Archive for nem

Changes Ahead for Net Energy Metering

CPUC working to develop successor tariff
Net Energy Metering

The California Public Utilities Commission (CPUC) is currently working on a proceeding to develop a successor tariff for net energy metering (NEM), which allows utility customers with solar PV systems or other distributed generation technologies to receive credit for the excess energy that they supply to the grid.

Assembly Bill (AB) 327 requires California’s three investor-owned utilities to offer NEM until either July 1, 2017, or the date at which the utility reaches a 5% NEM program cap, whichever is earliest. The cap represents 5% of total peak customer demand within the utility service territory.

This is the progress of each utility toward reaching the 5% NEM cap as of May 2015. Information on progress toward the cap is reported to the CPUC monthly and can be found on each utility’s website.

Pacific Gas and Electric – 3.12% (learn more)
Southern California Edison – 2.58% (learn more)
San Diego Gas & Electric – 3.37% (learn more)

Customers who install a solar generating facility before the utility reaches its NEM cap or July 1, 2017, will be grandfathered into the current NEM tariff for a period of 20 years from their interconnection date. As indicated, SDG&E is closest to reaching the 5% cap but is not expected to do so until mid-2016. Customers should keep this in mind when considering whether to install solar PV this year. However, future changes to NEM should not be used to justify high-pressure sales situations.

AB 327 also directs the CPUC to develop a NEM successor tariff for eligible customer generators no later than December 31, 2015. The CPUC is currently reviewing proposals from industry and utility stakeholders. To find more information about the status of this proceeding and to join the conversation, visit AB 327: NEM Successor Tariff Workshops or contact Shannon O’Rourke at Shannon.O’Rourke@cpuc.ca.gov or (415) 703-5574.

 

LIPA approves solar feed-in tariff program

Originally published: June 29, 2012 8:03 PM

By MARK HARRINGTON  mark.harrington@newsday.com

LIPA trustees this week gave formal approval to a new solar program that will encourage construction of commercial solar power plants around Long Island that will sell electricity back to the authority much the way local power plants do, but without the emissions.

Approval of the so-called solar feed-in tariff on Thursday starts the ball rolling for companies and investors to construct mid- to large-size solar farms on commercial and municipal rooftops and other open spaces beginning July 15, when LIPA begins accepting applications.

Several solar installers at a LIPA trustees meeting this week applauded the program, saying it would likely lead to the creation of hundreds of jobs and up to 50 megawatts of combustion-less power. The Long Island Solar Energy Industries Association called it a “substantial and positive” step to building a local renewable energy portfolio. A megawatt of solar energy produces enough electricity to power 125 homes.

The $11.5 million program, paid for by ratepayers at around 44 cents a month, allows companies to negotiate 20-year contracts to sell solar power to LIPA for 22 cents a kilowatt hour. The program is considered ideal for companies with large warehouse roofs, which can accommodate dozens of solar panels.

The program differs from LIPA’s traditional rebate program — which continues — that gives ratepayers refunds of around a third of the cost of solar systems. With a feed-in tariff, there’s no rebate; producers are paid only for the actual energy their systems produce.

While the new solar program has caught the interest of installers and commercial firms, Michael Deering, vice president of environmental affairs at LIPA, said much of the early interest in the program is coming from municipalities.

“I expect we’ll have a significant number of applications come in right out of the box,” he said.

Solar installations provide two benefits to LIPA: They produce peak power on the long, sunny days of summer when LIPA’s system hits its peak. And they are also dispersed around the region, helping to lower stress on the system by cutting the need to pipe plant power to far-flung places.

LIPA enters the peak summer season without one major power source: the 660-megawatt Neptune Cable. The $1.75 billion cable has been out of service since early June because of two related transformer failures. Michael Hervey, LIPA’s operating chief, said a spare transformer is in place and can be used if needed this summer.

The expansion of solar comes as LIPA continues to review around a dozen proposals for new power around Long Island, including new gas-fired plants in Kings Park, Shoreham and Yaphank, and potentially a new cable. LIPA is also renegotiating its power supply agreement with National Grid, which owns 17 former Lilco plants around Long Island, including large steam-generators in Northport, Island Park and Port Jefferson. LIPA this week said a new agreement with National Grid could give it the flexibility to upgrade the plants to new levels of efficiency.

Paul DeCotis, LIPA’s vice president of power markets, said LIPA is considering opening the bidding process for new power sources that are used primarily for peak power, and said solar peaking units could be among the power sources being considered.

 

The Net Energy Metering Cap Redefined: The Sun Is Shining on Rooftop Solar in California

by Nixon Peabody

On May 24, 2012, the California Public Utilities Commission (CPUC) voted in a 5-0 decision to greatly expand the net metering program for rooftop solar power generators. The net energy metering (NEM) program, first established in 1995,[1] allows homeowners and businesses that install rooftop solar panels to have a standard contract with their utility which gives them a monetary payout at the end of each year if their energy output exceeds their energy use. Under the net energy metering program, the electric utilities of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas and Electric Company (SDG&E) are required to make net metering available to customer-generators on a first-come-first-served basis until the total generating capacity exceeds five-percent (5%) of the utility’s “aggregate customer peak demand.”[2]  The CPUC decision clarifies that the “aggregate customer peak demand” is the aggregation, or sum, of all individual customers’ peak demands, including their non-coincident peak demands. This will have the effect of significantly increasing the total generating capacity that is eligible for net metering, thus opening up greater opportunities for solar project developers, their customers and investors.

Prior to this decision, each utility used a different calculation method to determine where the 5% cut-off is. For example, PG&E divided the capacity of NEM-eligible generation by the highest-peak-demand-ever across its entire system, using a 60-minute interval. Other commenters, including the Solar Energy Industries Association (SEIA), argued that to calculate the aggregate customer peak demand, utilities should instead add together all of their individual customer peak demands regardless of when they occur in order to account for the non-coincident nature of customer peaks – i.e., to properly account for individual customers whose demand peaks at different times during the day. Under SEIA’s methodology, the “aggregate customer peak demand” would be the summation of each  individual customer’s peak demand, not the system-wide peak demand as a whole. The CPUC agreed with this interpretation, determining that the utilities shall use the highest recorded sum of non-coincident peak demands in a calendar year in calculating the 5% limit. The utilities argued that this decision will only serve to increase the rates to their customers, while generator-customers get to benefit without contributing their fair share toward the maintenance and improvement of the grid. Sempra Energy, SDG&E, PG&E, and SCE estimate that this will shift $1.3 billion a year in costs from solar to non-solar customers. However, SEIA and others hailed this decision as a “step forward,” predicting that the demand for NEM solar will more than double, increasing the demand for solar panels and availability of clean energy jobs. Already, California’s solar industry employs tens of thousands of workers. More importantly from an industry perspective, it was predicted that the net metering cap would have been reached in 2013 for PG&E, and shortly thereafter for the other utilities. This cap would have thus prevented the admission of new NEM customers, limiting the potential solar market as soon as next year. Instead, the CPUC “decision ensures that the solar industry will continue to thrive for years to come, and we are fully committed to developing a long-term solution that secures the future of the industry in California,” according to CPUC President Michael Peevey.

Going forward, a public workshop will be held in June to determine how best to estimate individual peak demands for those customers who do not yet have a smart meter. Further, the CPUC has ordered the preparation of a cost/benefit analysis for the NEM program to be completed on or before October 1, 2013. Lastly, cap or no cap, the NEM remains scheduled to end Jan. 1, 2015 unless new CPUC rules are issued.


  1. Senate Bill 656 (stats. 1995, ch. 369).
  2. Cal. Pub. Util. Code Section 2827(c)(1) (2012).

The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.