California Senate Committee Proposes Net Metering Compromise

| About: PG&E Corporation (PCG)
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By Ucilia Wang

A California state Senate committee agreed to raise a metering cap on Tuesday, but reduced it from the previously proposed 10 percent to 5 percent instead.

The Energy, Utilities & Communications Committee vote 9-1 to pass the bill known as AB560, though the reduction in the proposed cap indicated that lawmakers are heeding concerns raised by utilities.

Net metering allows a utility's customers to get credits on their bills for producing more renewable electricity than what they could use at home or business. The excess electricity goes to the grid.

The practice is good for all kinds of renewable power, though net metering is considered a particularly important incentive for encouraging home and business owners to install solar panels.

In fact, the reason state lawmakers are considering an increase of the net metering cap is because the cumulative amount of solar energy generating capacities in the territory served by the Pacific Gas and Electric Co. (NYSE:PCG) could reach the 2.5 percent cap next year, the state said.

Without raising the cap, PG&E and other utilities or electric cooperatives would stop accepting new participants in the net metering program once the total amount of renewable energy generated by net metering customers in each utility's service area hits 2.5 percent of the load (aggregate customer peak demand).

The Senate committee began considering AB560 after the state Assembly approved it in May. In the Assembly's version, the cap would be raised from the current 2.5 percent to 10 percent.

Solar companies and advocacy groups such as Vote Solar Initiative support the 10 percent cap. Utilities have expressed concerns that an expansion of the net metering program would end up increasing the monthly bills of customers who couldn't afford or don't want solar panels in order to support those who could.

The utilities want lawmakers to wait until the California Public Utilities Commission completes a cost-benefit analysis of the program.

In the current practice, utilities pay net metering customers the retail rates for the excess electricity. That is too high, said a report by the Senate committee. The report also pointed out that Californians already get good deals to go solar: They can get the state rebate and a 30 percent federal investment tax credit.

PG&E customers are generating more solar power than those served by Southern California Edison or the San Diego Gas & Electric. About 123 megawatts of systems have been installed, compared with 81.2 megawatts for Edison and 18.6 megawatts for SDG&E, according to the California Public Utilities Commission, which oversees the California Solar Initiative.

The net metering rule also applies to wind energy producers or those who own a combo of wind and solar systems. Only solar, wind and hybrid projects under 1 megawatt qualify for net metering under the current law.

The bill now moves to the Senate Appropriations Committee.