Having solar panels installed may help you save money in a number of ways, but net energy metering (NEM) is the most significant. Every extra kilowatt-hour (kWh) of power generated by your solar panels is used to pay back the energy you need from the grid on cloudy days.
Since 1995, NEM has been mandated in California and applied to all customers of the state’s three main utilities. Now in its second iteration, NEM 2.0, it has been around for a while. Changes suggested as the CPUC nears the completion of constructing NEM 3.0 might significantly lessen the financial advantages customers can gain.
Up-to-date information on Net Metering 3.0
Judge Kelly Himes of the CPUC’s Administrative Law Division informed the parties to the Net Metering 3.0 hearing in early February 2022 that a judgment would be postponed “until further notice” because two newly-appointed commissioners required more time to study and digest the material. A fresh order from Judge Himes reopening the record and inviting the parties to answer questions was presented on May 9th, ending the hiatus.
In the past, on December 13th, 2021, the Commission submitted its final conclusion. Provisions in this proposal will shorten the time period as well as reduce compensation for solar energy sent to the grid.
The May judgment doesn’t alter the planned decision itself, but it does raise some doubts regarding potential amendments the Commissioners are contemplating. The deadline for respondents and parties to the proceeding to submit opening remarks in answer to those questions is June 10th, and the deadline for reply comments is June 24th.
Analyzing the proposed resolution
The CPUC received 18 proposals from interested parties during the NEM 3.0 procedure. These parties included the solar sector, utility businesses, natural resources organizations, and ratepayer advocates. There was a broad range of suggestions since different interest groups wanted different things.
The CPUC’s final proposed decision (PD) incorporates ideas from all of the submissions, although it’s quite similar to the utility companies’ original request.
NEM 2.0 will have a grandfathering term of 20 years
The 20-year grandfathering term for NEM 2.0 was also preserved in the NEM 3.0 California proposal. To be eligible for the significantly more advantageous NEM 2.0, solar clients must complete their interconnection documentation before NEM 3.0 enters into force (likely April 14, 2023)
On the question of when will NEM 3.0 go into effect, it was sometimes suggested that the 20-year grandfathering term for NEM 2.0 should be shortened to 10 years. So it’s excellent news for anyone who have invested in solar panels that the grandfathering term will continue at 20 years. Customers who want to be grandfathered into NEM 2.0 must act quickly, since solar projects normally take between three and five months to complete.
So, what happens next?
Not yet, however it seems likely that NEM 3.0 will be greenlit in the near future. As of August 1st, the CPUC is still debating this matter and has not made a judgement. Before the end of September, a new preliminary ruling is likely.
When this happens, consumers will have 120 days from the NEM 3.0 implementation date to execute “interconnection agreements,” so there is some hope. These will ensure that they continue to function in accordance with NEM 2.0 guidelines for a minimum of 15 years.
Furthermore, solar is still a very strong investment in California, even after NEM 3.0 was implemented. Although future benefit realization schedules may look different, there are ways to lessen the impact of these shifts (like installing battery storage). Customers should know all there is to know before the installation begins.