Coalition Letter to CPUC: Time to Update California’s Net Energy Metering Program
Submitted March 15, 2021
As organizations representing renewable energy companies, electricity customers, low-income, small-business, utilities, environmental, senior, and diverse community constituencies we appreciate you opening a formal proceeding to enact much-needed changes to the state’s Net Energy Metering (NEM) program.
Changes are needed to 1) ensure the long-term sustainability of rooftop solar and storage in California and 2) ensure that all electricity customers – those with rooftop solar and those without – contribute equitably to the electric grid we all rely upon and to state-mandated public purpose programs. Currently this is not the case and those least able to pay are assuming an unfair burden.
NEM was launched 25 years ago to incentivize rooftop installations, jumpstart solar technologies, drive costs down and contribute to the growth of renewable energy in the state. It worked! While the original goal of the program, enacted in 1995, was 10,000 rooftop solar systems, today there are over 1 million.
While much has changed in California in the past 25 years, only few changes have been made to the NEM program itself. Despite the fact the cost of solar technology has fallen more than 70%, the credits paid for excess rooftop solar power remains tied to retail electric rates – which means it continues to increase over time.
As a result, excess power generated from rooftop systems essentially costs 8 times more than solar power generated from large scale solar generators. With upward pressure on customers’ electric bills from other critically needed investments such as wildfire mitigation and grid hardening, it makes no sense to expect customers to pay inflated rates for solar power from one source when it can be procured cheaper elsewhere. Most problematic, these cost burdens are falling disproportionally on those least able to pay.
According to the Lawrence Berkeley National Laboratory, 70% of California solar adopters are in the wealthiest 40% of society. And the large bill credits provided to customers with solar rooftops means they are contributing less in their bills toward upkeep of the state’s electric grid, which they still rely on, and on state-mandated public purpose programs such as low-income assistance and energy efficiency.
In fact, today, electricity customers without solar systems pay $2.8 billion more annually in their bills (or as much as $200 per customer each year) to make up for the costs of the grid that customers with solar use, but do not pay for. If no changes are made to NEM, this unfair cost burden will continue to grow as fewer and fewer non-solar customers assume a disproportionate share of expenses that traditionally were shared by all customers.
This is simply not sustainable for non-participating customers, nor for the future growth of rooftop solar in California. We believe changes to NEM should be guided by these key principles:
- Better balance customer choice & equity: Californians should be free to generate or store their own clean energy, but those choices should not substantially increase the bills of customers who don’t make or don’t have that choice; many of whom are middle to low-income and or live in disadvantaged communities.
- Californians simply should not be expected to pay more for energy from rooftop solar if the same renewable energy and environmental benefits can be achieved at a lower cost: Many pressing and competing priorities are putting upward pressure on electric rates. Any incentive mandates imposed by regulators and policy makers to further the state’s greenhouse-gas reduction and clean energy goals must achieve the maximum benefit at the least cost for all customers. The current NEM structure does not. The cost of solar systems has dropped 70% but the incentives paid to customers are tied to retail rates and continue to increase.
- Recognize that everybody benefits & everyone should equitably contribute to the grid and public policy programs: We all rely on and need a dependable and resilient grid and all customers—those with solar systems and those without—should contribute equitably towards its maintenance. It’s counter-productive and unfair that the current NEM structure expects customers who aren’t financially eligible for solar to cover more of the costs of grid maintenance and mandated public purpose programs such as energy efficiency and low-income assistance.
- Solar systems without storage provide limited value: Any changes to NEM need to incentivize solar systems paired with energy storage over stand-alone solar systems. Storage is necessary to help manage the current glut of midday solar so it can be stored when there is low demand in the middle of the day and be available during peak evening demands.
- Provide prospective solar customers with a reasonable and transparent payback period for their system: Customers who don’t have solar shouldn’t be expected to pay more. But likewise, the solar industry and customers interested in installing solar deserve clear, stable rules to guide their decision making.
Again, thank you for taking up this important issue and hopefully enacting much needed changes to protect the continued growth of rooftop solar in California while also protecting non-participants from unfair cost burdens.
Mike Meador, Founder CEO
California Greenworks, Inc.
Faith Bautista, President, and Chief Executive Officer
National Diversity Coalition
LaNiece Jones, Executive Director
Black Women Organized for Political Action
Jose L. Perez, President & CEO
Hispanics In Energy
John Gamboa, President
California Community Builders
Jim Wunderman, President and CEO
Bay Area Council
Lucy Dunn, President and CEO
Orange County Business Council
Matthew Hargrove, Statewide Administrator
Building Owners and Managers Association of California
Rachel Michelin, President & CEO
California Retailers Association
Tom Hudson, President
California Taxpayer Protection Committee
Michael Turnipseed, Executive Director
Kern County Taxpayers Association
Carla Peterman, Senior Vice President Regulatory Affairs
Southern California Edison
Dan Skopec, Senior Vice President, State Government Affairs & Chief Regulatory Officer
San Diego Gas & Electric
Isela Perez, Editor
The Latino Journal
Luis H. Sanchez, Chief Executive Officer
Community Resource Project
Vickie McMurchie, Executive Director
Dana Point Chamber of Commerce
Nan Brasmer, President
California Alliance for Retired Americans
Jan Smutny-Jones, Chief Executive Officer
Independent Energy Producers Association
Nancy Rader, Executive Director
California Wind Energy Association
Pastor William D. Smart Jr., President & CEO
Southern Christian Leadership Conference of Southern California
Susie Y. Wong, President & CEO
Asians In Energy
Robert C. Lapsley, President
California Business Roundtable
Rex S. Hime, President & CEO
California Business Property Association
Julian Canete, President & CEO
California Hispanic Chamber of Commerce
Pat Fong Kushida, President & CEO
California Asian Pacific Chamber of Commerce
CiCi Rojas, President
The Latino Coalition
Jose M. Lopez, Executive Director
Campesinos Unidos, Inc.
Tom Hudson, President
Placer County Taxpayers Association
Nick Ortiz, President/CEO
Bakersfield Chamber of Commerce
Robert Kenney, Vice President, Regulatory and External Affairs
Pacific Gas & Electric
Mike Brown, Government Affairs Director
COLAB San Luis Obispo
Laurel Brent-Bumb, CEO
El Dorado County Chamber of Commerce