City Council Agenda Report
Meeting Date: January 21, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Senior Management Analyst
Subject
Closure of the Net Energy Metering Electric Program Offering to New Customers Recommendation
Approve and recognize that Vernon Public Utilities (VPU) has successfully met its Net Metering obligation of five percent (5%) of the electric utility's aggregate peak demand and authorize the closure of VPU’s three Net Metering (NM) electric rate schedules: “NM-Small”, “NM-Medium”, and “NM-Large” for any new customers as of January 1, 2025.
Background
California Public Utilities Code (PUC), Section 2827 states that “every electric utility shall develop a standard contract or tariff providing for net energy metering (NEM), and shall make this standard contract or tariff available to eligible customer-generators, upon request, on a firstcome-first-served basis until the time that the total rated generating capacity used by eligible customer generators exceeds five percent of the electric utility's aggregate peak demand.” In 1995, California Senate Bill (SB) 656, mandated that all electric utilities in the state, including municipal utilities providing residential electrical services, develop a standard contract or tariff for net energy metering, regardless of their jurisdiction under the California Public Utilities Commission (CPUC). Consequently, Vernon Public Utilities (VPU) established the Net Energy Metering (NEM) program for eligible customers capable of generating on-site electricity through renewable technologies such as solar or wind, with a maximum system size of 1 MW, in accordance with California PUC, Section 2827. Additionally, the program stipulated that renewable technology must be interconnected to function in parallel with VPU’s electrical distribution network.
The “special conditions” section of the City’s NM electric rate schedule, specifically Section C, indicates that “this schedule will be closed to all new customers once the aggregate capacity of all residential and commercial solar or wind turbine electrical generating facilities or hybrid of both exceeds five percent (5%) of Vernon’s aggregate customers’ peak demand”. This criterion aligns with the provisions outlined in the California PUC, Section 2827.
According to the stipulations in California PUC Section 2827, five percent (5%) of VPU’s aggregate peak demand puts the NEM limit at 8.78 MW. As of January 2025, the total rated generating capacity of eligible customer-generators in the VPU distribution system has not only officially met but it has exceeded the five percent (5%) aggregate peak demand.
As VPU has met its obligations under the California PUC Section 2827, staff recommends that the three existing NM electric rate schedules be closed to new customers, effective January 1, 2025. VPU has received further confirmation from outside legal counsel, Duncan, Weinberg, Genzer, & Pembroke, P.C., that VPU can discontinue the program for new customers once the state mandate has been fulfilled. Existing rate schedules will remain unchanged, and three NM rates will continue to apply to existing customers whose solar photovoltaic systems were installed prior to the effective date of the program closure. Looking ahead, VPU will continue to support customers interested in installing solar, while maintaining its commitment to providing competitive electric rates and ensuring high reliability for its utility customers.
Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
None.