Opening Briefs Filed on Reforming NEM

The following is a brief summary of the parties' opening briefs:

Agricultural Energy Consumers Association ("AECA") and California Farm Bureau Federation ("CFBF")

• The AECA and CFBF recommend that agricultural customers should not be allocated any additional cost responsibilities since agricultural customers on Net Energy Metering Aggregation (“NEMA”) tariffs pay nearly all the costs of distribution, transmission and nonbypassable charges due to the rate design of agricultural schedules.
• The Commission should respect the substantial investment in new generation that existing agricultural NEM and NEMA customers have made through continuation of the terms of the NEM 1.0 and 2.0 tariffs that they are currently on.
• The Commission should provide a level of certainty about investment return that is commensurate with the risk. For this reason, the Commission should provide a 20-year term on the NEM 3.0 tariff.
• NEMA customers should continue to net quantities of generation against aggregated loads, identical to the arrangement afforded to other NEM customers whose generation resources are behind the meter. Public Utilities Code (“PUC”) Section 2827(h) specifically provides that NEM accounts are to be aggregated physically, not just financially.
• If the Commission chooses to compensate NEM 3.0 customers at the short-run market prices, these customers should also be exempt from the Power Charge Indifference Adjustment (“PCIA”).
• NEM/NEMA customers should pay a variable charge for the distribution grid.
• The Agricultural Parties believe TURN’s proposal to impose “taxes” on future NEMA customers’ internal usage violates the fundamental principle that customers should not be charged for reducing consumption from the grid regardless of means. TURN’s Market Transformation Credit (“MTC”) proposal creates a complex and inefficient web of subsidies and cross-subsidies that would be impractical to implement.

Albion Power Company ("Albion")

• Albion believes the proposals of the Joint Utilities, CalAdvocates, TURN, and NRDC do not provide the inelastic relationship between consumer solar adoption and the NEM tariff needed to continue rooftop solar growth per PUC Section 2827.1.
• Rooftop solar is defined as load reduction and should remain at retail rate until such time that it is reclassified.
• Devaluing net metering is inconsistent with the state’s policy to achieve sound environmental planning, the state’s wildfire mitigation plan, and presents a bias against public safety. There must be culpability for policy that results in a future wildfire started by unnecessary transmission.
• California should allow the solar credits produced by residential and commercial rooftops to count toward the IOUs’ Renewables Portfolio Standard (“RPS”) goals. This omission reduces the marginal value of customer-sited solar resources due to expected daytime hour kWh saturation from larger solar farms.

California Building Industries Association (“CBIA”)

• CBIA supports the proposal by CCSA to establish a community solar program –described as a Net Value Billing Tariff (“NVBT”) – in California as a means for supporting the State’s energy policy goals and related building code requirements.
• CBIA agrees that these energy policy goals and related building code requirements, which expand to other building sectors over the course of this decade, cannot be met alone with behind-the meter solar generation due to physical constraints.
• CBIA agrees that the lack of a viable community solar option for builders is a severe disconnect between California Energy Commission (“CEC”) policies and current programs authorized by the Commission, and that the current programs available in investor-owned utility (“IOU”) service territories are not sufficient to meet the building code’s needs for community solar as they are limited in capacity, provide no assurance of customer savings, and are only available to bundled IOU customers.

California Energy Storage Alliance (“CESA”)

• CESA believes that approaches to incentivize storage attachments to NEM systems should not be prescriptive or tied to mandatory transitions.
• NEM sizing limitations should be increased or removed to support resiliency needs and accommodate future electrification.
• Retroactive policy changes and mandatory transitions for NEM 1 and 2 customers should be avoided in lieu of encouragement to voluntarily move to NEM 3.
• Proposed fixed charges put an unfair burden on NEM systems compared to other load-reducing measures and infringe on a consumer’s right to self-supply electricity.

Californians for Renewable Energy (“CARE”)

• CARE’s proposal is for a small renewable qualifying facility (“QF”) NEM customer-generator tariff or power purchase agreement for facilities up to 3 megawatts.
• CARE requests that the parties address the anticompetitive behavior by the IOUs and the revolving door between the Commissioners and the IOUs in their reply to this brief.

California Storage and Solar Association (“CALSSA”)

• CALSSA proposes a NEM-3 tariff to reduce the export compensation rate, with a reasonable glidepath to step the rates down based on the achievement of adoption targets.
• CALSSA proposes that NEM credits be based on a percentage of retail rates, with the relative pace of reduction between the IOUs informed by the Avoided Cost Calculator (“ACC”). As an alternative, CALSSA encourages the Commission to consider export compensation step-down based on the structure of a glidepath.
• CALSSA’s proposal includes a suite of income-qualified provisions, for customers under Virtual Net Energy Metering (“VNEM”), California Alternate Rates for Energy (“CARE”) and Family Electric Rates Assistance (“FERA”) tariffs. The proposal also includes customer experience provisions that seek to reduce unexpected end-of-year bills and increase the accuracy of savings estimates while reducing project costs.
• CALSSA believes that the proposals of pro-transmission parties (those who oppose customer solar in favor of renewable energy generated outside of communities and delivered via increased grid infrastructure) should be rejected because of the following fatal flaws: (1) Fixed solar fees violate state and federal law and are bad policy; (2) The pro-transmission parties’ combination of fixed solar fees and rate requirements are unprecedented and would launch California’s IOUs to the top of the list in terms of the highest unavoidable charges for solar customers in the nation; (3) Impair the ability to install solar and storage, contrary to state law; (4) Create significant consumer protection concerns; (5) No transition period, long implementation timelines, and never-ending litigation; (6) Reverse progress in equity; (7) Unreasonable cost-recovery periods and reliance on modeling with significant analytical gaps; and (8) Fail to understand the realities of the energy storage market.

California Wind Energy Association (“CalWEA”)

• CalWEA believes that the Commission’s successor tariff should follow the joint recommendations of the independent parties to meet the Commission’s guiding principles.
• The Commission should reject any argument that a high rate of rooftop solar growth is necessary to achieve the states SB 100 goals.

Coalition of California Utility Employees (“CUE”)

• CUE believes the Commission should use the Rate Impact Measure (“RIM”) test as the primary method for choosing a successor tariff because it measures impacts on all customers. The Total Resource Cost (“TRC”) test is only useful for choosing the better proposal among similar proposals, but it does not measure impacts on all customers.
• The “growth” of rooftop solar is not an appropriate criterion for choosing a successor tariff. Sustainable growth is the criterion required by law.
• The export rate should be based on the most recent ACC and market prices where applicable.
• The import rate should be based on time-of-use (“TOU”) rates.
• Successor tariff customers should pay a GBC to cover their fair share of fixed costs.
• CUE believes NEM 1.0 and 2.0 customers should be transitioned to the successor tariff.

Coalition of Community Solar Access (“CCSA”)

• CCSA recommends that the Commission should approve CCSA’s NVBT as proposed.
• CCSA’s NVBT proposal addresses significant gaps in Commission-approved program offerings that currently result in profoundly unequal and inequitable access to distributed energy resources (“DER”).
• California’s current suite of tariffed programs supporting access to DER leaves millions of California’s energy consumers without options to access DER.
• CCSA believes its proposal expands access to DER to Californians who currently have no pathway to access DER and advances California’s energy efficiency (“EE”) requirements.
• The features of CCSA’s NVBT proposal address the defects in current Commission-approved programs resulting in scalable, universal, and ubiquitous program that aligns resources with grid needs.
• CCSA’s proposal advances the CEC’s EE building requirements by operationalizing Title 24 compliance.
• CCSA’s proposal is the most cost-effective proposal on the record using the Standard Practice Manual (“SPM”) test.
• The record demonstrates that CCSA’s proposal is the most well-balanced and cost-effective proposal on the record of this proceeding. Parties broadly agree that the SPM test should be utilized in assessing parties’ proposals.
• Concerns raised by other parties in testimony regarding CCSA’s proposal either have been addressed, lack merit, or can be addressed during implementation.
• CCSA’s tariff advances consumer protection through innovative program elements.

Foundation Windpower, LLC (“Foundation”)

• The NEM 2.0 Lookback Study confirms that BTM wind under the current NEM tariff is cost-effective when deployed by medium to large non-residential customers.
• The NEM 2.0 Lookback Study confirms that bill payments on non-residential participating customers, using wind and other technologies, under the current NEM tariff exceed the cost of service.
• The Lookback Study reports that non-residential customer bill payments, on average, exceed their cost of service.
• The Lookback Study’s cost of service analysis applies with even greater force to medium and large commercial, industrial, and agricultural customers deploying DER systems equal to or greater than 1.0 MW.
• The Commission should reject precipitous adoption of the Joint Utilities and CalAdvocate’s sweeping proposals for all non-residential customers or, at the very least, rely on the Lookback Study’s cost-effectiveness and cost of service analysis and adopt the Foundation proposal.

GRID Alternatives, Vote Solar, and Sierra Club

• These parties are mostly focused on ensuring that environmental and social justice communities, including low-income households, have access to distributed generation and storage.
• The parties recommend adopting Policy A to ensure low-income customers have the opportunity to access the bill savings and resilience benefits associated with the NEM 2.0 tariff and increase demographic parity.
• They recommend adopting Policy B to provide a pathway for these parties to own and operate distributed generation and storage projects in their communities and to their benefit.
• The parties reject the Joint Utilities’ income-qualified proposal and CalAdvocate’s recommendation that third-party owned models should be disallowed for low-income participants.
• The parties recommend modifying and adopting the Joint Utilities’ “Savings Through Ongoing Renewable Energy (“STORE”) pilot, incorporating an underlying tariff that is accessible to low-income customers with a household income equal to or less than 80% of the area median income, and either incorporating a third-party program administrator or combining the STORE program with existing clean energy programs.

Independent Energy Producers Association (“IEP”)

• IEP supports the Joint Recommendations presented by the independent parties with one exception that the proposal does not eliminate the subsidies or level the payments made to the NEM solar facilities and grid-scale solar facilities.
• IEP recommends that Commission require the successor tariff customers pay a GBC to cover their fair share of grid costs.
• IEP believes the Joint Recommendations’ proposal fairly compensates successor tariff customers.
• The GBC should include, at a minimum, the following non-bypassable charges: (1) Public Purpose Programs; (2) Wildfire Fund Charge; (3) Nuclear Decommissioning; (4) Competition Transition Charge; (5) Reliability Services; (6) New System Generation Costs; (7) IOU securitization for costs relating to wildfires or other undercollections; (8) Energy cost recovery account (for PG&E) and PUC reimbursement surcharge.
• The Commission should adopt the interim transition tariff immediately as a step in the right direction.
• IEP would prefer a NEM successor tariff that focused more on fair competition in wholesale energy markets and on a NEM program that was more consistent with the least-cost dispatch approach of the California Independent System Operators (“CAISO”).

Ivy Energy

• Ivy Energy recommends rejecting the Joint Utilities’ “virtual tariff” consolidation proposal in its entirety.
• Ivy Energy recommends maintaining distinct VNEM and NEMA tariffs as they serve different purposes and customer classes.
• Ivy Energy recommends affirming that renters have not had equitable access to the benefits of NEM as compared to property owners.
• Ivy Energy recommends establishing a VNEM carveout under the current NEM 2.0 regime in the Final Decision as an intentional Environmental & Social Justice (“ESJ”) policy designed to accelerate deployment of DERs for customers who do not own property (renters).
• Ivy Energy recommends instituting a VNEM 2.0 trigger of 10,000 MW for multifamily buildings; once that trigger has been reached, then the Commission should require the transition to a future DER grid services tariff.
• Ivy Energy recommends executing a marketing campaign that is designed to reach multifamily buildings and renters in support of ESJ goals and California’s Title 24 building code.
• Ivy Energy recommends ensuring customers that are eligible for the low-income CARE discount in a multifamily building are able to retain that discount when the multifamily building installs a shared DER asset.
• Ivy Energy recommends making other Benefitting Account List (“BAL”) process improvements to VNEM to enhance backend implementation and the customer experience.

National Resources Defense Council (“NRDC”)

• NRDC believes the existing NEM 1.0 and NEM 2.0 tariffs have caused undue burden on non-participants through a substantial cost-shift.
• NRDC believes wealthier household disproportionally participate in NEM, while lower and middle-income households are conspicuously underrepresented.
• Customer uptake in paired BTM solar-plus-storage systems has been minimal, and excessively skewed toward wealthier households.
• NRDC believes the current NME tariff is regressive and should be reformed.
• NRDC believes that claims by the solar industry that the dimension of the cost-shift are overstated and/or unsubstantiated are demonstrably incorrect. The ACC is the right tool to determine NEM benefits.
• NRDC believes the successor tariff should have a net billing structure.

Public Advocates Office at the California Public Utilities Commission (“CalAdvocates”)

• CalAdvocates believes the Lookback Study and other studies provide ample data proving the current NEM tariff is not cost effective and unreasonably burdens non-NEM customers.
• The Commission should use the 2021 ACC and the RIM test to analyze the program element that CalAdvocates proposes.
• The Commission should adopt a successor tariff that will fairly compensate customers with BTM generation without unreasonably burdening all customers.
• CalAdvocates believe its proposal best balances equity concerns and the need to provide sustainable growth to BTM generation in California.
• The current NEM tariff creates barriers to California’s greenhouse gas (“GHG”)reduction goals targeting electrification of buildings and transportation.

Pacific Gas and Electric Company (“PG&E”), San Diego Gas and Electric Company(“SDG&E”), and Southern California Edison Company (“SCE”), together the “Joint Utilities”)

• The Joint Utilities recommend the Commission use the Lookback Study, other studies concerning California’s NEM program, and the experience of other states that have reformed their NEM programs to inform its analysis in this proceeding, all of which reflect the need for reform.
• The Joint Utilities recommend analyzing the parties’ proposals using the Commission’s SPM, and in particular, the Participant Cost Test (“PCT”) and RIM Test results, as they are the most informative in the context of this proceeding and are best suited to ensure compliance with the Guiding Principles.
• The Joint Utilities recommend reforming California’s NEM program for new NEM customers through adoption of the Joint Utilities’ proposal, which includes: (1) A cost-based residential default rate for residential customers, including TOU rates for three periods: on-peak, off-peak and super off-peak for the summer and winter seasons; (2) A net billing structure in which all energy delivered to the customer is billed at the retail rate, and all energy exported to the grid is compensated at an export compensation rate (“ECR”) set at the avoided cost based on a one-year forward estimate in different time periods; (3) A GBC-based on solar system size and updated annually, designed to recover distribution, transmission and non-bypassable charges (“NBCs”) that might otherwise be avoided by solar customers; and(4) The netting of a customer’s consumption and exports on an instantaneous basis during hourly TOU periods, with monthly true-ups.
• The Joint Utilities recommend including as part of the Reform Tariff, the utilities’ proposed Income Qualified Discount (“IQD”) to reduce the GBC for income qualified customers, in conjunction with export compensation at the full (non-discounted) avoided cost.
• The Joint Utilities recommend adoption of their pilot called the STORE for income-qualified customers.
• The Joint Utilities recommend requiring NEM customers’ facilities be equipped with dynamic load management capabilities and cybersecurity configurations to (i) allow the customer to permit the IOU to control the facility for purposes of curtailment and dispatch and (ii) protect the grid from cyber-attack.
• The Joint Utilities recommend transitioning to the Reform Tariff promptly after the final decision, allowing a buffer period (three months for residential; five months for non-residential) for customers in the contracting process at the time of final decision.
• The Joint Utilities recommend adopting their consumer protection proposal, which includes, among other things: (i) updates to the California Solar Consumer Protection Guide and other materials; (ii) an update to the current Consumer Protection Guide by November 1, 2021; and (iii) a robust plan of marketing, education and outreach (“ME&O”).
• The Joint Utilities recommend providing for the IOUs to recover the subsidies emerging from the Income Qualified Discount proposal and the STORE Program, as well as the costs for implementation and ME&O, through appropriate balancing and memorandum accounts.
• The Joint Utilities recommend reforming VNEM and NEMA tariffs such that exports are compensated at avoided costs.
• The Joint Utilities recommend adopting their proposed Value of Distributed Energy (“VODE”) tariff option, for future customer use cases requiring a dual-meter option to provide information to facilitate more advanced uses of distributed generation such as demand response or microgrid participation.
• The Commission’s successor tariff must require the customer-sited distributed generation (“DG”) industry grows in a way that maintains its own viability. In other words, the growth should be self-sufficient and not dependent upon a cost shift.
• The Joint Utilities also discuss legal framework that are pertinent to NEM reforms: (1) NEM reform must abide by federal law requiring that NEM customers be net energy consumers to avoid implicating federal jurisdiction; (2) California’s implementation of NEM overcompensates customers as compared to what would be allowed under federal law, reflecting areas ripe for reform; (3) To avoid federal jurisdiction, NEM systems should not be sized to exceed onsite load; (4) Payment for annual excess energy exports does not conflict with the net consumer requirement, and such compensation does not render monthly exports RPS-eligible; (5) Assembly Bill 327, the Ratepayer Reform Act provides policy directives that, based on rules of statutory construction, must be read in harmony, and require elimination of the cost shift.

Protect Our Communities Foundation (“PCF”)

• PCF believes the total benefits of customer-sited renewable generation under the current NEM tariffs, including societal benefits, outweigh the total costs.
• The Commission should adopt a successor tariff with a reasonable payback period to ensure that NEM solar continues to grow sustainably.
• The Commission should use the cost-of-service analysis as the basis for establishing the cost of NEM solar.
• The Lookback Study underestimates the benefits of BTM generation. ACC does not adequately quantify avoided transmission costs and does not quantify resiliency benefits of NEM solar.
• The Commission should use the Societal Cost Test (“SCT”) variation of the TRC test to analyze the cost-effectiveness of the successor tariffs.
• The Commission should evaluate successor tariffs based on whether customers would receive an attractive economic value proposition.
• Making NEM solar prohibitively expensive conflict with the Commission’s goal of increasing equity.
• Maintaining the current NEM tariffs would promote California’s and the Commission’s electrification goals.
• The Commission should retain the current NEM tariff with modifications to incentivize storage and more equitable access.
• The Commission should adopt modified TOU rates to increase incentives for customers to maximize the benefits of their solar and storage systems to the grid.
• The Commission should promote adoption of and expand access to storage and should address equity concerns by expanding access to the benefits of NEM 2.0.
• The Commission should not adopt a regressive and unfair grid benefits or grid access charge.
• The Commission should adopt the proposal submitted by the PCF, and in the alternative, it should adopt CALSSA’s proposal.

Sierra Club

• The Sierra Club believes the Lookback Study’s cost-effectiveness results and impact of the transition from NEM 1.0 and 2.0 on residential solar deployment support a glidepath to avoided cost compensation.
• The Lookback Study’s cost-effectiveness results support moving existing NEM customers to electrification-friendly rates.
• The record demonstrates that a glide path is needed to avoid market shock and ensure customer-sited renewable generation continues to grow sustainably.
• The Commission should set the initial export credit at electrification rates though a net billing mechanism which, unlike net metering, would not escalate over time.
• The Commission should adopt capacity-based step-downs to avoided cost with a date certain set three months in advance of the next projected step-down.
• As agreed by multiple parties to this proceeding, the Commission should transition existing NEM customers to electrification-friendly rates.

Small Business Utility Advocates (“SBUA”)

• SBUA believes the Commission should adopt SBUA’s NEM 3.0 proposal.
• The Commission should maximize the overall cost-effectiveness of the NEM program and should open Phase 2 to address NEM generation charges to ensure recovered costs reflect customers’ burden on the shared system.
• SBUA believes that rate design (moving to TOU rates that follow marginal costs) will improve RIM scores even without NEM reform.
• The Commission should reject instantaneous netting.
• The payback period is the best measure for estimating NEM program sustainability.

The Solar Energy Industries Association and Vote Solar (“SEIA-VS”)

• SEIA-VS request that the Commission adopt its residential general market tariff proposal, which is comprised of the following elements for residential customers who are not low-income: (1) For imports from the IOU, the residential NEM customers of PG&E and SDG&E would be required to take service from one of the IOU’s available untiered TOU rates designed to promote beneficial electrification. This requirement would take effect at the outset of the NEM 3.0 program. The residential customers of SCE would continue to be allowed to use the residential default TOU rates, as well as SCE’s electrification rate, because the design of SCE’s rates has more aggressive TOU pricing. If there is a delay in the approval of an electrification rate for SDG&E, the existing schedules DR-SES and EV-TOU-5 should be made available to the initial NEM 3.0customers in SDG&E’s territory; (2) Compensation for exports for residential DG customers under NEM 3.0 would be gradually reduced over time from the level set in the current NEM 2.0 tariff, in a series of steps until the benefits (avoided costs, plus a resiliency adder for solar + storage systems) of BTM distributed generation approximately equals the cost; (3) Interval netting of imports and exports should be retained, with the continued use of today’s one-hour interval for residential customers; (4) NEM 3.0 customers should be billed on a monthly basis, with the option to retain the current annual billing. The true-up of NEM charges and credits should continue to occur annually, with all customers moving to an annual true-up in April each year; (5) A customer should be allowed to oversize their system by 50%, with annual net surplus generation compensated at avoided costs.
• The Commission should retain the current NEM 2.0 compensation structure for all non-residential customers.
• The Commission should adopt the proposals for Environmental Justice and Social Justice Communities, including low-income customers, advanced by Grid Alternatives, the Sierra Club and VS.
• The Commission should adopt an implementation period for the successor tariff which allows sufficient time for (1) the required regulatory process; (2) customer education; (3) industry transition; and (4) billing system changes, approximately 14 months.
• The Commission should reject all proposals to modify the terms and conditions pursuant to which customers under the NEM 1.0 and NEM 2.0 tariffs take service.
• The Commission should allow all NEM customers in all three IOU service territories, to elect Critical Peak Pricing or Peak Day Pricing rates on any rate option that they select.

The Utility Reform Network (“TURN”)

• TURN recognizes that the Commission’s failure to adopt meaningful past reforms has created a crisis that must be addressed now.
• TURN believes that proposals to link customer export credits to retail rates would result in escalating cost shifts over time and do not align with avoided cost values.
• TURN believes export compensation should not be aligned with levelized Avoided Cost values.
• Solar parties fail to incorporate any adjustments to export compensation in the event that the Investment Tax Credit is extended.
• Compensating self-consumption at full retail rates would increase cost shifting over the life of the system.
• Grid charges proposed by the IOUs, SBUA, and CalAdvocates would less accurately assign cost responsibility.
• Market Transition Credit proposals by other parties are less developed and cannot easily accommodate external funding sources.

Walmart Inc. (“Walmart”)

• The Lookback Study’s results are fundamental to the determination of the final results in this proceeding.
• The Lookback Study’s analytical methodology resulted in meaningful conclusions with regard to the contributions that nonresidential customers make to their cost of service.
• Walmart believes that the support for a nonresidential GBC was not widespread.
• Cost causation is a bedrock principle of Commission ratemaking.
• The GBC would deter future investment in NEM by non-residential customers.
• The complexity of the nonresidential GBC will also deter NEM renewable investments.
• The proposed nonresidential GBC would increase existing subsidies.
• If the Commission decides to approve a nonresidential GBC, revisions to the Joint Utilities’ proposal are necessary.