Draws on the NEM 2.0 Lookback Study, existing legislation, and findings from previous NEM proceedings to inform the NEM 2.0 successor tariff.
The White Paper provides an overview of the existing misalignment between the bill savings NEM customers receive and the corresponding impact or value of this generation to the utility (avoided costs),and it proposes solutions for a path to eliminate these cost shifts. It illustrates that immediate elimination of the cost shifting under the current NEM program would be very difficult to achieve, as it would cause severe bill impacts and could make it challenging to maintain a viable customer-sited renewable generation industry in the state.
The primary mechanism for an NEM successor examined in the white paper is the application of a Market Transition Credit (“MTC”) which is focused on BTM solar and is structured as a $/kWh credit applied to all generation. The MTC is designed to provide a reasonable return on investment for the average customer-generator, considering the bill savings provided and the remaining savings required to meet a desired payback period.
The MTC would be fixed over a defined payback period for each NEM vintage, based either on annual vintages, number of subscribed customers, or the volume of adoption of customer-sited generation.
In addition to the MTC, other tools are presented as possible ways to ease the transition to a more equitable NEM tariff such as dynamic rates, a grid access charge a, and the reform of demand charges.
