California regulators cut into subsidies for solar on multi-unit complexes

California regulators have approved new rules for solar panels on apartments, farms, and schools with a swift vote.

“The vote is five-zero. The item passes,” said Alice Reynolds, the president of the California Public Utilities Commission (CPUC) ending more than three years of sometimes-acrimonious debate over the state’s solar tariffs.

Thursday’s vote at a meeting in El Centro affects the rules for properties with more than one electric meter. Changes will take place next year, and existing customers are not impacted immediately.

Single-family home revisions — which slashed the value of electricity produced on rooftops — were approved last December and took effect in the spring.

“At the end of the day, the only source for covering the cost of the system is from customers,” said CPUC Commissioner Karen Douglas. “And those costs are not going away and in fact, as commissioner Reynolds said, we’re seeing a lot of price and cost pressures.”

Critics blasted the proposed decision which eliminated the mechanism for sharing solar credits when multiple customers were served by one solar array.

A late change restored the ability to share solar credits for rental units in multimeter properties, but not building owners.

That hurts the ability of apartments, schools, farms, and small businesses to save money by installing solar.

Money was also on the CPUC’s mind as the commissioners grappled with rising utility costs and the need to expand the grid as the state pressed for more electrification.

“Those investments mean costs,” said John Reynolds, a CPUC commissioner. “Costs that will have to be paid for and making sure that we are getting customers that are using the grid and benefiting from it, contributing to those costs is important to make sure the service is affordable to everyone.”

“Your proposal must be changed to allow everyone to use the electricity generated by their solar panels with no exceptions whatsoever. In a time of climate disaster, the CPUC should be doing whatever it can to promote rooftop solar in California and not destroy it.”

Patricia Blevins, San Jose resident

At issue was how complexes with more than one electric meter share the benefits of a single solar array.

Existing solar rules allow for virtual net energy metering (VNEM). That permits landlords and tenants in a multi-unit complex to calculate and share the benefits of having solar panels on the structure.

The first proposed decision eliminated VNEM for all but pre-approved apartments serving low-income tenants. That’s a tiny fraction of the state’s rental housing pool.

The revised proposal allows renters to use VNEM, but it cuts building owners out of the equation. Landlords cannot use their solar panels to offset electricity used in common areas.

“VNEM is the primary mechanism for tenants to benefit from installing solar in multifamily properties,” said Andrew Dawson of the California Housing Partnership. “The financial benefits help with installing electric appliances and ensures that tenant bills do not increase significantly.”

Critics said the new rules make it less likely that owners of multifamily housing units will make the upfront investment in solar panels because the financial calculations no longer benefit those owners.

“So, in effect what this is going to do is it is really going to narrow the number of apartment buildings that can pencil out going solar,” said Bernadette Del Chiaro, executive director of the California Solar and Storage Association. “It’s going to be limited to smaller buildings with a very small common space electricity load.”

Del Chiaro warned that the new rules also discourage landlords from offering electric car charging in their complexes because the building owners could not use their solar panels to offset the electricity used at the stations.

Farms, small commercial properties, and schools lose the ability to use VNEM under the new rules.

They would have to sell any electricity their solar panels generate to the utility at the wholesale price and then buy back that electricity at retail prices.

Without the ability to split the bill and credits in multi-tenant buildings, there is no way for commercial properties to share the benefits from solar panels.

“By adding building-level or property-level netting we can install solar on multi-tenant buildings,” said John Witchel of the technology company King Energy. “Without property-level netting, it’s simply not cost-effective for anyone.”

The commission heard from dozens of people who overwhelmingly opposed the changes to California’s solar rules for multi-tenant structures.

“Your proposal must be changed to allow everyone to use the electricity generated by their solar panels with no exceptions whatsoever. In a time of climate disaster, the CPUC should be doing whatever it can to promote rooftop solar in California and not destroy it,” said Patricia Blevins, a San Jose resident.

Another caller was upset that regulators appear to be turning their back on the state’s school children. The new rules would eliminate VNEM for schools looking to add solar.

“We need public money to benefit our public school kids. Don’t steal their resources,” said Sara Roos, the chair of the California Democratic Party’s children’s caucus.

It will be several years before regulators are required to revisit the issue.

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