Following on Decision 22-12-056, which established a new net billing tariff for retail utility customer generators participating in net energy metering (NEM) and Decision 23-06-056 denying rehearing of that decision, the California Utilities Commission (CPUC) has issued a new Proposed Decision addressing six additional net energy metering issues not resolved previously. The recommendations in the Proposed Decision are summarized here. The Proposed Decision is expected to be on the agenda for a vote by the CPUC at its September 21, 2023 business meeting.
Successor VNEM Tariff
The utilities’ Virtual Net Energy Metering (VNEM) tariffs serve properties with residential or non-residential accounts sharing the net metering benefits of one or more on-site renewable generation facilities. The majority of utility VNEM customers are participants in the Multifamily Affordable Solar Home (MASH) and Solar on Multifamily Affordable Housing (SOMAH) programs. The PD recommends replacing the current VNEM tariffs with a revised VNEM tariff that “aligns with the net billing tariff adopted in D.22-12-056” following a three month sunset period. Existing VNEM customers and those completing applications during that sunset period may remain on the existing VNEM tariff until the end of a 20-year legacy period. The successor VNEM tariff will: (1) base export rates on values derived from the Avoided Cost Calculator [ACC], (2) provide ACC Plus adders for all residential VNEM benefiting account holders as a glide path mitigating financial impacts; (3) adopt a transferable nine year legacy period; (4) prohibit using the export compensation credit to offset non-bypassable or fixed charges, (5) retain existing eligibility, size to load and metering requirements, and (6) allow VNEM customers to participate in demand response or emergency reliability programs.
Although parties argued that the current VNEM tariff provides net benefits to ratepayers and utilities, the Proposed Decision finds that some categories of benefits are not quantifiable, that on balance the current VNEM tariffs are not cost-effective, and that the successor VNEM tariff is necessary to “improve upon its cost-effectiveness.” For more details on the proposed successor tariff, VNEM implementation and program changes, and eligibility for the MASH and SOMAH tariffs, see the PD, pp.30-58.
Successor Aggregation Subtariff
The utilities’ current Net Energy Metering Aggregation (NEMA) subtariffs allow an eligible customer-generator with multiple meters to aggregate the electrical load of the meters located at the site of the generation facility or on contiguous property. NEMA customers are not eligible for net surplus electricity compensation. NEMA tariffs currently serve a mix of residential, non-residential and mixed accounts, including agricultural customers.
As a threshold matter, the PD rejects party arguments that NEMA tariffs are not subject to statutory NEM sunset provisions leading to the current overhaul of the NEM 2.0 and other NEM tariffs. The PD finds justification for adopting a successor Aggregation subtariff based on the net billing tariff adopted in D.22-12-056, with an ACC Plus as a glide path, no netting, three month transition, nine year lock-in period, and continuance of the credit and debit approach used in the current NEMA subtariff. The PD finds that the current NEMA subtariff provides no additional benefits to ratepayers and utilities in comparison to the NEM 2.0 tariff, but “does allow agricultural customers to optimize their use of land resources by being able to locate solar on land that is underperforming.” For more details, see PD pages 58-76.
The PD recommends improvement of processes related to the Public List of Non-Compliant Providers (Watch List), establishes a billing reformation process, and adopts “other smaller improvements to protect customers while omitting unnecessary Utility reporting requirements.”
The Watch List is a record of noncompliant solar providers that is currently managed by the CPUC’s Energy Division as a means of consumer protection and program auditing. To address identified issues of inconsistency and unfairly lumping together companies committing substantive and merely administrative errors, the PD recommends a number of reforms including improved coordination and updating measures, and creation of an internal Enhanced Review List process to improve auditing and enable providers to avoid being placed on the Watch List for administrative errors. Under the new rules, automatic limits would remove violators of CPUC rules from the Watch List after three months, and violators of Contractors State License Board (CSLB) or Department of Financial Protection and Innovation (DFPI) regulations after six months. The Energy Division would be tasked with developing a standardized Commission Compliance Checklist that clearly identifies the requirements for an interconnection application for purposes of the Watch List.
To address NEM customer billing issues, the PD recommends a process to examine customer billing issues and consider revision of NEM customer billing formats to improve customer understanding. In Phase 1 of this process, the utilities will consult with Energy Division to identify near-term billing changes that could improve customers’ understanding without delaying implementation of the net metering tariff, which is currently set for December 15, 2023. Phase 2 will begin in the first quarter of 2024 with workshops to address “future, long-term needs” for NEM billing improvements.
NEM Tariff Evaluation
Decision 22-12-056 authorized review of the new net billing tariff based on three years of data, with a focus on affordability, equity, and grid benefits. The PD recommends that this evaluation should be funded by public purpose program surcharges, with a budget set at $2.5 million. The PD identifies a number of evaluation objectives rather than specific questions, which will be used by an evaluation consultant to develop metrics for measuring the success of NEM tariffs, in consultation with the CPUC and parties.
The review process will begin within 120 days of adoption of the PD, with development of an RFP for selecting the evaluation consultant. Once a consultant is hired, a Research Plan will be proposed and discussed in a collaborative process. The process will culminate in development of a draft report, which will be addressed through workshop discussion and comments, and lead to a final report.
Fuel Cell Participation in NEM
The PD recommends adoption of a revised Staff Proposal to Implement NEM Fuel Cell Greenhouse Gas Emission Standards issued in April, 2021. The Staff Proposal is provided as Appendix B to the PD. The Staff Proposal was developed to implement Assembly Bill 1637, which was signed into law in 2016 and amended the Fuel Cell NEM statute, Public Utilities Code §2827.10. As explained in the PD, the lengthy AB 1637 implementation process involved the California Air Resources Board (CARB) developing greenhouse gas emissions reduction standards for NEMFC resources, and the CPUC developing further implementation and enforcement procedures. The proposed framework requires customer-generators with new and existing fuel cell systems to certify compliance with performance test code requirements and annually renew the certification. The Staff Proposal provided calculations for determining certification and a compliance worksheet. The PD clarifies that any waste heat usage associated with the system should be included in calculating the GHG emission rate, and that CARB’s anticipated modifications to the interim GREET model for accounting for reduced emissions from biomethane be incorporated into the NEMFC tariffs within 90 days of adoption by CARB.
Notwithstanding concerns raised by fuel cell industry parties that AB 1637 did not authorize retroactive application of standards developed long after enactment of the statute, the PD would amend the Staff Proposal to require that its requirements apply to “all NEMFC resources installed after the enactment of AB 1637.” The PD also clarifies that the utilities would be responsible for policing compliance with the adopted standard, and authorizes the utilities to charge a fee to a fuel cell customer-generator to recover the costs associated with administering the annual collection and processing of certifications. If the PD’s recommendations are adopted, the initial certification deadline will be six months from the adoption of the PD. Customer-generators found to be in violation of the NEMFC standards would have a six month window to come into compliance. If they cannot do so, the NEM interconnection agreement would be terminated and the project would be moved to a Rule 21 non-export agreement.
Prevailing Wages Implementation
Assembly Bill 2143 (codified as Public Utilities Code section 769.2) requires that as of January 1, 2024 large customer-sited renewable generation and storage facilities participating in tariff programs (including NEM) must provide prevailing wages to all construction workers and apprentices, subject to some exceptions. The CPUC is required to oversee maintenance and collection of certified payroll records for projects covered by the statute and to retain the records as public records for five years.
The PD proposes to implement AB 2143 by: Requiring the utilities to create a checklist that projects can use to determine if they are subject to AB 2143 requirements; Clarifying that beginning in 2024 any interconnection application for a new NEM project or upgrade to an existing project will trigger AB 2143 compliance for projects covered by the statute; Requiring the utilities to develop a Prevailing Wage Disclosure Form that will be provided to eligible customers to ensure they are aware of the statutory requirements; Requiring the utilities to upgrade their tariffs to reflect the requirements of AB 2143, including reporting requirements, “willful violation” notification provisions and penalties; and Requiring the Energy Division to hire a consultant to devise a system for collection and review of payroll records for enforcement purposes.
For more detail on the PD’s recommendations for implementing AB 2154 see PD pages 147-172.
Opening comments on the PD may be submitted to the CPUC on or before August 22, and the due date for reply comments is August 28.
Contact: Brian Biering or Lynn Haug