Net Energy Metering (NEM)
NEM 2.0 Program
Net Energy Metering (NEM) program was established in 1995 to facilitate the
installation of small customer-owned renewable electricity generation that is
connected to the utility electric distribution grid. This allowed
customers who install and operate small renewable generation facilities, such as
a solar photovoltaic system on a residential rooftop, to receive credit on their
utility bill for power generated by their system that is fed back into the
electric grid during times when the system’s generation is greater than the
October 2013, Governor Jerry Brown signed AB
327, which requires the CPUC to develop
a replacement for the NEM program by December 31, 2015. This legislation
requires the CPUC to develop a NEM successor
tariff that considers whether or not participants in the current NEM program are
paying their full and fair costs of utility service, and whether there is an
undue subsidy in the current NEM program at the expense of customers who
are not participating the program. In response to AB 327, the CPUC
established a Rulemaking to
gather proposals and input from consumer groups, the investor owned utilities,
the solar industry, environmental groups, and other stakeholders. The CPUC is
holding a series of stakeholder workshops to obtain input on analytical and
policy issues as well as opportunities for stakeholders to formally file their
comments with the CPUC.
September 2014, the CPUC issued a Ruling to
gather stakeholder input on analytical issues for testing options for a
successor to the existing NEM tariffs, referred to as the “Public Tool.”
Scope of Issues & Policies
January 2015, the CPUC issued a Scoping
Memo and Ruling which set the
proceeding schedule and determined the scope of issues to be addressed:
or more tariffs/standard contracts
and evaluation plans and budget
of storage and other Distributed
February 2015, the CPUC issued a Ruling requesting
that parties address specific policy issues to comply with AB 327, including:
The Public Tool
March 26, 2015, CPUC staff released its Draft
Public Tool - a spreadsheet based calculator that will be used to
conduct benefit cost analyses, cost of service analyses, and forecast solar
installations and GHG reductions under various rate design and solar tariff
scenarios. The Calculator can be found under the “Public
Tool Documents” section of the CPUC’s webpage. Stakeholders are
providing input on the Draft Public Tool.
CPUC Evidentiary Hearing
CPUC held an Evidentiary Hearing in San Francisco on October 5-7, 2015. On September 4, 2015, the
CPUC issued a Ruling,
outlining the scope of the Hearing, and that parties may address the basis for:
of prices of rooftop solar installations that are different from those used
in the Public Tool.
proposed charges for interconnection of small systems.
fixed charges that are different from the assumptions used in the Public
Tool, such as demand charges, capacity fees, standby charges, access fees,
use charges, etc.
CPUC Final Decison
January 28, 2016, the CPUC issued a Decision,
which largely continues the same Net Energy Metering program but with the
Eligibility and Assurances
participant eligibility size to larger than 1 MW.
a 10-year service warranty and minimum equipment safety requirements for
that customers of this NEM successor tariff can maintain service under this
tariff for 20 years.
implementation of a “reasonable” interconnection fee, except for those
customers participating in the Single-Family Affordable Solar Homes (SASH)
nonbypassable charges (e.g., public purpose programs, nuclear
Rates & Pricing
customers to be on a time-of-use rate as a condition of participation
(except for SDG&E customers, whose time-of-use rates will be determined
in another proceeding).
Customers on Net Energy Metering prior to when time-of-use rates become
default in 2019, can remain on their original rate for up to five years (SDG&E
customers can remain on their tiered rate for up to five years).
all Net Energy Metering successor tariff customers to be on a time-of-use
rate after default time-of-use rates are in effect in 2019, with a limited
exception for certain SDG&E customers.
CPUC will consider adjustments to this NEM successor tariff in 2019. A second
phase of this proceeding will determine how to develop alternatives for
residential customers in disadvantaged communities, and more fully develop the
consumer protection and evaluation measures.
goals are for a new NEM tariff to:
to provide a cost-effective means for utility customers to generate their
own electricity with a renewable generator.
subsidies for NEM systems to only what is necessary to preserve a value
proposition for customers who generate their own electricity with a
viable means for low-income customers and disadvantaged communities to
access the benefits of generating their own electricity with a renewable
robust consumer protection measures for customers who choose to generate
their own electricity with a renewable generator.
ORA NEM 2.0 Proposal
On August 3,
ORA issued its Proposal
for a Net Energy Metering (NEM) successor tariff for residential utility
customers, with the following features:
continuation of the existing NEM, at full retail rate.
additional fee based on the installed capacity of the generator.
increase on the fee with a three
increases tied to NEM adoption milestones.
grandfathering provisions for customers who take the NEM tariff.
of existing NEM fee waivers and NEM exemptions for projects greater than 1
continuation of consumer protection measures that were part of the
California Solar Initiative Program.
expansion of the existing Single-Family Affordable Solar Homes third party
financing program to serve Disadvantaged Communities.
ORA's September 21, 2015 Testimony.
August 3, 2015 Comments
with its full proposal for a NEM Successor Tariff.
January 7, 2016 Opening
Comments on the CPUC's Proposed Decision.
January 15, 2016 Reply
March 16, 2015 Opening
Comments on policy issues.
October 1, 2014 Opening
Comments on analytical issues.
October 20, 2014 Reply
Comments on analytical issues.
August 26, 2014 Comments
on the CPUC’s Order Instituting Rulemaking.
the Proceeding docket.
to proceeding information here.
Distributed Resources Plan Webpage
March 30, 2015: The
Analytical Tool that stakeholders will
use to test their NEM proposals
April 7, 2015: Disadvantaged