Almost a year after its first proposed NEM 3.0 decision that sent the state’s solar industry into a frenzy, the California Public Utilities Commission (CPUC) has released a new version. Today’s proposal includes a shift to net billing and a glide path to transition slowly to the new plan, and, notably, gets rid of the solar taxes present in the original decision.
NEM 3.0 history
The CPUC’s initial proposed decision in 2021 included a switch from net metering to net billing, allowing the dollar value of credits to be set at a different level than the energy’s import price; a Grid Participation Charge for solar customers and a long-term Market Transition Credit to encourage storage paired with solar systems. Wood Mackenzie predicted the initial proposal would cut California’s residential solar market in half by 2024.
The initial proposed decision was shelved for an indefinite amount of time after intense backlash and public disapproval from Governor Newsom. In spring 2022, the CPUC reopened the record under new leadership.
2022 NEM 3.0 proposal
The new proposed decision released on Nov. 10, 2022, also includes a shift to net billing, a glide path to transition slowly to the new plan and non-bypassable charges.
The new Retail Export Compensation Rates that make up the net billing plan will be based on hourly Avoided Cost Calculator values averaged across days in a month, differentiated by weekdays and weekends/holidays, according to the commission. The decision was made based on a cost of solar set at $3.30/W. The commission expects the new plan to result in a nine-year payback period for standalone solar.
The five-year glide path is in the form of an Avoided Cost Calculator adder that varies among California’s utilities. The “ACC Plus” adders will remain constant for a customer for nine years from the interconnection date. The adder will decrease by 20% annually until it reaches zero.
The CPUC says SDG&E customers are excluded from the adder because their solar systems generate more bill savings due to SDG&E’s higher electric rates.
The program also includes four non-bypassable charges. Those charges are: the public purpose program charge, nuclear decommissioning charge, competition transition charge and the Wildfire Fund Non-Bypassable Charge.
The NEM 2.0 Sunset Period begins with adoption of this decision, which is expected to happen in December. Customers submitting a completed interconnection application prior to the end of the Sunset Period will be considered applicable for the current NEM 2.0 tariff. According to the decision text, the commission will implement the NEM 2.0 tariff sunset marking the end of the Sunset Period no later than 120 days after the adoption of this decision, at which time no additional customers will be permitted to take service under the NEM 2.0 tariff.
NEM 1.0 and 2.0 customers will remain under their programs unchanged.
The California Solar & Storage Association (CALSSA) previously said it would evaluate the new proposed decision based on whether it imposes any discriminatory solar taxes, affects the economics of solar for middle and working class households, impedes the state’s clean energy goals and more. The group issued a response on Thursday saying that even though it doesn’t include any “solar taxes,” more adjustments should be made to the decision, as it would make solar less affordable by reducing the credit consumers receive for contributing their excess solar energy back to the power grid, known as export rates.
“The solar industry and clean energy supporters are still reviewing the CPUC’s proposed decision, but based on an initial analysis, it would cut the average export rate in California from $0.30 per kilowatt to $0.08 per kilowatt and make those cuts effective in April 2023, resulting in a 75% reduction in value of exports,” CALSSA said in a release.
“The CPUC’s new proposed decision would really hurt. It needs more work or it will replace the solar tax with a steep solar decline. An immediate 75% reduction of net energy metering credits does not support a growing solar market in California,” said Bernadette Del Chiaro, executive director of CALSSA, in an emailed statement.
“If passed as is, the CPUC’s proposal would protect utility monopolies and boost their profits, while making solar less affordable and delaying the goal of 100% clean energy. California needs more solar power and more solar-charged batteries, not less. We urge Governor Newsom and the CPUC to make further adjustments to help more middle- and working-class consumers as well as schools and farms access affordable, reliable, clean energy,” she continued.
The CPUC will hear oral arguments from all stakeholders in the form of two- to three-minute presentations at a remote meeting on November 16 from 10 a.m. to 12 p.m. PT. Viewers can sign up to watch the arguments here.
Read the full proposed decision here. Visit the NEM Revisit webpage here.
Updated with CALSSA’s response at 2:34 p.m. ET
Ben Hanvey says
So SDG&E will pay me $0.03 cents per KWH that my solar over produces during the day and sell it back to me that night for $.30 per KWH. That is a 1000 percent markup on cost. If that is not usury what is? Please let me in on that business plan.
William Day says
Stop NEM 3, CPUC has sold out!
Jeremy P. says
Kelsey, please do more homework on the “glidepath” piece. The way you write about it here, you make it seem reasonable, or even “fine.” It is far from fine. The “glidepath” in this new version of NEM3 is terrible for homeowners, terrible for solar companies, and terrible for our industry and the push to reach 100% renewable energy in CA. The reduction in the export compensation is a 75% decrease, immediately once NEM3 is implemented. That is not a glidepath, that is “going over a cliff,” and a severe, unnecessary, despicable reduction in the export value. A true glidepath would have taken where the export value is today (between $.21 and $.30/kWh in PG&E, depending on the person’s current rate plan), and reduced that gradually, over 5-10 years. For example, $.18 the first year, $.16 the 2nd year, $.14 the 3rd year, etc.
We should be pushing back hard as solar advocates on this insulting “glidepath” that was presented by the CPUC members, and encouraging Gov. Newsom to step in and correct this travesty.
Scott Johnston says
If they pass this they will truly show where they stand as far as the general public goes and their ability to remain self seficient as everything in California as far as billing goes is now extremely exaggerated as in prices are way over what the actual value of service or cost of product. It’s beyond rediculous and fully shows that our government needs to be extremely limited in what it’s able to do and that there needs to be some sort of a board of people from each monitary class as they are considered to actually decide these things as our government from bottom up has greatly show their detachment from reality. Our so called president is the prime example and that anything he has done or is doing leaves nothing good for citizens just leaves us with a fowl taste and horrible stench of what’s to come so to speak.
I think for home owners with solar (I have a 5kW system myself)… I think for us its a bit of a mixed bag. Clearly the intent is to increase the differential between off-peak and on-peak import prices, to create a disincentive for pushing power back to the grid, and to create an incentive for load shifting and net-zeroing with a home battery system.
For me it depends significantly on just how much lower the off-peak pricing would be. I don’t have a home battery system but there are certainly poor-man’s solutions using power stations that I could use to easily load-shift a few hundred watts of power.
But the new proposal has a number of warts. The biggest one is that the peak period starts at 3pm when the actual utility peak is more around 7pm. At a minimum the proposal should be changed to adjust the peak period start time to 5pm. 3pm is absurd. The new proposal also low-balls export prices while generously increasing import prices on a wider time frame. For example, peak export pricing doesn’t get interesting until 7pm-9pm, but import pricing starts at 3pm and maximizes at 4pm. That is also absurd in my view.
Matt I see your point and I see the extortionist path the CPUC is trying to allow to satiate the IOU electric utilities in California, where the term Califronia Public Utilities (Commission) is supposed to be an ombudsman for the retail energy user, not the utility in a biased and improper manner. What the consumer is missing is (specific) information on how (their) particular household uses energy, how much and at what hours this occurs. I believe there are such monitors available for the homeowner to apply or have some electrician install one of the more expensive monitors that have current transformers that snap around the main buss bars in the house electrical panel. With the proper programming and enough memory one can not only monitor when an appliance comes on, but how long it stays on and it is possible to map surge values of appliances and when they occur over a period of time. (This) is the information one needs to determine how much and (when) one would use a smart ESS to help power the home to keep electricity costs down. A 20kWh ESS seems to be a nominal all around system capacity for most residential applications. Many early adopters have up to 40kWh of ESS storage and capacity.
There comes a time, where the homeowner stops worrying about ROI of their solar PV system or solar PV and ESS as the utility creates tiered electricity blocks of use, then turns around and creates a TOU period of rate spiking for 5 hours every day and now to protect their egregious practice of choosing dividends over O&M of the system that feeds your house, they get to turn your power off for hours or maybe even days when a PSPS is invoked. The thing to worry about now is “just how important is resiliency” in your own home’s A.C. use and capacity every day?
Installed solar in September 2014, I am in NEM1 with PGE. Was told I would be grandfathered for 20 years from time system received permit to operate from PGE THAT WAS A BIG FING LIE!!!! Just received letter from PGE that NEM1 customers on E6 rate plan HAVE to change plans. In other word’s nem1 e6 customers were ALL LIED TO. How many bribes were paid to CPUC employees to get them to agree to this??? Won’t be the 1st time one of them has accepted a bribe now will it?
Jeffery E Flud says
Simple fix….we shut off our solar on the 15th of November. If everyone turns it off ( there’s a switch for repairs) we can send a message. Personally no one has explained how I’m getting charged per kw for something that I own. Who is expected to do repairs or upgrades as needed? If this passes big utility will have stolen 25-30k from every solar owner and the government is allowing it. We will cut our losses and have our removed if this does pass.
So they submitted this to the judge on nov.4, 2022, meeting on nov.16, this noticed released for public announcement nov 10. If you have comments and wish to be heard you must submit request on nov. 9 cut off at 2pm. And the judge signs off with her seal of approval. Do the dates even make sense. The governor needs to fire everyone in the cpuc. There is no room for their clouded judgements. Most of cpuc members come from pge and other large utility companies. These matters that affect the lives of the public does not belong to utility executives. These positions need to be voted in and their decisions need to be submitted to congress or local government with further voting.
My God people… Do you not see that Newsom is backed by the utilities! So he backs them!!! Remember their big private maskless dinner party during the Covid mask mandate period? So understand, Newsom is not all about renewables but about the power that comes from saying he is and the manipulation of power he gains from stating he is aligned with renewables yet behind closed doors he’s protecting the utilities at every corner. Just look at the States semi confusing bail outs for the wild fire legal issues, allowing the CPUC to be run by the utilities (which is filled with Utility Company Directors), and excessive regulations which hurt the renewable industry and installers as well. There is power in positioning with an ideological movement that can be used even against that movement.
EXAMPLE: The CPUC created a Solar Consumer Disclosure form required for interconnection. Its sounds and reads like it’s designed to protected consumers against predatory solar companies but what it really did was suggest that Large Corporate companies be selected and guided homeowners away from small contractors who could really drop the cost of solar. Keep in mind that most of the Large National Corporate Solar Companies us the same technicians. In effect it made Corporate Large Solar the only suggested option, yet these guys are the predators who use crafty ways to over charge, ie Hybrid Leases, Hybrid Loan/leases and certainly PPA’s (big corporate money). These Large Corp companies had their liability regarding predatory practices covered via this required form. It directed Solar PV customers towards conglomerates that charge $3.50 to $5.00 per watt and basically signed away a persons ability to claim predatory practices. All while small contractors could do quite well charging $2.75-$3.00 per watt using top quality equipment. This is not a free market supporting bureaucracy.
Dean Burnett says
The new CPUC release appears to be another CPUC effort to help PG&E in it’s effort to squash rooftop solar.
There is no difference in the electricity generated using rooftop solar and the electricity generated in a commercial solar farm. Why should the rooftop generator not receive the same renumeration for a given quantity of electricity as does a commercial generation company.
We have been told the reason for the time of day premium is supposedly due to be the high demand taxed the grid. We also have been told that we need to really need to worry when we have a very hot day, because the demand is too great. Rooftop solar was credited with being the reason the grid was able to meet the need on the day the temperature hit 116 degrees this past summer.
PG&E has extended it’s use of the Diablo nuclear facility because they can’t meet California’s electricity needs.
To me these are examples of reasons the CPUC should stop bowing to the wishes of PG&E. They should realize that the rooftop solar panels will allow us to reduce use of fossil fuel more quickly as well as meeting the electricity needs of the state of California. The should also realize that electricity is the same regardless of where, or by whom it is generated therefore the entity responsible for generating the electricity should receive the same renumeration for the generation of the electricity. Stop bowing to the desires ofsPG&E.
I think that the California’s Economy is about to Collapse and be unlivable because of the Democratic Taxation and Insane inefficiency in Energy demands. How does making Solar less Cost effective help California or it’s Citizens? Time to Impeach Newsom again?
Did you read the article? The last NEM 3.0 proposal went down in flames in part because Newsom was aggressively against it. He wants solar to be affordable. He wants more of it. Your reply makes no sense, it’s just a hyper-partisan rant.
well, Newsom responded to the outcry last year, when he was up for reelection. The fact that they announced this 2 days after the election suggests to me that he’s already onboard with the revised proposal and the vote next month is a rubber stamping exercise.
stephan Kuttner says
Glide path? A reduction of credits by 75% will crash the market.
This CPUC proposal makes sense only from a private utility shareholder perspective. Clean energy with a 120% markup for utility transmission and delivery – rather than distributed generation of clean energy located near users – makes no sense to the rest of us!
Regulatory capture, pay to play, and the continued undermining of the clean energy market on behalf Citizens (Shareholders Only) United empowered oligarchs really would look ugly for California politics, and those in leadership here.
“NEM 1.0 and 2.0 customers will remain under their programs unchanged.”
This “suggests” current PPA “agreements” will be grandfathered in until the PPA period “sunsets”. When one starts to take a “deep dive” into the aspects of NEM 3.0 it is NO LONGER NEM, but is NBM and with the “programs in place” with tiered block rate electricity billing rate increases per block of energy use and the added TOU from around 4 PM to 9 PM each day, the utility has decreased the “value” of clean solar PV overgeneration pushed back onto the grid and in a concatenated manner reduced the energy credit from a 1:1 ratio to an energy credit that moves from energy credit at a 1:3 up to 1:6 ratio. IF ones current energy credit ratio is 1:1 and say is $0.19/kWh it would be from $0.063/kWh to $0.032/kWh excess energy credit, while charging after hours electricity at $0.45/kWh up to around $0.47/kWh (bundled retail) during the five hour TOU period of each day. Then there’s still the question of “grid connection fees” for solar PV adopters that are connected to the grid. One would need right at twice the solar PV on their roof as they have now. IF it happens to be a 10kWp solar PV array, one would need a 20kWp array to offset the energy circus created by NEM 3.0. When the rote IOU electric get through, lobbying, there will be a “connection fee” for solar PV adopters extortion fee allowed and it has been determined $8/kWp of the array will be charged “each month”. So, in the above scenario a 10kWp array will be charged $80/month, and at 20kWp could be $160/month as the “connection fee” that the IOU electric utility will use to pay dividends as they continue to put dividends over O&M.
“The new proposed decision released on Nov. 10, 2022, also includes a shift to net billing, a glide path to transition slowly to the new plan and non-bypassable charges.”
Really,REALLY, “….a glide path to transition slowly……” In the scheme of ‘things’ this is more like a WWF bodyslam of past, present and future solar PV adopters or an out and out crash and burn of the NEM.