California Legislature Passes AB 327 With Solar Provisions

The California legislature has passed Assembly Bill 327, a bill that would lift a pending suspension of the state's net energy metering program (NEM) at the end of the year, as well as a 5 percent cap on the amount of electricity that utilities would have to buy from renewable energy customers. It now heads to Governor Jerry Brown's desk, where it is expected to be signed into law in the coming days.

AB 327 has had an interesting history. It was initially seen as an attempt by California utility companies, namely Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison, to put a stop to the exponential growth of rooftop solar energy. Originally, the law included measures that would have made solar panel installation much less valuable to California customers, while also raising electricity rates for people who don't use a lot of energy. It accomplished these goals by giving the California Public Utilities Commission (CPUC) the authority to approve a flat $10 fee on all electricity bills to cover fixed costs, such as transmission and distribution.

It also has language that would allow the CPUC to approve a flattened rate structure, a major change to the way Californians pay for their energy. After a rolling blackout crisis in the early 2000s, California legislatures allowed the CPUC to put in place tiered rates for power that charged more for entities that used more electricity, as a way of encouraging efficiency. AB 327 would lead to a flattening of those rates, so that there is less of a penalty for using more electricity.

This would also have made solar panel systems less valuable for high-power users, who have the most to gain from switching to renewable energy. With lower per-kilowatt-hour rates for those customers, it would take longer for them to earn a positive return on their investment in solar, especially since they wouldn't be exempt from the flat fee mentioned above.

These changes raised the ire of the solar industry, but thanks to the involvement of Governor Jerry Brown, several provisions have been added to the legislation that changed it from being a bill meant to kill renewable energy investment, to one that will spur more growth in solar, and potentially other sources such as wind and geothermal.

The most important change that was made lifted a suspension of net metering that would have occurred at the end of the year. Net energy metering (NEM) allows rate payers with solar panels to sell their electricity back to the grid when they don't use it, earning a rebate for each kilowatt-hour they sell. This program was set to expire in 2014, but with the passage of AB 327 it will continue indefinitely. In addition, the new law would lift a cap on the amount of NEM electricity that utilities must buy from their customers. Previously, that limit was set at 5 percent of the state's overall electrical use, but going forward there will be no cap, assuming the governor signs the bill.

"This is a banner day in California," Rhone Resch, the president and chief executive of the Solar Energy Industries Association, said in a news release. "Once again, state lawmakers have set the bar high when it comes to the adoption of renewable energy. AB 327 provides a clear pathway for the continued growth of solar generation in California."

At a time when energy use is skyrocketing and the effects of global warming are becoming clearer, policy makers should be encouraging the use of environmentally friendly products rather than putting in caps and limits. The passage of AB 327 is further demonstration of California's ongoing commitment to green living.

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