Net metering – counting the cost in California


San Francisco, CA, U.S.A. — (METERING.COM) — September 30, 2013 – Amid the ongoing debate about the impacts of net metering, California’s Public Utilities Commission has just made available a draft cost effectiveness evaluation aimed to assess how the costs are stacking up and who benefits and who is paying.

The lengthy report, which was produced for the PUC by Energy and Environmental Economics, Inc. (E3), is focused primarily on solar PV – which at the end of 2012 accounted for 99% of the over 150,000 accounts enrolled by the state’s three investor owned utilities and 96% of their 1,305 MW capacity.

The report finds that at that time the net cost of net metered electricity exported to the grid was $75 million (0.22% of utility revenue), while the net cost of all net metered generation was $254 million (0.73% of utility revenue).

By 2020, and assuming a capacity of approximately 5,573 MW to reach the 5% net metering cap, these costs are estimated to increase respectively to $359 million (1.03% of utility revenue) and $1.103 billion (3.16% of utility revenue) annually.

The report also evaluates the cost to serve, and finds that in 2011 the average percentage cost of service recovery for net metered customers was 106%, while for customers without distributed generation it was 133%. However there are sharp differences between the residential and non-residential groups: respective cost recoveries were 88% and 154% for residential customers with and without DG and 113% and 122% for non-residential customers.

The report is now open for comment until October 10, with a focus on the analytics and assumptions and specifically on errors in the calculations used, and no doubt many groups will be starting to pick it apart. However, a key aspect of the report is that it could impact future rate design, and this is clearly necessary, as the findings above – coupled with the additional finding that the median household income of $91,210 of customers who have installed DG is high compared to the median income in California of $54,283 and in the IOU service territories of $67,821 – are unlikely to find favor with the majority of the IOU customers.