AB 327 (Perea)

Fact Sheet on California’s Newest New Energy Metering Law - AB 327  

Updated October 14, 2013

How would AB 327 impact Net Energy Metering in California?

AB 327 would effectively have three main impacts on California’s NEM program. 

First, AB 327 would remove the December 31, 2014 “cliff” on the California NEM program by codifying the 5% Net Energy Metering (NEM) cap with aggregate peak load as defined by the California Public Utilities Commission (CPUC) decision issued March 2012. The 5% cap would be converted into a cumulative capacity limit, instead of a percentage, so that the three investor owned utilities would be required to sign up new NEM customers until the following cumulative installed capacity limits are hit, or July 1, 2017, whichever comes first:

  1. San Diego Gas & Electric: 607 MW
  2. So Cal Edison: 2,240 MW
  3. PG&E: 2,409 MW

Second, AB 327 would direct the CPUC to create an uncapped “NEM 2.0” program after the newly defined cap is hit. The bill would leave details to the CPUC but includes five important mandates:

  • That the new program continue to grow customer-sited solar “sustainably”.
  • That disadvantaged communities be included in the program.
  • That the future program be uncapped and unlimited in terms of both capacity installed and numbers of systems connected to the grid. The 1 MW individual system size limit would also be lifted.
  • That the total benefits of the program to all customers be approximately equal to costs.
  • AB 327 would not necessarily extend the same consumer protections from anti-solar taxes and charges that current NEM customers enjoy, but it would require that any such charges be defined by a rule-making proceeding that includes all of the utilities at once, i.e. not via individual rate cases every three years.

Third, AB 327 would direct the CPUC to determine a “transition period” within which all customers who signed up for NEM within the 5% cap are eligible to continue their current NEM contract or tariff. In other words, the bill would direct the CPUC to decide how long the existing 160,000+ NEM customers, plus all those who sign up before “NEM 2.0” kicks-in, can be eligible to receive full retail credit and avoid charges and fees that aren’t levied on non-solar customers.  This transition period must be determined by the CPUC by March 31, 2014.

 What other elements of AB 327 could have an impact on solar in California?

  • AB 327 would flatten rates by lowering upper tier rates and raising lower tier rates.
  • AB 327 would allow CPUC to levy up to $10/month fixed charge on all residential ratepayers, not just solar customers. This charge would be allowed, not mandated, and is a ceiling not a floor.  The CPUC would be ordered to consider other alternatives to a fixed charge.
  • AB 327 would prohibit mandatory or default time-variant (e.g. time of use) pricing for residential customers but it would allow the CPUC to require it starting January 1, 2018.
  • AB 327 would establish the current 33% by 2020 Renewable Portfolio Standard as a floor, allowing utilities or the CPUC to go beyond 33%.

 How does AB 327 impact municipal utilities and community choice aggregators?

All changes to rate and billing design would not impact municipal utilities as they are not regulated by the CPUC. However, the NEM cap and directive to establish a new NEM program would apply to all community choice aggregators as well as municipal utilities with greater than 100,000 customers, with the exception for customers of LADWP who have never come under the state’s NEM laws.  

Where is AB 327 right now? What happens next?

AB 327 was signed by Governor Brown on October 7, 2013. In signing the bill, the governor issued a strong signing statement declaring his intention to protect existing NEM customers. AB 327 will become law on January 1, 2014. The CPUC will have 90 days to make a decision related to the grandfathering of existing NEM consumers.