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First California utility hits net metering cap: Impact on New Solar Customers?

PG&E in Northern California is in line to be the next to hit the 5% cap…. It was only a matter of time before SDG&E hit the cap after sounding the alarm a year ago that net metering applications were piling up fast.

How will PG&E customers be impacted?

PG&E rate payers are also scheduled to transition from NEM 1.0 to 2.0 over the next couple months. Below is a summary of the changes:

As an investor-owned utility, PG&E will likely hit its cap in the next couple of months. Therefore, it will be the second utility in California to enter NEM 2.0 territory, which kicks in after the 5% penetration mark is reached. This means that new, more expensive rules will come into effect with customers who want to use net-metering being obligated to pay a little more.

Pursuant to rules set by the California Public Utilities Commission (CPUC), NEM 2.0 comes with a successor tariff for new users. Once PG&E hits the cap, those who want to use net-metering will have to:

  • Pay a one-time interconnection fee that is estimated between US$75 and US$150
  • Pay an estimated 2-3¢/kWh in “non-bypassable charges” for the electricity consumed from the grid
  • Go on a time-of-use (ToU) rate instead of the flat rate paid by most residential consumers each month

Note: Anyone who installs and commissions a PV system before the cap is reached will have their better net energy metering 1.0 rates grandfathered for the next 20 years and receive net energy metering 1.0 benefits for energy they produce.

PG&E is the second California utility to reach the cap. While such an event typically induces panic in solar advocates (as seen in states like Nevada and Massachusetts), California regulators acted swiftly enough to ensure a plan was in place for when the cap would be hit.  Under CPUC’s January decision, new net metering customers will be able to keep retail rate remuneration for energy exported to the grid after the cap is hit, but they will also pay a one-time interconnection fee between $75 and $150, a non-bypassable monthly charge ranging from $0.02/kWh to 0.03/kWh, and will be moved onto time-of-use rates.

The solar industry isn’t particularly worried about the impacts of a California utility hitting its net metering cap. Bernedette Del Chiaro, executive director of California Solar Energy Industries Association (CalSEIA), doesn’t anticipate any slowdowns in rooftop solar installations in SDG&E’s service territory after the cap is hit, according to PV Tech.

“If anything, we anticipate a return to growth as more consumers realize that NEM 2.0 isn’t a threat to the economics of solar and that now is just as good to go solar as ever,” she said.

The other two major California utilities, Southern California Edison and Pacific Gas & Electric, aren’t far behind SDG&E in reaching their own net metering caps. As of June 19, the last time PG&E’s net metering tracker was updated, the utility was about 289 MW away from reaching its 2,409 MW cap. SCE, which hasn’t updated its tracker since April, was about 621 MW away from its 2,240 MW cap.

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