AB 327 (Perea) just passed the Senate on September 9 with a vote of 27 to 6 on the floor. From here, the bill goes to the Assembly for an up or down concurrence vote before going to the governor's desk. The bill can not be changed at this point.
AB 327 is nothing short of a big, historic solar bill that continues to set a high bar. And, thanks to our joint efforts, the bill is stronger than when we first got engaged and, equally important, our coalition is stronger as well.
AB 327 was amended on the 9th to address two of CALSEIA's remaining concerns, namely the protections for existing customers against forced changes to their existing net metering agreements, and protections for future customers from anti-solar taxes and charges.
The bill directs the CPUC to finalize so-called "grandfathering" rules by March 2014 to minimize the uncertainty in our market between now and when the new rules are in place. There was a robust bi-partisan discussion on the Senate Floor about how existing customers should be protected and the governor's office has personally promised that "a deal is a deal" and will be honored at the PUC.
Second, the bill limits the forum for any additional fees or charges above and beyond what non-solar customers face to a proceeding that includes all three utilities. In other words, they can't try to sneak anti-solar charges within rate cases every three years on a utility-by-utility basis.
In the big picture, AB 327 removes the current 2014 cliff on net metering and codifies that another 5,500 MW of customer-sited solar can sign up for "Net Metering 1.0", i.e. full retail net metering, between now and July 2017. It directs the CPUC to create a new net metering program, "NEM 2.0", that is unlimited and that ensures that the customer-sighted solar market continues to grow. It also directs the CPUC to ensure that the new program spur customer-sited solar in disadvantaged communities.
On the flip side, the utilities are getting a lot out of this bill as well. They are getting the rate reforms they've wanted for several years. They are getting the authorization for the PUC to levy up to a $10 fixed charge on all residential customers, solar and non-solar alike. And we had to accept a lot of uncertainty within the actual bill, even as we strove for certainty in our market.
But it is critical that we acknowledge what this bill is: a breath of new life for rooftop solar and a transformative vision of making solar power an unbridled source of energy for our state in the near future.
Certainly, our work is cut out for us going forward. CALSEIA is going to have to unite and work together to ensure that the rules adopted by the CPUC over the next 24 months get the job done.
I want to commend the CALSEIA team, especially our lobbyist Will Gonzalez who opened doors and allowed us to work to not only pass this bill but get it into the strongest form possible.
Of course, AB 327 is a group effort and the companies who put the most into the effort, including SolarCity, SunRun, SunPower and Sullivan Solar, deserve a lot of applause, as does the work of Donne Brownsey on behalf of SEIA.
And, while we didn't get everything we wanted or even needed in this bill, we did end on a high note with a very active and engaged customer-base who we can work with and engage at the PUC.
Thanks again for all your help. Please feel free to call or email if you have any questions. We'll be setting up a time next week to make ourselves available to go through the bill in greater detail and discuss strategies moving forward. Stay tuned for more info.
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:
San Diego Gas & Electric: 607 MW
So Cal Edison: 2,240 MW
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.
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