On December 13, 2021, the California Public Utilities Commission (CPUC) issued a proposed decision to revise the current net energy metering (NEM) framework and replace it with a net billing tariff.[1] In 2016, the CPUC adopted the current NEM, which gives customers a credit at the retail rate for energy that they provide to the grid. However, the proposed decision determined that the current NEM "negatively impacts non-participating customers; is not cost-effective; and disproportionately harms low-income ratepayers." According to the agency, the new proposed decision would adopt more accurate price signals that will promote the higher installation of customer-sited storage, helping the state decrease its dependency on fossil fuels during the early evening hours when solar output is low but demand is high. Under the net billing tariff proposed by the CPUC, new solar owners will be compensated for their excess electricity sent to the grid using an avoided cost calculator, which is lower than the current incentives.

The CPUC also proposed creating a Market Transition Credit of up to $5.25 per kW for residential solar plus storage and solar-only systems. The credit would continue at this level for four years, after which it would begin to decline by 25% a year. The proposal would also put in place a monthly residential Grid Participation Charge of $8 per kW of installed solar. The proposed decision would also create an Equity Fund with up to $600 million to improve low-income customer access to distributed clean energy programs with strong consumer protections. The proposed decision is now open to public comments, and the proposal is on the CPUC’s agenda for January 27, 2021.

[1] https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M430/K903/430903088.PDF