S. E. Williams |
In February, Californians owed about $1.25 billion in past due utility bills and the California Public Utilities Commission (CPUC) sanctioned a plan to assist utility customers behind on their payments.
The plan issued June 21, suspended disconnections for the past due bills for a period of three more months, giving energy utilities enough time to enroll and notify residential customers that, should they need it, they have two years to pay off energy bill debt.
In addition, the Congressional Research Service reported in May that as of the fourth quarter of 2020, household debt (including past due utility bills) totaled $14.6 trillion, on par with the 2008 peak of the Great Recession.
Total Household Debt and Its Composition
1st Quarter 2006 through 4th Quarter 2020
Facing this reality, it is understandable there is a growing concern over the expanding inequity related to how low-income customers may feel as though they are being unfairly held hostage to the growing impact of NEM subsidies.
The increasing inequity
About 70 percent of solar customers are in the wealthiest 40 percent of society. Subsidies for just one of these customers could range between $540 and $840 per year according to the Brookings report.
When you multiply even the least amount ($540) by the average lifetime of a rooftop solar system estimated at 25 years times the number of systems deployed across the state, it is easy to see the magnitude of the cost shift and the impact on the poor it could have in the coming years as more people deploy solar and fewer and fewer customers are left to share the burden of NEM subsidies.
Concerns over NEM disparities are nothing new. A 2013 study by Energy+Environmental Economics and commissioned by the CPUC estimated that NEM would result in a cost shift of $1.1 billion dollars annually by 2020 from solar to non-solar customers—many of them among the least able to afford it– if NEM policies are not reformed.
NEM 2010 Household Income by Installation Year
Compared to California Median Income
In 2013, The outsized cost shift was unacceptable to the CPUC and adjustments were made in NEM 2.0, however, the cost shift has continued to expand over time.
How we got here
There were 10,000 home-based solar systems in California when NEM was implemented in 1995. Today, solar has exploded in the state. California now leads the world in this regard.
Solar now produces about 15 percent of the state’s energy while at the same time, the cost of rooftop solar technology has decreased significantly—by some estimates, as much as 70 percent.
All these factors leave critics questioning how much longer the state can justify the inequities of NEM subsidies being carried by the state’s poorest residents while the benefits of the technology are being enjoyed by those with means.
Given California’s clean energy progress, dramatically falling rooftop solar prices, and policies that assure continued growth of rooftop solar in the state, it is difficult to rationalize why these subsidies should remain. This is especially true when people are crying out for equity and an end to such institutional and systemic disparities.
In April, AB 1139, “the Utility Profit Grab” bill, was introduced in the Assembly. It called for the repeal of the current Net Energy Metering tariffs and required the CPUC to establish a new version of Net Energy Metering (NEM 3.0) and other new programs.
The bill called for crediting excess energy generated by solar systems at the wholesale rate, charging customers for electricity imported from the grid at the full retail rate, and it required a grid access charge for all electricity consumed—including all transmission and distribution charges. The legislation died on the Assembly floor in early June.
The bill’s failure, however, did not end the drive for change as the CPUC was moving forward in its quest for a viable solution to NEM subsidy concerns.
CPUC Seeks Solution
The California Public Utilities Commission is in the process of re-evaluating the current Net Energy Metering (NEM) program and will decide on a new one. It will be established as NEM 3.0.
As part of its deliberation, the CPUC is considering several proposals,-some are solar friendly while others are less so.
Regardless, the agency required all proposals submitted for consideration to adhere to guiding principles it put forth. Proposals were required to ensure equity among customers, enhance consumer protection measures, maximize the value of customer-sited renewable generation to all customers, ensure transparency to all customers, and coordinate with current California energy policies including California’s 2018 landmark policy SB100, which requires renewable energy and zero-carbon resources supply 100 percent of electric retail sales to end-use customers by 2045.
CPUC’s timeline for change
On June 24, the Commission voted to approve major updates to the calculator that will be used to evaluate every NEM proposal.
On August 27, the Commission held opening briefs on proposals and replies were due by September 10.
Now the state must wait for the Commission to issue its proposed decision by December 9, and a final decision regarding NEM 3.0 is expected January 8, 2021.
The IE Voice and Black Voice News will continue to follow this story.
Stephanie Williams is executive editor of the IE Voice and Black Voice News. A longtime champion for civil rights and justice in all its forms, she is also an advocate for government transparency and committed to ferreting out and exposing government corruption. Stephannie has received awards for her investigative reporting and for her weekly column, Keeping it Real. Contact Stephanie with tips, comments. or concerns at firstname.lastname@example.org.