distributed generation and
storage
• Low-income customers exempt from
monthly fixed charge
• Low-income customers can enroll in any
rate, not just TOU
• Low-income customers receive even more
$ for each unit of energy they sell back to
the grid.
Other charges
How to balance the costs
and benefits associated
with distributed solar
• NEM customers exempt from many
statewide charges for wildfire prevention,
resiliency, et.
• NEM customers no longer exempt from
these statewide charges
Attachment Staff Report Item 12A
6 EBCE’s Positions: 2021 Decision
In response to the Proposed Decision in 2021, EBCE filed comments with other CCAs, arguing:
1. The monthly fixed charge for NEM customers is discriminatory. Instead, the CPUC should address cost recovery issues by moving NEM customers to electrification rates.
2. NEM customers should be subject to the same suite of statewide charges as other ratepayers.
3. A glide path to export rates based on avoided costs should be established to stabilize the transition
The CPUC adopted these recommendations in the 2022 proposal.
Attachment Staff Report Item 12A
7 EBCE’s Positions: 2022 Decision
In response to the Proposed Decision in 2022, EBCE filed comments with other CCAs, arguing:
1. Utilities should be given more time to implement NEM 3.0, and this should be completed before NEM 2.0 is closed to new customers.
2. Funding for the glide path should only be collected from IOUs that receive glide path incentives (SDG&E does not)
3. Glide path step-downs should be based on installed capacity, rather than year
4. The CPUC should consider additional incentives for low-income customers
5. Non-residential customers should receive the additional glidepath incentives that are currently limited to residential
Attachment Staff Report Item 12A