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Jul 23, 2023

NGOs suing California PUC, utilities over net metering update could face ‘fairly steep’ challenge: attorney

In December, the CPUC issued a decision updating the state’s net energy metering

In December, the CPUC issued a decision updating the state's net energy metering tariff, implementing an export compensation rate that is tied to the value of behind-the-meter generation on the grid. The agency estimated that the new framework would save the average residential customer who is installing solar $100 on monthly electricity bills. The solar industry criticized the decision, which the California Solar & Storage Association, or CALSSA, said would slash by 75% the value of solar energy exported to the grid.

The petition also says the decision "arbitrarily calculates the cost of distributed generation by treating NEM customers’ reduced consumption of energy from the grid as a cost that must be borne by other customers,'' although regulators otherwise treat reduced energy usage and electricity conservation as a benefit.

The CPUC and utilities — Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric — now have 30 days to respond to the petition.

While CALSSA is not a party to the lawsuit, "we agree with the basic complaint that the CPUC did not properly value all of the benefits of distributed solar energy and therefore came to a decision that was lopsided toward utility interests and that ultimately fails to move California toward a clean energy future at speed and scale," Bernadette Del Chiaro, the group's executive director, said in an email.

The petition raises fairly detailed and technical arguments regarding calculating cost shift issues, Seth Hilton, partner at Stoel Rives, noted. The challenge here is that the petitioners are going in front of a court that doesn't have a ready familiarity with these issues, unlike the CPUC.

"So if you challenge it, you need to explain this to the Court of Appeal sufficiently… and that's a tough burden."

The inclination of the Court of Appeal is going to be to defer to the PUC and the challenge of getting this decision reversed is "fairly steep," he said.

The Center for Biological Diversity, Protect Our Communities Foundation and Environmental Working Group had previously filed an application with the commission to rehear the NEM decision, followed by a request to delay the effective date of the new framework until that was resolved. The new tariff, however, kicked in on April 15.

The CPUC will respond to the lawsuit as part of the litigation process, and expects to consider pending applications for rehearing at a June 29 voting meeting, barring an unexpected delay, commission spokesperson Terrie Prosper said in an email.

Procedurally speaking, any other company, trade group or party that wants to challenge the CPUC's decision in the Court of Appeal would have first needed to file an application for rehearing at the CPUC, Hilton said.

An application for rehearing the NEM decision was also filed by CAlifornians for Renewable Energy in January. CALSSA's Del Chiaro said she is unaware of any other lawsuit at this time.

PG&E spokesperson Mike Gazda said in an email the utility is currently reviewing the lawsuit.