Net Metering Cap Clarified by California Public Utilities Commission

In a huge win for the solar industry, the California Public Utilities Commission voted unanimously to issue a decision that clarifies the calculation of the California's five-percent Net Metering cap.  Net Metering ("NEM") allows customers to earn credit for excess solar electricity they produce that is distributed to other customers on the grid.

Electric utilities are only obligated to offer Net Metering to customers until the amount of installed solar capacity equals five percent of the utility’s “aggregated customer peak demand.” Prior to the CPUC's decision, electric utilities interpreted “aggregate customer peak demand” to mean the coincident system peak demand, or the highest demand from all customers at any one time.  Under this interpretation, many utilities would not accept new Net Metering customers potentially as soon as 2013 and the viability of rooftop solar would be severely threatened. The CPUC decision clarifies that aggregate customer peak demand means the aggregation, or sum, of individual customers’ peak demands. This clarification doubles the amount of solar systems that can benefit from Net Metering, providing the benefits of solar energy to many more customers -- a huge win for the solar industry.

CPUC Opens New Proceeding on Impacts of Net Metering

However, the CPUC decision also opens a proceeding to examine the costs and benefits of Net Metering for non-participating customers and consider possible revisions to the Net Metering program. This will have a huge impact of the continued success of the solar industry in California and bears close monitoring.

New Net Metering rules must be adopted by January 1, 2015 or the Net Metering program will be suspended.