On December 15, 2022, the California Public Utilities Commission (CPUC) unanimously approved revised net metering rules that will reduce the rates paid to new rooftop solar customers.[1] California first adopted net energy metering (NEM) incentives more than 20 years ago, allowing 1.5 million customers to install solar panels. The CPUC first proposed revisions in December 2021 but shelved them based on stakeholder criticisms. Regulators said the newly approved net metering rules, which were initially released in November 2022, were designed to adapt the solar market to the changing grid. “[T]he electric grid is now powered largely by renewable systems, both large and small, and there are even moments when we need to curtail, meaning shut down, clean renewable generation because we have too much on the grid at once,” CPUC President Alice Reynolds said. According to the commission, the aim of the new rules is to shift the use of solar-generated power to the evening hours when demand rises, but solar generation ceases.

The previous NEM framework gave customers a credit at the retail rate for energy that they provide to the grid. The new framework, called net billing, includes a retail export compensation rate that is based on the value that behind-the-meter generation provides to the grid and electrification retail import rates that have high differentials between winter off-peak and summer on-peak rates. The intention is to encourage more customers to install solar paired with storage, which will draw energy during the day and dispatch it at night. Customers installing solar with storage will save about $136 a month on their electricity bill, compared to about only $100 for households with only solar panels. Current net metering customers will not be affected by the new rules.

[1] https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M499/K921/499921246.PDF