NEM 3.0 Changes: Here’s What to Expect

May 17th 21

NEM 3.0 Changes: Here’s What to Expect

Introduction

The original net energy metering program (NEM) was created in the early 80s, for Idaho and Arizona. The California Public Utilities Commission (CPUC) passed the NEM program for California in 1995 to make it more beneficial for customers to install rooftop solar systems. When the cost of solar systems began to get lower, utility companies began to make less profit so (in 2017) the CPUC decided to make some changes and updated the program to NEM 2.0.

Reason For Change

In a recent study, (funded by the CPUC) it was found that while many solar users were seeing great benefits from NEM 2.0, some rate payers who had not gone solar were seeing increased rates because of it. For this reason, California’s Investor-Owned Utilities (IOU) decided to come up with more changes to the NEM program that would help create, “a modern and equitable distributed generation program.” Investor-Owned Utilities (IOU) claimed that the NEM programs caused customers without solar systems to pay up to $3 billion more (or as much as $240 per customer) annually in their energy bills, through cost shifting. Some of the main changes being proposed with the NEM 3.0 update are:

  • Introducing a net billing core tariff
  • Eliminating subsidies for new solar adopters
  • Turning annual true-ups into monthly true-ups
  • Cutting the credit that consumers receive for their excess electricity

Reason Not To Change

While the changes to NEM 2.0 may seem like they should benefit everyone equally, according to the California Solar + Storage Association (CALSA), “the proposal will make solar an unaffordable option for most low- and middle-income consumers and stall the state’s economy in the post-pandemic setting.” CALSA believes that, “solar roofs save everyone money, not to mention build a more resilient grid, but they cut into utility profits,” because of this, “utilities are trying to blame their huge structural shortcomings on consumers and small businesses.” The net energy metering program is designed to benefit solar user’s that monitor their system and are producing more energy than they are consuming. Executive Director of the Solar Rights Alliance, Dave Rosenfeld, believes that net metering in California is actually lowering electricity costs and “making it possible for more families to access the savings, resilience and other benefits of solar power.” Unfortunately, the more the NEM program changes the more it is beginning to benefit the utility companies over the consumer.

Current NEM Users

When NEM made its first change from NEM to NEM 2.0, customers who were already a part of the NEM program were able to be grandfathered in and keep their original benefits. It is very likely that current NEM 2.0 users would not see any changes to their current program they are using once NEM 3.0 is available. Experts speculate that, as before, the CPUC will grandfather older systems in and continue to uphold the original agreements. Which should mean customers who go solar with the NEM 2.0 program would still be able to keep their NEM 2.0 benefits when the NEM 3.0 changes become official.

Future NEM Users

The CPUC estimates that the NEM 3.0 proceedings “will take roughly 15 months in total, starting with a November 2020 prehearing conference.” Which means that we likely won’t see NEM 3.0 until sometime in 2022. While this new program may be set to help balance the difference that was being charged to non-solar users, it will mostly come at the expense of solar users themselves. Despite the changes to NEM 3.0 being unpopular with many solar advocates, the net energy metering program still benefits solar consumers. Although it has benefitted them less and less with each batch of changes to the program. The NEM 3.0 aims to ensure that both solar and non-solar customers using the grid are paying their “fair share.” While it may come at costs to solar customers it does not mean that you can no longer benefit from net energy metering. Changing to monthly true ups should help NEM users to get a more accurate picture as to how much they are saving with solar energy each month.

Conclusion

We won’t know how much the NEM 3.0 will change the program and how many of the solar user’s benefits will be cut until the program is put in place. If you are concerned about missing out on the NEM 2.0 benefits, going solar before the NEM 3.0 changes are made could allow you to avoid any changes made to the NEM program. When you get a free quote with Infinity Energy, we will make sure we walk you through the best incentives available to help save you the most money possible. Contact us today to find out how much you could save by taking advantage of the net energy metering program.

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