1200 Carlsbad Village Drive ï Carlsbad, CA 92008 ï 760-434-2808 thecleanenergyalliance.org
January 19, 2022
President Alice Reynolds
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102
RE: PROPOSED DECISION IN NET ENERGY METERING RULEMAKING (R. 20-08-020)
Dear President Reynolds,
Clean Energy Alliance (“CEA”) submits this letter to express serious concerns with the Proposed Decision, issued on December 13, 2021, in the Net Energy Metering (“NEM”) proceeding, Rulemaking (“R.”) 20-08-020.1 The solar and storage industry has grown tremendously over the years, such that it now plays a critical role in developing and expanding the supply of renewable energy. Unfortunately, the Proposed Decision eliminates long-standing incentives for customer generators, penalizes them for the size of their solar systems and upends the economics of rooftop solar. Adopting the Proposed Decision in its current form would result in widespread negative impacts on the solar industry.
CEA recognizes that the Proposed Decision addresses important equity concerns raised by the Investor-Owned Utilities (“IOUs”) and other parties, and supports exemptions from certain charges and beneficial rate components designed for low-income customers. However, the Proposed Decision would render the NEM rate design entirely unrecognizable to existing NEM customers and customers who have done their research and are planning to install solar on their homes and businesses in the near future. Meanwhile, new NEM customers would face a dramatically altered economic landscape that fails to recognize the value of their contribution to renewable generation.
The Proposed Decision does away with the rate structure that has been in place for rooftop solar owners for years and replaces it with a rate structure that penalizes them for generating energy and reducing their use of energy from the grid. Under the Proposed Decision, compensation for net surplus energy is set by an Avoided Cost Calculator rather than set at the retail rate, resulting in a substantial reduction in the amount that rooftop solar owners will be credited for power they supply to the grid. Furthermore, the Grid Participation Charge of $8/KW per month is excessive and should be reduced, restructured or eliminated for storage owners who provide grid benefits. Grandfathering and restrictions on TOU periods should also be made less restrictive in the interest of fairness and customer choice. In addition, the Market Transition Credit should be increased and extended to prevent rate shocks. CEA respectfully urges the Commission to amend the Proposed Decision to address these specific problems, which are discussed in more detail below.
1 Order Instituting Rulemaking to Revisit Net Energy Metering Tariffs Pursuant to Decision 16-01-044, and to Address Other Issues Related to Net Energy Metering, Rulemaking 20-08-020, filed August 27, 2020. 2 Background
CEA is a Joint Powers Authority (“JPA”) that was established in 2019 to operate a community choice aggregation program (“CCA”) to serve customers in the City of Carlsbad, the City of Solana Beach, and the City of Del Mar, all located in San Diego County. CEA’s primary objectives in implementing this program are to procure an electric supply portfolio with higher renewable content than the incumbent utility, San Diego Gas & Electric Company (“SDG&E”), to provide cost competitive electric services when compared to SDG&E, to gain local control in rate setting to provide long-term rate stability for residents and businesses, and to meet climate action plan goals of the member cities. CEA submitted its Implementation Plan in December 2019 and intends began serving customer load earlier this year. Two new cities, San Marcos and Escondido, have recently joined CEA and customers in those jurisdictions will be enrolled in 2023.2
Grid Participation Charge
The Proposed Decision adopts a fixed Grid Participation Charge of $8/KW per month for residential customers.
3 By most accounts, the average residential solar system in California is approximately 6 KW, so rooftop solar customers would pay an additional $48 per month on average to access the grid. This is a substantial new charge that rooftop solar owners will be required to pay each month going forward.
It is noteworthy that the Grid Participation Charge is not based on the amount of energy produced or used, unlike many other charges that make up a customer’s bill, but is instead a flat fee that is determined based on the size of the solar system. The larger the system, the higher the fee. While the Proposed Decision exempts low-income customers from the fee, the fact that the fee remains fixed and cannot be mitigated will provide a strong disincentive to prospective NEM customers.
While low-income customers have been exempted from the Grid Participation Charge, other customers will now face a monthly penalty for installing solar and storage, and the result is likely to be a steep reduction in rooftop solar and storage installations. CEA cannot support the Grid Participation Charge in its current form. The charge should be reduced, restructured or eliminated for customers installing storage in order to avoid adverse effects.
Market Transition Credit
The Proposed Decision adopts a Market Transition Credit (“MTC”) between $0 and $5.25/KW depending on IOU territory and customer group. When eligible customers begin receiving the MTC, the amount steps down 25% each year, ultimately reaching zero after year four. While the MTC does provide a transition of sorts, given the deep cuts to net surplus compensation, it is not set at an amount that is high enough and does not last long enough to prevent severe rate shocks or maintain strong incentives for adoption of rooftop solar and
2 Clean Energy Alliance, Addendum No.1 to the Community Choice Aggregation Implementation Plan and Statement of Intent to Address Expansion to the Cities of Escondido and San Marcos, December 30, 2021.
3 Proposed Decision at 127.
4 Copy: Commissioner Clifford Rechtschaffen
Commissioner Darcie Houck
Commissioner Genevieve Shiroma
Commissioner John Reynolds
Service List R. 20-08-020