Toolkit: Net Energy Metering (NEM) 3.0

Last updated September 14th, 2021

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

A final decision is expected early next year, however the current timeline is subject to change.  Below is the expected schedule for the remainder of the year.

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
No later than 90 days after Reply Briefs
(December 9, 2021)
Commision Decision
No later than 30 days after the Proposed Decision
(January 8, 2022)
What Has Transpired

On Thursday June 24, 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 materials 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.

Because of this decision, it will be even harder to secure a strong NEM 3, which is needed to help stop climate injustices and the climate crisis.  This is why your voice is needed now more than ever!

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.

Community Voices
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)

  • 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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