Category: "Net Metering"

04/08/16

  11:55:00 am, by Jim Jenal - Founder & CEO   , 776 words  
Categories: All About Solar Power, PWP, LADWP, BWP, GWP, Net Metering

Munis Shutting Down Net Metering! - UPDATE 2X

UPDATE - 5/28/16 - Despite our best efforts, AB 2339 was HELD in the Appropriations Committee, effectively killing the bill this session.  Thank you to everyone who took the time to call and voice their support for the bill.  Special thanks to Frank Andorka who created a podcast in support of the bill, all the way from Cleveland!  We lost this battle, but the fight continues.

 


UPDATE - 5/26/16 - We passed the Assembly Utilities Committee on a 10-2 vote, but right now we are stuck in the Assembly Appropriations Committee, chaired by San Diego Democrat Lorena Gonzalez. The decision of whether to allow AB 2339 to  advance to the Assembly Floor rests in the hands of two people: Chair Gonzalez and Speaker Rendon.  Please take a moment to give them a call and urge them to support the bill.  Here are their numbers:

  • Lorena Gonzalez, Chair Assembly Appropriations Committee: 916-319-2080
  • Speaker Anthony Rendon: 916-319-2063

Thanks!


 

Back in February we wrote about the new Net Metering 2.0 rules that the California Public Utilities Commission (CPUC) approved over the objections of the Investor-Owned Utilities (IOUs), SCE, PG&E, and SDG&E.

PWP - Net Metering?

We noted at the time that the CPUC rulemaking did not directly affect the Municipal Utilities (munis, like Pasadena Water and Power). Boy was that right as muni after muni is looking to shut down Net Metering altogether! Here’s our take, and more importantly, an action item that you can take to preserve Net Metering with the munis.

How We Got Here

The munis  are generally free, within the limits of state law, to set their own policies as confirmed by the local city council.  So here in Pasadena, PWP sets its policy but has to have that policy ratified by the city council’s vote.  When it comes to Net Metering, state law requires that the munis, like the IOUs, offer Net Metering agreements until the amount of solar deployed exceeds “5% of the electric utility’s aggregate customer peak demand.” (CA Public Utilities Code § 2827)  Now if that quote seems like less than a model of clarity, you are quite right.  Before the CPUC, the IOUs argued that it meant that you look at a utility’s highest peak demand as of a certain point in time, and that would be the cap.  Such an interpretation, however, reads the words “aggregate customer” out of the statute.  The CPUC agreed, and the proper interpretation requires the utility to sum the aggregate demand from each customer and that becomes the cap.

The results are dramatic - the proper interpretation effectively doubles the total amount of solar allowed under the cap.  That decision by the CPUC back in 2012 redefined Net Metering, but only for the IOUs.  At the time there was little concern regarding the munis since none was close to reaching their cap. 

Fast forward to today and five munis have already reached their caps, as calculated under the old, pre-CPUC ruling, methodology.  That leaves them free to replace Net Metering with whatever they choose, and at least one, Turlock, has adopted new rules that have resulted in an 85% decline in the solar market there!  (In contrast, LADWP has already agreed to the new methodology thanks to leadership from Mayor Garcetti.)

Support AB 2339!

Fortunately there is a fix in the works.  AB 2339 (Irwin - D-44) will require that the munis calculate their caps in effectively the same way as the IOUs.  The bill is presently in the Assembly Committee on Utilities and Commerce, chaired by Mike Gatto (D-43) - a former student and colleague of mine, and a champion of clean energy.

We need the strongest bill possible coming out of the committee, and you can help make that happen.  How?  Our friends at CALSEIA have compiled a target list of key assembly members who need to here from their constituents on this bill.  From the CALSEIA newsflash:

Target List:

  • Jim Patterson (R-Fresno/Clovis) 916-319-2023
  • Susan Eggman (D-Stockton/Mountain House/Thornton/Tracy) 916-319-2013
  • Mike Gatto (D-Burbank/Glendale/La Canada/La Crescenta) 916-319-2043
  • Bill Quirk (D-Hayward/Ashland/Castro Valley/Cherryland/Fairview/ Fremont/ Pleasanton/San Lorenzo/Sunol/Union City) 916- 319-2020
  • Miguel Santiago (D-Huntington Park/Vernon) 916- 319-2053
  • Eduardo Garcia (D-Imperial/Blythe/Brawley/Calexico/Cathedral City/Coachella/Desert H.Springs/El Centro/Indio) 916- 319-2056
  • Christina Garcia (D-LA/Bell Gardens/Bellflower/Cerritos/Commerce/ Downey/Montebello/Pico Rivera) 916- 319-2058
  • David Hadley (R-Torrance/Gardena/Lomita/Manhattan Beach/Palos Verdes Estates/Redondo Beach/West Carson) 916- 319-2066
  • Phil Ting (D-San Francisco) (916) 319-2019
  • Rocky Chavez (R-Oceanside/Calsbad/Encinitas/Vista) (916) 319-2076

If you live in one of those districts, or if you run a business in one, or have customers there, please contact that member.

More generally, there is a website where anyone can go to express their support for expanding the benefits of Net Metering to muni customers throughout the State.  Just click on the button to make this happen:

Sadly, the list of entities opposing this bill includes Pasadena Water and Power - looks like we need some political leadership here in our own backyard to get PWP on board.

We will update this post as the bill progresses through the legislature - watch this space!

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02/01/16

  02:12:00 pm, by Jim Jenal - Founder & CEO   , 1953 words  
Categories: Utilities, SCE, Ranting, Net Metering

Net Metering 2.0 Explained

On January 28 the California Public Utilities Commission (CPUC) voted 3-2 to adopt new rules governing what is known as Net Energy Metering, thereby creating the framework for Net Energy Metering 2.0 (NEM 2.0).  Here is our take on what the CPUC did, and didn’t do.

What Hasn’t Changed

The first and most important thing to know is that for many people, the new rules adopted by the CPUC will not affect you at all!  These new rules only directly apply to customers of the three investor owned utilities (IOUs): SCE, PG&E, and SDG&E.  If your electrical service is provided by one of the municipal utilities - like PWP or LADWP - nothing that the CPUC did last month will directly affect you since the CPUC does not have jurisdiction over the munis.  (That said, the munis often follow the lead of the CPUC, so it is entirely possible that they will individually adopt their own version of NEM 2.0, but that will be a discussion for another day.)

Even for solar clients in the service territory of one of the IOUs, if you have already signed a net metering agreement, you will be grandfathered in and allowed to continue to operate under the old rules for 20 years.  Once the 20 years have elapsed, you will be transitioned to the net metering rules (NEM 5.0?) then in effect.

Beyond all of that, even for new solar clients in IOU territory, these new rules do not go into effect right away.  Rather, the old rules will still apply until your utility reaches their 5% of customer aggregate demand cap, or July 1, 2017 - whichever comes first.  In SCE territory it is an open bet as to which will occur first (see more below).

Bottom line: this is not happening right away, so you still have time to benefit from the existing rules.

What is Going to Change

Net metering is changing

Net metering is changing!

Proposals

Lots of people weighed in on NEM 2.0 including all three IOUs, CALSEIA, NRDC, and various advocates for rate reform and consumer protection.  While some of the proposals, and their proponents, were entirely predictable, others were not, and at least one such position was seriously disappointing.

For example, the three IOUs all advanced proposals that would have significantly reduced the value of going solar.  SCE wanted to reduce the rate for energy exported from full retail to just 7¢/kWh (with a 1¢ adder if you give SCE your renewable energy credits), plus a $3/kW/month “grid access charge", and a one-time $75 interconnection charge.  (SDG&E’s proposal was even worse, seeking a $9/kW/month charge!) On top of that SCE wanted to eliminate virtual net metering altogether.

At the other extreme, the “solar parties” (such as CALSEIA and The Solar Alliance) advocated for keeping net metering at full retail value.  However, in a nod to changing realities, they did support paying on nonbypassable charges (more on that mouthful in a minute) but not until after 2019.

Still, there was one proposal that strikes us as entirely reasonable which CALSEIA opposed - mandatory warranty periods.  Back when the California Solar Initiative was in place (i.e., when SCE was paying rebates), solar contractors were required to provide a ten-year warranty on their work in order to participate in the program.  With the demise of the CSI program, technically that warranty requirement also went away.  As part of the NEM 2.0 rulemaking, ratepayer advocates advanced the notion of restoring the warranty requirement - a common sense request that no one should oppose.

But the “solar parties” did oppose it, asserting that such a requirement could “discourage innovation in product offerings."  Seriously?  What “product” might we reasonably want to offer that having to stand behind it would be discouraging? When pressed about this position during CALSEIA’s NEM 2.0 webinar, Brad Heavner, CALSEIA’s policy director, said that the view was that the market could decide this: presumably if a company didn’t offer a warranty and that was important to the customer, they would go with a different company.  This was not, however, a position that CALSEIA pushed hard to win, and in the end, they lost on this point.

In our view, opposing a mandatory warranty paints solar in a bad light.  It puts the industry on the side of those who do the least reliable work, and penalizes those companies who go the extra mile to install systems that will stand the test of time.  From what we have seen it is tough enough to get a company to honor its warranty commitments, let alone relying on the “invisible hand” of the market to protect consumers.  CALSEIA did a lot of great work on NEM 2.0, but this position was a mistake.

Decision

The ultimate decision is a major defeat for the IOUs, and a partial victory for the solar industry.  For the IOUs, they clearly overplayed their hand, advancing proposals that were so clearly anti-solar that the Commissioners couldn’t really take them seriously.  According to a CALSEIA webinar, toward the end of the proceedings the IOUs suggested an energy export feed-in-tariff which, if they had proposed it at the start, might have gained traction.  Something to think about as we look toward subsequent iterations on NEM rules.

The solar industry retained full retail value for energy exports, but they also saw three changes that undercut somewhat the value of that victory: nonbypassable charges (NBC) for all energy taken from the grid, one-time interconnection fees, and mandatory time-of-use (TOU) rates.  Let’s look at each in turn.

Nonbypassable Charges (NBCs)

As part of their rate schedules, the IOUs have certain rate components that are known as nonbypassable charges or NBCs.  For example, if you were to look at SCE’s Domestic Rate schedule tariff page (check out page 3), you would see a whole host of factors that go into making up the rate that the customer ultimately pays.  The decision affects three of those NBCs: the Nuclear Decommissioning Charge, the Public Purpose Programs Charge, and the Department of Water Resources Bond Charge.  The sum of those three charges for an SCE residential rate payer  comes to 2.224¢/kWh.  (The lion’s share of which is the charge for public purpose programs, such as bill assistance to people on limited incomes.)

Under the old rules, solar customers would only pay for these charges on the net energy that they consumed in a month.  So, if your consumption was 1000 kWh per month, and your solar system produced 800 kWh, you would only pay these charges on 200 kWh, about $4.45.  Under the new rules, however, every kWh that you pull from the grid, whether it is ultimately netted out by energy you exported, is subject to NBCs.  Sticking with the same example, of the 800 kWh that you produce, imagine that 500 kWh of that are consumed at your home and the remaining 300 kWh are exported.  Meaning that you imported a total of 500 kWh from the grid.  As a result, under NEM 2.0 you will pay NBC on 500 kWh — raising the charge from $4.45 to $11.12, and increase of $6.67/month on the solar customer’s bill.

The relatively small impact of the NBCs is due in part to solar industry lobbying that held the line at around 2¢/kWh versus a proposal, apparently favored by the two dissenting Commissioners, to include more charges that would have brought the total above 4¢/kWh.  (Indeed, we are told that keeping the NBCs at 2¢/kWh is what caused those two Commissioners to vote against the final package.)

Frankly, we think the NBC costs are fair.  The programs supported by the NBCs are a public benefit and all other customers pay for those based on every kWh they pull from the grid.  Under the new rules, so will solar customers.  Of course, if you are in a lease and only saving $20/month from your old bill, this is a much bigger hit.  Yet another reason to avoid leasing!

One-Time Interconnection Fees

Also reasonable was the imposition of one-time interconnection fees to be set based on the IOUs actual cost of handling the interconnection.  The CPUC estimates that the fee will be somewhere between $75-150.  (Recall that SCE advanced a $75 fee as part of its proposal, so it will be fascinating to see if they try to come back for a higher fee now!)

Mandatory TOU Rates

The biggest hit to solar mandated by the NEM 2.0 rules was the requirement that solar customers get switched over to TOU rates.  (SCE is moving all customers to TOU rates eventually, but that target date is 2019.)  Under TOU rates, you pay more for your energy depending upon the time of day when you use it, as opposed to being on a tiered rate schedule where you pay more when you use more during a billing cycle.  For residential customers, SCE sets its peak charge time as the hours between 2 and 8 p.m., and Noon to 6 p.m. for commercial customers.  This means that, for residential customers, solar exported to the grid before 2 p.m. will be valued less than energy that needs to be pulled from the grid after the sun goes down, but before 8 p.m.

It is this change to the rate structure, and to a lesser extent the imposition of the full NBCs, that makes intelligent energy storage that much more valuable.  With smart storage, you won’t export energy during the day, you will store it for later use.  That reduces the total amount of energy pulled from the grid (lowering the NBCs) and allows you to shift the availability of the energy to the evening so as to avoid peak TOU rates altogether.  There can be no doubt that this is the future for how solar installations under NEM 2.0 (and likely beyond) will be the most cost-effective.  We are optimistic that by the time NEM 2.0 goes into effect for SCE clients in our service area, we will have an intelligent storage solution to offer.

Timing

So when does all of this go into effect?  As we noted above, at the very latest, the new rules go into effect on July 1, 2017. Most likely, however, they will go into effect sooner than that since the actual start date is tied to when the IOU reaches its 5% cap.  In SCE territory, the following NEM report is informative:

SCE's NEM report

SCE’s total customer aggregate demand, the basis for the 5% cap, is 44,807 kW.  5% of that is 2,240 MW of solar installed.  As of the end of December, 2015, SCE had 1,388 MW of solar either installed or with net metering agreements in place, leaving 852 MW remaining under the cap.

The report also shows that applications for 48.1 MW of new solar were received during the month of December.  If we take that number as  a fair monthly average, we can expect SCE to reach its cap in 17 to 18 months. So to lock-in your system under the existing rules, you will need to have your net metering application complete and on file with SCE before then (May-June 2017).  We will continue to update on the status of SCE’s progress toward its cap.

Final Thoughts

On the whole, the solar industry dodged a bullet, especially when you look at the latest battles over NEM in other states, like Nevada.  This success is a tribute to the thousands of people who took the time to advocate for solar, whether they be our trade association, CALSEIA; individual solar companies, like Run on Sun; or solar customers who reached out to inform the Commission of the true value of solar.  Not lost in the debate was the importance of solar as a job creation engine in California.

Moreover, the political climate in California, from the Governor on down, has been strongly supportive of solar and they deserve our thanks as well.

We would love to hear your thoughts and if you have questions that haven’t been answered here, please leave them in the comments and we will do our best to address them.

12/31/15

  09:01:00 am, by Jim Jenal - Founder & CEO   , 826 words  
Categories: All About Solar Power, Solar Tax Incentives, Climate Change, Ranting, Energy Storage, Net Metering

Top 5 Reasons Solar Soared in 2015!

There can be no doubt, 2015 was an amazing year for solar.  As we reach the end of the year, here’s our look back on the top five reasons solar soared in 2015!

5. Run on Sun had its Best Year Ever!

Run on Sun Top 500 Solar Contractors

While not the most important reason for solar overall, we would be remiss if we didn’t acknowledge that thanks to our wonderful clients, 2015 was our best year by far!  From our largest project ever for our favorite water company, to adding another school to our portfolio, to the many residential projects that we built all across Southern California, 2015 was a great year.

We took great pride in being recognized, for the third year in a row, as being one of the top Solar Contractors in the country by the wonderful folks at Solar Power World, and even more pride in the scores of referrals that we received from our ecstatic clients.

We can’t wait to meet and exceed our success this past year in the New Year ahead!

4. Politicians that Got It!

Political leadership on dealing with Climate Change was finally in evidence this year, and the resultant policies are, inevitably, pro-solar.  Exhibit A was California Governor Jerry Brown pledging to have the state generate 50% of its electricity from renewable sources by 2030, a mere fifteen years away!  Said the Governor:

I envision a wide range of initiatives: more distributed power, expanded rooftop solar, micro-grids, an energy imbalance market, battery storage, the full integration of information technology and electrical distribution and millions of electric and low-carbon vehicles.

We are on board with that!

But  political leadership extended far beyond the borders of our great state in 2015!  More than 190 countries came together in Paris to agree to the most far-reaching accord ever to address Climate Change, and lots more solar was high on their list of ways to achieve a more sustainable planet.

To be sure, none of these actions were without their political opponents, but it is impossible to deny that 2015 marked a major turning point in the public’s perception of the need to act, and those views were increasingly adopted by the world’s politicians.

3. Smart Energy Storage (Finally) Comes of Age (Almost)!

Ok, we have to give the man his due — Elon Musk’s outlandish PowerWall announcement changed the conversation around smart energy storage (and our blog post debunking his most outrageous claims became our most viewed post of the year!).  Indeed, storage went from being a topic hardly ever mentioned by a potential client, to something that nearly everyone did after Elon did his thing.

Unfortunately, the hype still leads the market, and mature products are still not really available.  But that is changing rapidly, and from our perspective that can’t happen soon enough.

2. Net Metering 2.0 Saves Solar in California — We Hope!

There had been great angst in the solar community about the future of net metering — the means by which solar owners get compensated for excess energy that they put out onto the grid — in California (and elsewhere).  Decisions about net metering in other states that bent over backwards to appease utility demands only ratcheted up the anxiety in California as the state’s Public Utilities Commission deliberated over competing proposals for Net Metering 2.0 - including utility schemes that could have gutted the market for solar.

Fortunately our fears were not realized and the preliminary decision — due to be made final in January — was quite solar friendly.  Once we have a final decision we will report on it in depth, but for now this looks like one of the biggest pro-solar developments of 2015.

1. Federal Solar Investment Tax Credit is Extended!

Losing money if the ITC goes away!The number one, most amazing, and most amazingly unexpected development to boost solar in 2015 is unquestionably the major extension of the 30% federal solar investment tax credit (ITC).

Given that the ITC was previously scheduled to expire at the end of 2016, solar installers, potential clients, utilities, and building departments alike were all bracing for what could have been a hellish second half of next year as all involved scrambled to get systems commissioned before the deadline.

Instead, the full 30% will continue through 2019, 26% in 2020, 22% in 2021, and 10% thereafter.  Moreover, the “placed in service” language — which required a project to be commissioned before the credit could be claimed, thereby leaving installers and clients at the not-so-tender mercies of the local utility — was replaced by the far more manageable, “commenced construction” requirement.

The net benefit of this will be a more orderly market, driven by rational purchasing decisions rather than a panicked stampede to meet an arbitrary deadline at the end of next year.  And beyond that, keeping the ITC in place for many years to come will help to grow solar in ways that would not have been possible otherwise.  The industry, the economy, and the environment were all winners here.

So that’s our wrap on 2015 — truly a great year for solar!  But we are betting that 2016 — with your help, of course — will be even better!  Watch this space!

Happy New Year!

11/25/15

  11:21:00 am, by Jim Jenal - Founder & CEO   , 407 words  
Categories: SEIA, SCE, Ranting, Net Metering, Chandler School

Solar Thankfulness - 2015

Giving thanks - 2015When you are fortunate enough to work in the Solar Industry you really should be thankful everyday.  After all, we are a part of doing something wonderfully important at work, and how many people can honestly say that?  We provide genuine value to our clients by bringing them clean, affordable solar energy, and we get to make our living at the same time – pretty cool!

But with the holidays upon us, starting with Thanksgiving tomorrow, we wanted to take a look back on this year and highlight some of the things for which we are especially thankful, today and all year around. 
So, in no particular order, here is our list for 2015…

Of course, at the end of the day, it is all of our clients for whom we are the most thankful! From the first to the latest, from the smallest to the largest, and everyone in between - you are why we do what we do, and we never for a moment take for granted the trust you have placed in us. 

May your holidays be filled with peace and joy and love!

08/08/14

  09:02:00 am, by Jim Jenal - Founder & CEO   , 799 words  
Categories: All About Solar Power, Residential Solar, Ranting, Net Metering

Do Pro-Solar Policies Hurt the Poor?

smoke from coal-fired power plantThe fossil fuel industry has a problem—its customers hate its product.  We purchase gasoline to fuel our cars and natural gas to heat our homes or cook our food, but we know as we do so that we are making the world hotter and dirtier.  And the electricity that we get from the grid, far too much of it comes from burning coal, and every aspect of that industry, from mining (black lung disease, cave-ins) to burning (think belching smoke stacks like the one on the right) makes one recoil in disgust.

The natural result of that revulsion, is that we are constantly striving to use less of their products.  Which hurts the bottom line, and that is something the fossil fuel industry cannot abide.

Particularly when it comes to solar.  As solar becomes more affordable—and as more advantageous financing mechanisms become available—more and more people “go solar".  Which means less revenue for utilities which drives their rates higher.  Which makes solar more financially viable (if not necessary), thereby driving even more utility customers into the welcoming arms of your friendly, neighborhood, solar installer.  This virtuous cycle for consumers is a vicious cycle for utilities, leading inexorably to their demise unless they change their ways—or solar goes away.

So far most utilities appear to be holding out for option B.

Of course the fossil fuel industry in general, and utilities in particular, are not sympathetic entities with the public so they need a different angle, a better hook if they are going to convince people to abandon solar.

Cue the Koch brothers funded Americans for Prosperity (AFP), and their faux concern for the poor.

In an article titled “How State Solar Policies Hurt America’s Poor,” (h/t Solar Wakeup) AFP Policy Analyst Justin Sykes advances the canard that net metering polices harm poor consumers.  In a piece rife with inaccuracies, Sykes makes a number of misleading statements.  Try this one:

Specifically, the average household income of solar-customers was $91,210, compared to the a median income of $54,283 for non-solar customers. A similar report this month on Nevada’s net-metering policy found  73 percent of solar-customers there have higher median incomes than the statewide average.  Figures like these exemplify how net-metering policy fosters inequality in the way Americans receive and pay for energy. On average, low-income households spend an estimated 37 percent of their income on household energy bills, a burden that grows when coupled with increasing rates due to cost-shifting.

Sorry, but the data simply doesn’t support those statements.

Let’s start with the assertion that solar households have much higher median incomes that non-solar households.

Median household income by zip for solar installations in CaliforniaWe looked at all residential solar installations in California from 2008 to 2013 using data from the California Solar Initiative and ranked them by zip code.  We then compared that to U.S. Census data reporting median household income for those zip codes.  (If you click on the graphic you can actually explore the interactive visualization on our website.)

In every year, whether purchased or leased, the majority of solar was in zip codes where the median household income was at or below $75,000, with only a relative handful in neighborhoods above $125,000.  Indeed, there were more installations in zip codes with a median income of less than $50,000 than there were in zip codes with a median income above $125,000!

Now to be sure, zip code averages are not the same thing as actual customer income, but actual household income of solar customers is not a publicly available piece of data, so this is the best proxy available (and presumably the same proxy available to the likes of AFP’s Mr. Sykes.)

And while we are debunking things, let’s take a look at the statistic about how “low-income households spend an estimated 37 percent of their income on household energy bills."  Seriously?  The link supporting that stat takes you to an article that provides no support for the number.  But more to the point, how could that number even be possible?  According to the U.S. Department of Health & Human Services, the 2014 Poverty Guideline for a family of four is $23,850, of which 37% would be $8,824.50, which works out to a monthly energy bill of $735!

Once again, the data tells a very different tale.  According to the U.S. Energy Information Administration, the average U.S. household spends roughly $2,000 per year on all household energy (excluding transportation) and that figure is across all households, not just low income households.  (In California, that average is below $1,500 thanks to energy efficiency measures adopted in the state.)

This is how the battle against solar is being fought: with misleading claims and made-up statistics.

But here is the reality: as solar gets cheaper, and innovative programs like solar loans and HERO PACE financing become widely available, more and more people will realize that they can afford solar and will jump at the chance, rich and poor alike. 

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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