The California Public Utilities Commission (CPUC) issued a proposed decision approving new regulations that restructure onsite solar and storage tariffs and reduce the compensation rates for multitenant properties and customers with adjacent properties. This changes will largely affect farms, schools, and rental properties.
The changes provide a similar incentive framework as was implemented in the December 2022 decision to transition from net metering to a new net billing structure for single-family households and commercial customers. (See CPUC Revises Rooftop Solar Subsidy to Promote Battery Storage) These changes will apply to future customers only. The decision concludes the review of the net energy metering tariffs as required by AB 327 of 2013.
Virtual Net Billing
The decision changes the virtual net energy metering (VNEM) and Net Energy Metering Aggregation (NEMA) programs that allow properties with multiple electric meters to share one solar system’s electricity credits. It lowers compensation rates by adopting a virtual net billing tariff (VNBT) that provides retail export compensation rates based on “avoided cost” values. The decision also adopts an aggregation net billing subtariff, which mirrors the net billing tariff but maintains the credit and debit approach used in the existing net energy metering aggregation subtariff.
Under the VNBT, tenants and property owners receive electricity bill credits for the value the renewable system provides to the grid. The “avoided cost” value of the credit is based on the hour of the day that the energy is sent to the grid.
Customers with battery storage can store solar energy when it is readily available during the day and send it back to the grid when it is most needed. CPUC states that the VNBT will improve price signals to encourage multitenant property owners to install battery storage together with their solar systems. This, in turn, will improve grid reliability.
As part of the transition to the new system, residential multitenant properties will receive a monetary adder for nine years on top of the standard energy compensation rate for net generation. The adder is available to new customers for five years and steps down incrementally over that period.
Existing low-income multifamily VNEM tariffs related to the CPUC’s Solar On Multifamily Affordable Housing (SOMAH) Program and Multifamily Affordable Solar Housing (MASH) Program are maintained and slightly modified to improve customer experience and encourage storage.