By Cynthia Clark, Manager of Utilities & Incentives

For several reasons, actually:

•It’s not just about California – as an early adopter of solar and a market bell-weather, the outcome is likely to influence policies across the U.S. going forward.
•It’s not just about Solar – lessons learned in the developing solar industry are often used to inform the strategy for incentivizing other renewable energy resources.
•Regional solar markets used to live and die by incentive program funding. Now, as California’s market continues to go strong while the state-wide CSI program runs dry, net energy metering (NEM) stands to be the primary barrier or driver of solar going forward.
•Current NEM is set to expire by 2017, or sooner if program caps are reached. Along with the scheduled reduction of the Federal Investment Tax Credit, this could set the state for market collapse.

Now that I have your attention, what is AB 327 all about? It started out as way for utilities to give the California Public Utilities Commission (CPUC) more leeway to flatten tiered residential structures and consider implementation of higher fixed fees (up to $10/month) for all residential customers. Solar advocates rightly objected that this could significantly change the value proposition for long-term solar investments that many customers have already made. The result has been a compromise bill that adds provisions to better define the extent of the current net metering program and clarify how decisions will be made about a successor program. The compromise language was enough to get solar advocates such as CalSEIA and VoteSolar to back the bill, rather than opposing it. It also puts this bill squarely in the center of the ongoing debate over whether NEM is actually a subsidy or a net benefit to utilities and non-solar customers (see our August 30, 2012 blog post and our current whitepaper for more information).

Within this context, the results of CPUC’s mandated study on the costs and benefits of net metering, performed by E3, are due this October. In this solar market observer’s opinion, the released study should really be the main event in this debate. In the meantime, AB 327 could pave the way for NEM continuity while arming the CPUC with more tools to respond effectively to the results of the study.

The revised bill passed the state Senate 33-5 on Monday September 9th and is expected to pass what is largely a procedural vote in the Assembly before being signed into law by Gov. Jerry Brown.

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