CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
12/12/2022
1 SUBJECT:
Letter to the Governor Regarding Net Energy Metering 3.0 RECOMMENDED ACTION:
Authorize the Mayor to send a letter to Governor Newsom expressing concerns about the California Public Utilities Commission’s (CPUC) Net Energy Metering (NEM) proposal.
STAFF CONTACT:
Kevin Woodhouse, City Manager
(650) 738-7409
[email protected]
BACKGROUND/DISCUSSION:
Customers who install small solar, wind, biogas, and fuel cell generation facilities to serve all or a portion of onsite electricity needs are eligible for the state's NEM program. NEM allows customers who generate their own energy ("customer-generators") to serve their energy needs directly onsite and to receive a financial credit on their electric bills for any surplus energy fed back to their utility. The current NEM 2.0 program went into effect in 2016.
In August 2020, the CPUC issued an order to revisit the existing NEM 2.0 program, and on November 10, 2022, the CPUC published a new proposed decision <https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M498/K526/498526033.PDF> (NEM 3.0).
The Commission is scheduled to vote on NEM 3.0 at their December 15, 2022 meeting.
Peninsula Clean Energy (PCE) is a party that can submit formal comments to the CPUC, but has a narrow scope of comment, while the City of Pacifica is not a party that can submit formal comments directly to the CPUC. Therefore, should the City Council authorize the Mayor to send a comment letter on this proposal, then it should be submitted directly to the Governor.
DISCUSSION
Mayor pro Tem Bigstyck (Pacifica’s representative to PCE) and staff consulted with PCE staff about the proposal. PCE’s initial review indicates that this revised decision is a significant improvement from an earlier CPUC proposal released late in 2021 that was met with great objection from many quarters. The latest draft removes two objectionable provisions. First, the 2021 proposal included a monthly grid charge. That charge is not a part of the latest draft.
Second, the forced migration of existing NEM customers to the new (NEM 3.0) rate has also been eliminated.
There are additional changes and differences from the current rule and from the proposal Pacifica City Council 2
December 12, 2022
offered last year including a 120-day “sunset” period based on the approval date of the decision that provides new NEM customers with their last chance to participate in NEM 2.0 rates. This sunset period is the fourth step of five standards outlined in the proposed decision to be met by the Investor-Owned Utilities (IOUs) to implement this decision. The fifth step involves revamping the IOUs’ bill systems. Peninsula Clean Energy, as part of a joint community choice aggregation (CCA) comment filing, is going to request an extension of the sunset period to 180 days and request that the fourth and fifth steps be reversed to avoid customer confusion (first revise the billing systems, then have new NEM customers join 3.0). Either request, if granted, would effectively allow PCE to include their second municipal solar program under the prior rules.
The continued objections to NEM 3.0 include the 75% reduction of the credit that future solar installations will get for sharing their extra energy with the grid. This change reduces the value of selling excess solar back to the grid, thereby creating a significantly longer payback period for all solar installations. This change, in turn, will have the effect of slowing the installation of rooftop solar.
Should the Council authorize the Mayor to send a letter in opposition of this ruling, the attached sample letter is recommended, and has been used by other cities.
ALTERNATIVE ACTION:
The City Council could choose to not authorize the Mayor to send a comment letter on NEM 3.0.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
Sending a comment letter advocating against reducing incentives for solar installation relates to the City Council’s Goal of Environmental Sustainability.
FISCAL IMPACT:
There is no fiscal impact related to the recommendation.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Attachment A: Draft Comment Letter (PDF)