Fair Treatment for Solar Customers

On January 28, 2015, the California Public Utilities Commission issued a final net metering decision that extends NEM for solar customers indefinitely. The Commission firmly rejected proposals from the utilities to replace net metering with complicated schemes that would have put solar out of reach for most consumers.

NEM-2 for IOU's

Under NEM 2.0, the utility meter will continue spinning backward at full retail rates for solar customers when they are generating more electricity than they are using. The tariff was changed in three main ways:

  • Non-bypassable charges to support public purpose programs like energy efficiency rebates and low-income bill assistance is assessed on energy consumption that is offset by NEM credits, in addition to monthly net consumption.
  • There is a one-time application fee of $75 for SCE, $132 for SDG&E, and $145 for PG&E. These amounts will be re-evaluated over time as the costs of processing NEM applications change. 
  • Residential solar customers must be on “time-of-use rates” that vary depending on the time of day. Nearly all commercial and agricultural customers are already on mandatory time-of-use rates.

Future Changes

The CPUC will again consider revisions to the NEM tariff after more work to develop methodology for calculating the value of solar, including locational benefits, grid support from smart inverters, and other factors. The official proceeding for the tariff development will begin in 2019, but much of the foundational research is already underway. NEM-3 will not apply to customers who go solar before the changes are approved. Customers are “grandfathered” from future changes for the first 20 years of operation of their solar systems. This does not guarantee that the underlying rates will not change, but it guarantees that NEM credits will be at full retail rates and that there will not be any new fees beyond those described above.

OLDER Systems Are Grandfathered

The changes to net metering in this decision do not affect customers who already had solar before utilities transitioned to NEM-2. The transition happened in June 2016 for SDG&E, December 2016 for PG&E, and June 2017 for SCE. 

NEM for MOU's (Municipal Owned Utilities)

California’s municipal utilities (a.k.a. "munis") are not obligated to continue net metering once they reach their 5% level. What’s more, they are not even obligated to define their 5% level the same way that the investor owned utilities do. AB 327 (Perea) in 2013 directed the CPUC to create a successor program for IOUs, i.e. NEM 2.0, and it codified the calculation methodology for the 5% level, but it remained silent on municipal utilities.  

As a result, NEM in munis varies across the state.  The best NEM plans are in LADWP and SMUD, which have both agreed to continue full net energy metering indefinitely.  (Note: SMUD moved to Time of Use from 5-8p for all customers – new solar customers first in 2018 and everyone else in 2019.)  Colton hit the 5% level but also plans to continue its NEM plan, and several munis have hit the 5% level but are continuing NEM until a successor plan is in place: Bear Valley (IOU), Gridley, Healdsburg, Merced, and Moreno Valley.  Others have started NEM-successor solar programs, such as Alameda, Imperial Irrigation District, Modesto, Palo Alto, and Turlock.  A few munis will hit the 5% level in 2018, including Anaheim, Glendale, and Roseville; and an even longer list are expected to hit the 5% level in 2019 or later.

California Solar & Storage Association members have access to our extensive Muni NEM Tracker which has details on the successor plans for each municipal utility, their expected timeline for implementation, and how close they are to reaching the 5% level.


Contact Brad Heavner, Policy Director