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Toolkit: Net Energy Metering (NEM) 3.0

Last updated February 22nd, 2022

The California Public Utilities Commission (CPUC), the entity responsible for regulating the investor-owned electric and gas utilities in California, has launched a proceeding to re-evaluate the current net energy metering (NEM) program and decide upon a new NEM program, to be established as NEM 3.0.

Simply put, NEM is the program that allows rooftop solar customers to be compensated for the excess electricity they send back to the power grid.  NEM, paired with solar financing and ratepayer funded incentives, has allowed solar to become increasingly accessible to low-and-moderate income families across California.

California investor-owned-utilities (IOUs), Pacific Gas and Electric, San Diego Gas & Electric and Southern California Edison have submitted a joint proposal that calls for drastic changes to NEM that would make solar energy more expensive, increase the amount of time it takes for customers to pay off the system and ultimately has the potential to eliminate the California solar market.  

For a deeper dive on NEM in California, please visit our blog on the history of NEM.

Party Proposals

A total of 17 party proposals were submitted to the CPUC for consideration early this year.  Each proposal is required to demonstrate the cost effectiveness of their proposal as well as adhere to the guiding principles put forth by the CPUC.  These guiding principles include:

  • Ensuring equity among customers
  • Enhancing consumer protection measures
  • Maximizing the value of customer-sited renewable generation to all customers
  • Ensuring transparency to all customers 
  • Coordination with current California energy policies including Senate Bill 100 

Solar friendly proposals were submitted by:

  • California Solar and Storage Association
  • CAlifornians for Renewable Energy
  • Coalition for Community Solar Access
  • California Energy Storage Alliance
  • Vote Solar, Sierra Club and GRID Alternatives
  • Solar Energy Industries Association and Vote Solar
  • Ivy Energy
  • Protect our Communities Foundation
  • Clean Coalition

Non solar friendly proposals were submitted by:

  • The California IOUs
  • Sierra Club
  • Natural Resources Defense Council
  • The Utility Reform Network
  • Cal Advocates
  • Foundation Wind Power
  • California Wind Energy Association
  • Small Business Utility Advocates
Opening Testimony
June 18, 2021
Rebuttal Testimony
July 16, 2021
Evidentiary Hearing
July 26 - August 12, 2021
Completion of Settlement Talks
August 27, 2021
Opening Briefs
August 27, 2021
Reply Briefs
September 10, 2021
Proposed Decision
December 13, 2021
Commision Decision
*Currently "Postponed Indefinitely"
New Tariff Effective
*To Be Determined

*While the final decision is currently "postponed indefinitely", there is some indication that it may be revisited in April or May of 2022.  No later than 120 days after the adoption of this decision, the Commission will implement a tariff sunset on NEM 2.0, after which time no additional solar customers will be permitted to take service under the NEM 2.0 tariff.  If a customer is seeking NEM 2.0 status, it is imperitive that they have a complete interconnection application filed with their utility no later than 120 days after the adoption of the CPUC's final decision.

What Has Transpired

On Thursday June 24, 2021 the CPUC voted to approve major updates to the calculator that will be used to evaluate every NEM proposal, called the Avoided Cost Calculator.  These major updates undercut the value of solar by two-thirds compared to the 2020 version of the calculator.  The calculator was developed by the E3 consulting firm which is the same consulting firm used by utilities that regularly puts out products that are biased against distributed generation.
The commissioners voted unanimously to approve the updates despite the fact that the calculator uses an entirely new and untested model for predicting how wholesale energy pricing will behave in the future.  These updates were labeled as minor, and as such did not go through a robust public process where stakeholders can engage and vet the new model.  Over 7,000 comments were made by environmental advocates, homeowners, community groups and climate justice organizations urging the commissioners to not vote to make the updates official until after the new model has been put through a public process. 

On September 8, the City of Solana Beach became the first city in California to pass a resolution standing up for a strong NEM!  We hope this decision will encourage other cities in the region to stand up for rooftop solar and send a strong message to the commissioners before making their proposed decision later this year.  In addition to the City of Solana Beach passing this historic resolution, City of San Diego Councilmember Raul Campillo also released a letter that he sent to Governor Newsom and the CPUC. Business for Good San Diego also released a similar letter they sent to the governor and CPUC as well. 

On November 9, 2021, the City of Chula Vista voted to approve a resolution and a letter advocating for the CPUC not to make any drastic changes to the current net energy metering policy, which has been very successful in finally making solar accessible to communities of concern.
On November 11, 2021, Imperial Beach Mayor Serge Dedina released a letter to the governor requesting his support to protect the net energy metering program to help expand access to solar and energy storage in underprivileged communities.

On November 15, 2021, the City of San Diego, America’s second-best solar city, became the largest city in the state to weigh in on the proceeding.
Shortly after San Diego’s resolution was approved, the City of Encinitas weighed in with a letter from the city council and Mayor Catherine Blakespear, which stated “the City of Encinitas was proud to be one of the first cities in the region to join a community choice energy program, San Diego Community Power (SDCP), and we have plans for our program to benefit the community in various ways, and net metering plays a role in our impact.  The solar fees that are being proposed by the IOUs are fees that SDCP will not be able to avoid, meaning that rooftop solar for our community choice energy program customers may still be inaccessible despite SDCP’s solar-friendly NEM rate, which is bad for our community members, makes it harder and more expensive for SDCP to reach 100 percent clean energy and takes away from potential program opportunities to benefit the community.” 

In January of 2022, the City of Carlsbad became the 6th city in San Diego County to formally weigh in on the proceeding and unanimously approved a resolution rejecting the CPUC’s proposed decision.

Read more about our growing local coalition here.

The CPUC’s Proposed Decision

On December 13, the highly anticipated net energy metering (NEM) 3.0 proposed decision was released.  It is very clear that the California Public Utilities Commission (CPUC) has sided with the investor-owned utilities and is proposing to make drastic cuts to the benefits of going solar.  

The CPUC’s proposed decisions threatens to:

• Reduce solar credits by 80 percent, from around 25 cents per kilowatt hour all the way down to 5 cents per kilowatt hour.
• Mandate solar customers to pay high and punitive monthly fees.
- An average system in SDG&E territory will carry the monthly fee of about $64 per month.
- An average system in PG&E territory will carry the monthly fee of about $48 per month.
- An average system in SCE will carry the monthly fee of about  $60 per month.
• Take away protections for existing solar customers, which expected 20-years of so-called “grandfathering.” Under current rules, customers who went solar were guaranteed protections  for 20 years. The proposed decision calls for a 25 percent reduction in grandfathering periods for existing customers.
• Increase dirty energy usage, worsening climate injustices and accelerating the climate crisis.

Community Voices
San Diego Mayor Gloria NEM Support Letter
San Diego City Council NEM Support Letter
City of Encinitas NEM Support Letter
City of Imperial Beach NEM Support Letter
City of Solana Beach NEM 3.0 Resolution
Councilmember Campillo NEM Support Letter
Business for Good NEM Support Letter
City of Berkeley NEM Support Letter
San Diego Community Power NEM Support Letter
Ways to Get Involved
  1. Sign the Save California Solar petition.
  2. Sign onto our coalition’s NEM letter, urging the CPUC and Governor Newsom to increase solar access while prioritizing equity.
  3. Attend our monthly Save California Solar coalition meetings
  4. Call on your elected officials to advocate for a strong NEM! Rooftop solar is crucial in meeting local climate action plans, creating local jobs and addressing the climate crisis by transitioning away from fossil fuels.
  5. Call into the CPUC meetings to make non-agenda public comments. Commission meeting dates can be found on the public calendar. The meetings are available to watch via webcast at however in order to make public comments you must call in.
  6. Call-in directions and talking points:  

If you would like to speak during the public comment period at the start of the meeting, please participate by phone and call in by 10 a.m. and you will be able to make your comment. Comments cannot not exceed 2 minutes.

1-800-857-1917, passcode: 9899501 (to make a public comment during the public comment period, press *1)

Please help us by calling Governor Gavin Newsom and telling him you are against this proposal and want to see a solar-friendly alternative proposal!  Share this information with your friends, neighbors and colleagues! 

Call Governor Newsom at (916) 445-2841 or through the Solar Rights Alliance’s calling tool.  A sample script is below - feel free to customize this: 

“My name is ___ and I live in ____.  I am against the proposal to cut the benefits of rooftop solar!  The high solar fees and cutting the benefits of solar by 80 percent will kill the solar market and worsen the climate crisis.  Nobody should pay a penalty for putting solar panels on their roof and California should be doing more, not less, to promote rooftop solar.  Please say no to the utilities’ profit grab, and yes to helping millions of working and middle class people access rooftop solar.“

Additional talking points: 

• California has ambitious climate goals that we will not meet with utility-scale solar and wind alone - we need to expand rooftop solar and storage access to communities of concern in order to not only meet our climate goals, but also to help alleviate the burden of skyrocketing energy costs and to provide backup power in case of emergencies.

• Local rooftop solar saves every ratepayer money.  Rooftop solar reduces the cost of maintaining long distance power lines as well as wildfire costs associated with long distance power lines that ratepayers must pay.  A recent study by Vibrant Clean Energy shows rooftop solar can save California ratepayers $120 billion! 

• We are in a climate crisis and should be doing everything we can to expand rooftop solar and energy storage access and transition away from dirty energy, which is contributing to climate injustices and accelerating the climate crisis.

Share this toolkit with family and friends and via social media!

  • State your name and organization or location.  
  • Indicate you are calling in to urge the CPUC to keep solar growing in California by creating a strong NEM 3.0
  • Pick from any of the points below and personalize them:
  1. State your name and organization or location.  
  2. Indicate you are calling in to urge the CPUC to keep solar growing in California by creating a strong NEM 3.0
  3. Pick from any of the points below and personalize them:
  • The state has said that we need to triple the amount of rooftop solar we have in order to meet our climate goals.  This simply will not happen if the economics of going solar are cut in half and payback periods increase to well over the warranty for systems expires, as proposed in the joint IOU NEM proposal.
  • California has ambitious climate goals that we will not meet with utility scale solar and wind alone, we need to expand solar access to disadvantaged communities in order to not only meet our climate goals, but help alleviate the burden of skyrocketing energy costs.
  • California will continue to suffer from power outages if we don't rapidly deploy more solar and battery storage.
  • Local distributed solar saves every ratepayer money.  Rooftop solar reduces the cost of maintaining long distance power lines as well as wildfire costs associated with long distance power lines.  Vibrant Clean Energy conducted a study that showed rooftop solar can save California ratepayers $120 billion while creating 374,000 new green jobs. 
  • We are in a climate crisis and should be doing everything we can to expand rooftop solar access and transition away from dirty energy, which is contributing to climate injustices and accelerating the climate crisis.
  • Please don’t take away opportunities for LMI ratepayers who are finally able to afford solar. Rooftop solar protects families who are struggling to pay skyrocketing electricity prices.
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350 Bay Area Action
350 Butte County
350 Silicon Valley
350 Ventura County Climate Hub
A Stellar Co
Active San Gabriel Valley
Aloha Solar Power
American Federation of Teachers
Association of California School Administrators
Baker Electric
Baker Electric Home Energy
Bquest Foundation
Business For Good San Diego
California Alliance for Community Energy
California Democratic Renters Council
California Interfaith Power and Light
California Public Interest Research Group
California Solar and Storage Association
California Young Democrats
Center for Community Energy
Center for Sustainable Energy
Chico 350
Citizens Climate Lobby
Citizens Franchise Alliance
Clean Coalition
Clean Earth for Kids
Clean Power Campaign
Clear Spot Energy
Climate Action Campaign
Climate Hawks Vote
Conejo 350
Conejo Climate Coalition
Corona Enterprises
Defenders of Wildlife
Del Paso Heights Growers Alliance
EAH Housing
Earth Day LA
Earth Justice
Eco San Diego
Environment California
Fallbrook Climate Action Team
Feminists in Action
Food and Water Watch
Fossil Free California
Glendale Environmental Coalition
Green New Deal UCSD
Green Power Romero Institute
Grid Alternatives
Hammond Climate Solutions
HES Solar
Humbolt Young Democrats
I Am Green And So Are You
Indivisible Alta Pasadena
Indivisible Beach Cities
Indivisible CA 33
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Local Clean Energy Alliance
Long Beach Alliance for Clean Energy
Morongo Basin Conservation Association
Mujeres De La Tierra
Mystery Org
National Parks Conservation Association
Normal Heights Indivisible
North County Climate Change Alliance
Northern California Land Trust
People Power Solar Cooperative
Progressive Caucus California Democratic Party
Progressive Democrats of America
Redwood Energy
Romero Institute
Rooted in Resistance
San Diego 350
San Diego Climate Hub
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San Diego County Democrats for Environmental Action
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San Diego Green Building Council
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San Francisco Bay Area Extinction Rebellion
San Francisco League of Conservation Voters
Santa Cruz Climate Action Network
Santa Cruz Indivisible
School Energy Coalition
Sierra Club
Silicon Valley Leadership Group
SoCal 350 Climate Action
Social Eco Education
Solar Rights Alliance
South Bay 350 Los Angeles
Sullivan Solar Power
Sunrise Movement Redding
Sustainable Marin
Sustainable Mill Valley
Sustainable Urban Network
The Climate Center
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The Environmental Justice Coalition for Water
The Resistance Northridge Indivisible
The Rural Caucus California Democratic Party
University Professional and Technical Employees
Uptown Tavern
Vote Solar