NET/NET: An Update on Changes in California’s Net Metering Formula
Net metering originated in the 1980s, and it has long been an attractive benefit for homeowners thinking about going solar. In early 2016, the California Public Utilities Commission (CPUC) adopted new rules for net metering that will change the price structure offered by the state’s three large energy utilities for anyone going solar after July 1, 2017. (That’s Pacific Gas & Electric – PG&E; San Diego Gas & Electric SDG&E; and Southern California Edison – SCE. Smaller municipal electric providers may implement their own policies.)
It’s being called Net Energy Metering 2.0 (NEM 2.0). Here’s a look at the changes.
BUT FIRST, THIS JUST IN…
What is net metering? It simply means that consumers can send unused “self” generated power to the electric company for credit. (This includes power generated from alternate sources such as solar and wind.) The monthly electric bill is the net amount of the total cost of energy used for your home minus the cost of “self-generated” power. So the net cost of electricity to you may be little to nothing at all. In fact, you may even end-up with an overall credit that will be applied to your next month’s bill!
Currently, 43 states have policies guiding net metering; three remaining states offer net metering via select utilities, with only four states having no procedures regarding net metering. However, specific rates and terms can vary greatly from state to state. For instance, Texas, the country’s second most populous state, offers net metering only through three electric companies. In some states, homeowners can roll-over their energy credits indefinitely; in other states, energy credits expire at the end of the year. There is also frequent, vigorous debate and drives to change policies around net metering – which leads us back to California in the second-half of 2017.
NET METERING 2.0 in CALIFORNIA
The good news is that there really isn’t any bad news! First, net metering remains in place in California. In some states, such as Nevada, solar opponents have won their battle to reverse net metering – or to change it to an extent that greatly diminishes the consumer benefit.
For current solar customers, there will be no changes at all. Homes already operating under net metering will be “grandfathered,” meaning their rates and terms do not change for 20 years. Anyone who installs a solar system after June 30, 2017 will see several changes – which will raise their total costs. More good news though – while no one likes a higher bill, the additional costs shouldn’t be over-the-top.
New costs under Net Metering 2.0 are for:
- Nonbypassable Charges (NBCs) – built into every electric bill are charges which the utilities are required to collect, such as the Public Purpose Programs Charge, which helps provide funds to pay for power for people on limited incomes. Under Net Metering 1.0, solar customers paid the NBC charges only on the net energy used (electric energy used – solar energy = net energy.) Under Net Metering 2.0, solar customers will pay NBC charges on the full amount of energy pulled off the grid – 100% of electric energy used. Since the NBC charges are in the range of .02 cents per kW hour, this won’t add a lot to the monthly bill (although even a small increase multiplied by 12 months a year adds up!)
- One-Time Interconnection Fees – a fee to reimburse the utility to set up the net metering “pipeline” from the home/business to the electric grid; this fee is anticipated to range from $75-$150.
- Time of Use Rates (TOU) – under Net Metering 2.0, new solar customers will be credited and charged for electric power by “time of use” – and of course, much like airline seats and gasoline, prices are higher when demand is higher, such as evenings. So if a home generates solar power that is fed to the grid at noon, it will be credited the TOU rate for that daypart – which is likely to be less than the cost of electricity the home uses in the evening. So it is possible that your overall bill will go up (or that you’ll have less of a credit to rollover to the next month.)
START THE CLOCK:
Net metering 2.0 takes effect July 1, 2017, and to qualify, your solar system has to be installed and functioning by that date. If you are still in a paperwork or permitting stage on that date, you will be classified under Net metering 2.0. So contact our Sunfinity Solar pros as soon as possible to beat the clock and lock in your savings under Net Metering 1.0.