Net Metering – California

California’s net metering law was established in 1995. There have been many modifications over the years including 3 separate bills enacted in 2005. The are many exceptions but, in general, the current rules allow on-site energy projects of up to 1 MW access to net metering. The combined capacity of net-metered systems may not exceed 0.5% of any utility’s peak demand [except for SDG&E, which has a limit of 50 MW].

Net metering in California generally applies to wind and solar energy projects. There is also a pilot program that allows fuel cells and biogas digester systems to qualify.

Mostinteresting are that California’s rules allow qualifying net metered projects to interconnect with their utility without having to pay additional charges including any new or additional demand charges, standby charges, customer charges, minimum monthly charges, interconnection charges, or other charges that would increase an eligible customer-generator’s costs beyond those of other customers in their rate class.

Information from the excellent DSIRE Database reports the following legislative history:

  • The original law applied to wind-energy systems, solar-electric systems and hybrid (wind/solar) systems. In September 2002, legislation (AB 2228) allowed biogas-electric facilities up to 1 MW to net meter until December 31, 2005, under a pilot program. This pilot program was extended until December 31, 2009, with the passage of AB 728 in September 2005. A customer-generator may continue to net meter an eligible biogas digester for the life of the facility, provided the digester meets California’s best available control technology (BACT) requirements upon installation. Furthermore, AB 728 (2005) authorizes up to three large biogas digesters — systems with a capacity greater than 1 MW but no more than 10 MW — to net meter. There is a 50-MW statewide limit on net-metered biogas digesters. California law provides for retail cost recovery of revenue loss from net-metered biogas digesters.
  • The 2002 net-metering amendments (AB 58) also:
    • limit the total amount of net metering to 0.5% of a utility’s peak demand;
    • exempt net metering from "exit fees" or "departing load fees;"
    • prohibit inter-class cost shifting that results from net metering;
    • allow municipal utilities to permit either net-metering or co-metering, which credits customers for generation on a "time-of-use" basis for the generation value of their production;
    • advise the state treasurer to consider net metering and co-metering projects as sustainable building methods or distributed-energy technologies for purposes of evaluating low-income housing projects;
    • grandfather in projects permitted prior to December 31, 2002, and completed before September 30, 2003;
    • permit wind-energy projects up to 50 kW to net meter; and
    • require wind-energy projects from 50 kW to 1 MW to utilize "wind energy co-metering," which provides for time-of-use pricing and credits.
  • Subsequent legislation enacted in October 2003 (AB 1214) made fuel cells eligible for net metering until the total cumulative rated generating capacity of net-metered fuel cells reaches 45 MW within the service territory of a utility with a peak demand of at least 10,000 MW, or until the capacity reaches 22.5 MW within the service territory of a utility with a peak demand of 10,000 MW or less. The maximum total capacity of all net-metered fuel cells in all service territories is limited to 112.5 MW. The repeal date for this provision, January 1, 2006, was removed by AB 67 2005. Under terms of AB 67 of 2005, fuel cells that begin operation before January 1, 2010, are eligible to net meter. Eligible fuel-cell systems may net meter for the operating life of the facility.

As of March 2005, California’s net metering rules had enticed nearly 600 projects to interconnect with the state’s 3 investor-owned utilities totaling 25.1 MW. Nearly 100 percent of the projects were using solar photovoltaic technology.

More information on net metering with IOUs in California is available at the following web sites:

Other Resources: