California Public Utilities Commission Preserves Net Energy Metering for Future Solar Projects

February 2016

On January 28, 2016, the California Public Utilities Commission (“CPUC”) voted to extend net metering credits for solar customers (“NEM Decision”).  The NEM Decision preserves the “full retail” credit for new solar projects, meaning any net energy generated by a photovoltaic/solar system in excess of an owner’s usage will continue to be compensated at full retail credit.  

This decision will affect school districts in different ways, depending on whether or not a district owns its system or purchases solar energy under a power purchase agreement.   Changes under the NEM Decision will take effect for new participants after the utilities’ existing net metering program participation caps are met, or on July 1, 2017, whichever occurs first.

NEM is a state program requiring utility companies to offer solar customers (including school districts) the option to use a net metering system which gives them full retail credit for the excess energy they produce and feed into the grid, allowing them to “net” out the energy produced versus that which is later consumed.  Those school districts purchasing their own systems will benefit from the NEM Decision directly for excess power generated.  Those districts purchasing energy under a solar power purchase agreement will benefit from having NEM factored into their pricing models.  Districts with existing solar power purchase agreements have benefitted from having NEM factored into their pricing models. 

The NEM Decision also introduces various new charges and rules applicable to future school district solar projects, including the following:

■    Interconnection Fee:  A reasonable interconnection fee (approximately $75-$100) will be charged to reflect the costs for a utility to review and ensure that a net metering system interconnects safely to the grid. Previously, this cost was distributed across all utility customers.

■    Non-Bypassable Charges:  NEM customers will be required to pay “non-bypassable” charges on all electricity that net metering customers consume from the grid.

■    Compulsory Time-of-Use Rules:  The amount paid for electricity from the grid will be higher during periods of high demand.   Beginning in 2018, net metering customers must utilize time-of-use rates as soon as they sign up.

The NEM Decision follows the recent extension by Congress of the 30 percent federal investment tax credit for solar vendors until 2020.  Both developments should contribute to continued growth for solar energy projects across California.  

If you have any questions regarding CPUC’s NEM Decision or any education matter, please call one of our six offices.

F3 NewsFlash prepared by Kathleen McKee, Kelley A. Owens, Jonathan A. Salt and John W. Norlin.
Kathy is a Partner in the F3 San Diego office.
Kelley is a Senior Associate in the F3 San Diego office.
Jonathan is an Associate in the F3 San Diego office.
John is Special Counsel in the F3 San Diego office.

This F3 NewsFlash is a summary only and not legal advice.  We recommend that you consult with legal counsel to determine how this legal development may apply to your specific facts and circumstances.  Information on a free NewsFlash subscription can be found at www.f3law.com.

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