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AB 327: Solar Friend or Foe?

Recently-amended energy bill, AB 327, awaits signature from Governor Brown

Just a couple of months ago, California Assembly Bill 327 was met with fierce criticism from solar advocates throughout California.

It was this rallying cry of opposition, however, that ultimately resulted in key revisions to this bill, which are a step in the right direction for rooftop solar.

Though this bill is by no means perfect, the amendments made to AB 327 are a testament to the growing power of the solar industry and allies of renewable energy in California.

Net-Metering: Investor-Owned Utilities vs. The Solar Industry?

To give you a little background, AB 327 will determine what happens to residential energy rate structures in California, including the state’s popular net metering program.

Net metering allows residents to receive financial compensation for the excess power generated by their grid-tied solar systems.  When the consumer gets paid for the electricity that’s sent back into the utility grid, it means a greater return on their investment. Net-metering is a monetary incentive for homeowners to get solar on their roofs.

Since state policies like this make “going solar” more attractive to potential solar customers, the solar industry has been fighting to keep it around.

Being required to pay residential customers for this electricity isn’t really in the best interest of an Investor-Owned Utility (IOU), which has a responsibility to their share-holders to maximize profit.

The fate of California’s net-metering policy has been uncertain until recently, as it was set to expire at the end of 2013.  California’s investor-owned utilities (IOUs) have been at odds with the solar industry, which came to head with AB 327.

Utility rate structure that solar advocates were criticizing in AB 327:

1. AB 327 will flatten the rates for customers paying for electricity in the higher tiers on their electric bills.   This means that customers who consume significantly higher amounts of energy (kWh) would be paying less than they currently do.

2. AB 327 would also allow utilities to impose a flat rate of up to $10 per month on residential customers, regardless of their net consumption.

By decreasing the cost for excessive energy consumption, AB 327 would have made investing in a PV system attractive to potential solar customers paying these high-tier rates.

AB 327 would mean that a residential customer, whose net consumption is minimal due to a solar system, could have to pay the utility company a flat rate every month. This could amount to an extra $120 annually, regardless of how much solar power the system was actually generating.

One of the main criticisms of this bill is that it would make net-metering less attractive to consumers, thus deincentivizing solar.

Needless to say, this bill was originally met with harsh criticism from solar advocates across California. Meanwhile, utility companies argued that residential solar customers need to help finance the maintenance of grid infrastructure from which they benefit like everyone else.

Solar Backlash?

Rewind several months.  The investor-owned utility companies were under fire for backing this hotly contested bill. A satirical ad campaign featured an actor pretending to be a representative from one of these utilities, explaining why they hate rooftop solar. The video ran into a bit of legal trouble for allegedly misusing the utility’s logo.

…. and now the solar industry supports the bill?

Long story short, AB 327 has seen several key revisions that have considerably modified the kind of impact it will have on rooftop solar in California.

What will AB 327 do now that it’s been amended?

The California Senate ended up including a series of amendments that address several of the objections presented by solar advocates.   At this time, AB 327 has the support of the Solar Energy Industries Association (SEIA), The Alliance for Solar Choice (TASC), and VoteSolar.org.

So then, how did these amendments turn starch opponents of AB 327 into proponents of the bill?

What does AB 327 do now?

 

  • Preserves net metering (at least) through 2016
  • California Public Utilities Commission (CPUC) has the power to remove the cap on net metering
  • CPUC can require IOUs to get more than 33% of their electricity from renewables (this is a big deal)
  •  By mid-2015, IOUs have to show CPUC how to maximize distributed solar generation
  • CPUC may choose to allow IOUs to impose a fixed charge of up to $10 on residential consumers

 

Of course, there’s a lot to AB 327, but overall, the bill turned out much better for rooftop solar than most had origninally expected.  That isn’t to say that the utility companies didn’t have their sway, as pointed out by Kathryn Phillips, the Director of Sierra Club California:

“AB 327 is a powerful reminder of the extent to which utilities influence public policy to the benefit of their shareholders and the detriment of working families. It’s disappointing that so many legislators walked away from their constituents’ interest… They’ve now saddled Californians with up to $120 a year in new charges on their electricity bills.”

– Kathryn Phillips, the Director of Sierra Club California
 

Now, here’s a very different reaction from the President and CEO of the Solar Energy Industries Association (SEIA), Rhone Resch, has to say about the recent amendments to AB 327:

“This is a banner day in California. 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, which ranks #1 in the nation in total installed solar capacity with 3,761 megawatts (MW) – three times more than any other state. What’s more, solar now provides nearly 44,000 good-paying jobs across the state, while saving money for hundreds of thousands of Californians on their utility bills.

Moving forward, we plan to work closely with the California Public Utilities Commission (CPUC) to ensure that future rules preserve consumer choice, ensuring that California homeowners, businesses and schools will continue to benefit from clean, reliable solar energy. Today, solar is more affordable than ever. Average PV system prices have declined by 40 percent since the beginning of 2011 – and by more than 50 percent since the beginning of 2010. As an industry, we’re also doing our part to help boost the economy and to fight climate change. SEIA applauds California legislators for ‘leading by example’ and for their strong, ongoing commitment to solar energy. We urge Governor Brown to sign this important legislation.”

-Rhone Resch, President and CEO of the Solar Energy Industries Association (SEIA)

As Resch notes, this bill leaves a lot of decisions to the California Public Utilities Commission (CPUC), so we’ll have to wait and see how they handle these issues.

Evan Gillespie, the My Generation Campaign director for the Sierra Club is hopefully optimistic about the recent amendments to AB 327, depsite his dissapointment with the fixed charge on Californians:

“Though the bill falls far short, we were nonetheless glad to see AB 327 amended in response to the concerns of thousands of clean energy supporters across California… While the improvements made to the bill represent good measures for the future of clean energy, there are still significant concerns over the impacts the fixed charge will have on our state’s working families and green economy.”

-Evan Gillespie, the My Generation Campaign director

Where is AB 327 currently?

Now that AB 327 has made it through the California legislature, the bill is now on Governor Jerry Brown’s desk, awaiting his signature.

If you were Governor Brown, would you sign AB 327 into law? With the recent amendments to the bill, is it good for the growth and development of rooftop solar and rate-payers in California?

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Tom Jackson

GoGreenSolar.com

Author: Tom Jackson

I believe clean, renewable energy is key to the evolution of society as a whole. Solar powers our planet, why not harness it to power humanity? Let's power our homes, our work, and our vehicles with solar energy. It begins with raising awareness and encouraging those around us to go green.

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