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HomeMy WebLinkAbout1D - Public CommentTiffani Bailey From: Anthony Mejia Sent: Wednesday, January 12, 2022 4:12 PM To: Tiffani Bailey Subject: Fwd: Agenda Item 1 D NEM Resolution - Public Comment Attachments: image001.gif, image003.png; Proposed Net Billing Tariff FAQ.pdf Follow Up Flag: Follow up Flag Status: Flagged For tomorrow's AC Anthony Mejia City Clerk Begin forwarded message: From: Jennifer Cusack <Jennifer.Cusack@sce.com> Date: January 12, 2022 at 3:56:58 PM PST To: Anthony Mejia <Anthony.Mejia@palmspringsca.gov> Cc: CityManager <CityManager@palmspringsca.gov> Subject: Agenda Item 1D NEM Resolution - Public Comment NOTICE: This message originated outside of The City of Palm Springs -- DO NOT CLICK on links or open attachments unless you are sure the content is safe. Dear Honorable Mayor and Council members, I am a registered lobbyist with the City of Palm Spring and I am writing on behalf of Southern California Edison (SCE) in regard to Consent Calendar item number 1D. I respectfully request the City Council not adopt the proposed resolution as written. Net Energy Metering (NEM) is a policy that has outlived its useful life and must evolve. The NEM program started in the 1990s to stimulate the rooftop solar market by providing solar adopters a subsidy paid by residential and business customers without solar. Now that the market is mature, the California Public Utilities Commission (CPUC) has proposed to reduce, but not eliminate, the NEM subsidy. The cost shift created by the current NEM subsidy is making electricity less affordable for customers who can afford it the least. Importantly, the proposal by the CPUC would create at minimum a $600M fund to support growth of the solar industry among lower income customers. The CPUC has confirmed installation of distributed generation is less frequent in low-income households. Palm Springs has over 8,000 homes on SCE's low-income CARE tariff. SCE is committed to helping the state, local governments, and our customers build a clean energy future, as outlined in our Pathway 2045 vision. This vision includes l - 1 3- ZD zz 1 P u b 1 (: to rrx M 2n-f- almost half of all single-family homes adopting rooftop solar, ideally paired with storage. Energy storage is key to our clean energy future and the current NEM framework does not properly incentivize it. Also, electricity must remain affordable so as to incentivize the adoption of clean technologies like electric vehicles and heat pump water heaters, but the cost shift caused by NEM is putting upward pressure on rates. As such, the NEM program must evolve. The CPUC's Proposed Decision focus heavily on changing the way we compensate customer exports to better incentivize more customer -owned storage and reduce the financial burden on non -solar customers. Currently, a misalignment exists between the compensation provided to participating NEM customers for load reductions and grid exports, which greatly exceeds the incremental benefits provided by rooftop solar. Most rooftop solar exports occur during times of day and seasons of the year when the grid already has an overabundance of solar. This is driving the value of exports down yet NEM customers get full retail compensation, which is about 5X higher than the avoided cost. This misalignment has led to higher bills for non-NEM customers. The cost of solar systems has dropped 70% since the NEM program was enacted in 1995, but the subsidy, paid for by customers who don't have solar, has regularly increased, and will continue to do so unless something changes. The cost of the NEM subsidy is not borne by SCE as a company or shareholders. It is passed on to the remaining non -solar customers, hence the "cost -shift" from solar customers, who tend to be wealthier homeowners, to non -solar customers, who tend to be lower -income and renters. Currently, the average non-NEM customer is paying $245 more per year to pay for the cost shift. If changes are not made, by 2030 the cost shift will increase to $555. Increasing solar access to vulnerable populations is of utmost importance to SCE as we strive to meet our sustainability and climate equity goals. There are innovative ways to increase solar access to this group of customers as outlined in the joint - utility proposal. However, there will be some customers that will not be able to adopt solar due to home ownership limitations or structural limitations that prevent optimal solar production. It would be unfair and unequitable for those non -solar customers to continue seeing rising electricity bills to fund subsidies being provided to wealthier solar adopters. While not completely eliminating the cost shift, the CPUC's Proposed Decision makes meaningful steps to address these concerns. There is no proof NEM reform will kill or harm the solar industry in California. In fact, the opposite is occurring as other states, such as Hawaii, Nevada, and Arizona, have updated their solar programs to mitigate the inequitable cost shift imbalance between solar and non -solar customers. The solar industry in those markets continues to thrive. In addition, the Sacramento Municipal Utility District (SMUD), a publicly -owned utility, voted unanimously to reform their NEM program on September 16, 2021. Notable changes included reductions to export compensation that aim to align more with today's wholesale cost of renewable energy. Reforming NEM will not harm California's ability to achieve its 2045 zero -carbon electricity goals. The exact opposite is true - power generated from rooftop solar costs about 8X more than electricity generated from large scale systems, making it the most expensive means of expanding renewable energy. Recent studies by Next 10 and UC Berkeley have also confirmed NEM as a significant driver of higher electric rates in California. As we continue to transition away from fossil fuels, 2 energy storage will become more important. Economist Dr. Severin Borenstein recently wrote, "...the ballooning subsidies have induced residential solar firms to go big on selling more dumb systems, without storage or grid communication. Those installations now do little to reduce grid costs or cut GHGs in California, but are still the vast majority of new systems going in today. The result is costing non -solar households boatloads of money." Many of the proposed changes in the CPUC's Proposed Decision focus heavily on changing the way we compensate customer exports so as to better incentivize more Alsmart" systems paired with storage. It is important to note that the California Public Utilities Commission (CPUC) is not only considering the joint -utilities proposal. Solar parties have also submitted proposals, as have multiple parties who are also advocating for NEM reform, including The Utility Reform Network, California Public Advocates, Natural Resource Defense Council, Sierra Club, and The American Association of Retired Persons. Many academics have also weighed in on the issue. The commission's Proposed Decision, which was published in December, does not pick one proposal over another and instead incorporates elements from multiple parties. SCE appreciates our longstanding partnership with the City of Palm Springs. We look forward to continuing to with the Council to help the City achieve its sustainability goals. We urge the Council to consider the impacts the current NEM program has on affordability and economywide decarbonization. We urge the Council to vote no on this resolution. Please let me know if I can provide any additional information related to this or other energy related matters. Respectfully, Jennifer Cusack Government Relations Manager Southern California Edison Government Affairs I Local Public Affairs Cell. 760-419-3510 Twitter @SCE JenniferC If you see fallen power line(s), please stay away and call 911 immediately. Emergency Hotline: 800-611-1911 or www.sce.com/outage General Customer Service: 800-655-4555 or www.sce.com/contactus Local Planning: https://www.sce.com/partners/consulting-services/localplanning Wildfire Safety Program & Rebates: https://www.sce.com/safety/wildfire Energy Savings Assistance: 800-736-4777 or www.sce.com/esap Savings By Design (new construction/remodel): https://www.savingsbvdesign.com/ Energy Education Center FREE Online Classes https://www.sce.com/business/consulting- services/energy-education-centers Energy Efficiency for Businesses/Non-profits: https://sceonlineapp.com/ Clean Energy Pathway https://www.edison.com/home/our-perspective/pathway-2045.htmi Electric Vehicles: https://www.sce.com/residential/electric-cars Edison News: https://energized.edison.com/ Request a Speaker: https://www.sce.com/ko/about-us/community/outreach/speakers-bureau 3 Customer PSPS & Emergency Preparedness Programs/Rebates COVID-19 SCE Programs 1. What is the status of NEM in California currently? o As of today, all existing NEM rules and policies continue to be in effect. On December 13, 2021, the CPUC issued a Proposed Decision addressing the future of NEM including implementation of a new "Net Billing Tariff." A final decision may be decided as early as the Commission's Business Meeting on January 27, 2022. 2. What is the cutoff date for submitting a valid interconnection request under NEM 2.0? o If the Commission adopts its Proposed Decision, the last day a customer can submit a valid interconnection request for NEM 2.0 will be four (4) months after the Commission issues its final decision. 3. lam a current NEM customer, how will the proposed Net Billing Tariff impact me? o The proposed Net Billing Tariff will not change the way current NEM customers are billed until the legacy period on their current tariff expires. The Commission's proposed decision will shorten the current legacy periods for NEM 1.0 and 2.0 from 20 years to 15 years. Once that period expires, SCE will serve existing and new customers on the new Net Billing Tariff. 4. What is the payback period under the new proposed Net Billing Tariff? o The proposed Net Billing Tariff estimates that the payback period for customers' adopting energy storage with their solar system will average 10 years. S. Does the proposed Net Billing Tariff change the interconnection process or related fees? o The proposed Net Billing Tariff does not make any significant changes to the interconnection process or related fees. 6. How will customers be paid for generation in the proposed Net Billing Tariff? o Under the proposed Net Billing Tariff, customers will be compensated for energy exported to the grid based on a predetermined estimated value of the energy at that time of day. The value of these credits varies by the time of day and season and are affected by the supply and demand for electricity on the grid. The value of this credit will usually be lower than the rate that customers pay for electricity, just as wholesale prices for other commodities are lower than their retail prices. Will the proposed Net Billing Tariff include any new fees? o The proposed Net Billing Tariff includes a fixed Grid Participation Charge for residential customers, which will pay for the costs of maintaining, improving, and reliably operating the grid that both NEM and non-NEM customers depend on for reliable power but that NEM customers currently avoid. This charge also pays for public purpose programs like those supporting bill assistance for low-income customers. Low-income customers are exempt from the Grid Participation Charge. 8. Are there any changes to the MASH or SOMAH Programs? o The proposed decision does not include changes to the MASH and SOMAH program. Customers who are new to this program will be placed on NEM 2.0. 9. Why is NEM Changing? o The NEM program was started in the 1990s to stimulate the rooftop solar market by providing solar adopters a subsidy paid by customers without solar. Now that the market is mature, the Commission has proposed to reduce, but not eliminate, the NEM subsidy because it has created a financial impact on customers without solar. The current subsidy is more than seven times greater than the cost of solar energy on the open market. The proposed reduced subsidy will continue to support the growth of rooftop solar in California. o One result of the high subsidy is that NEM customers not only avoid paying for the full cost of energy they receive from the utility, they also avoid the fixed costs of service that are meant to be shared among all electric service customers. Those costs include paying for the use of the existing electric grid, as well as necessary efforts to modernize it. Customers without solar must therefore pay those costs ---- up to $240 per year -- on behalf of NEM customers. Without the proposed reform, that amount will continue to rise. o In addition to avoiding paying the cost of utility service, NEM customers export their excess power to the grid. Those exports are purchased by utilities at the NEM customers' retail rate, which is significantly higher than the wholesale rate utilities typically pay for power. These costs are then passed through to non-NEM customers. o Reforming the NEM subsidy has widespread support from a diverse set of organizations, including groups like the Natural Resource Defense Council (NRDC) and Sierra Club, as well as groups representing customers, union labor, and utility reform. o California has committed to 100% of electricity coming from renewable and carbon -free resources by 2045. SCE has a Pathway to reach that 2045 goal. Reducing the NEM subsidy is essential to reaching that goal so that customer rates remain affordable. Anthony Mejia From: Jennifer Cusack <Jennifer.Cusack@sce.com> Sent: Wednesday, January 12, 2022 3:57 PM To: Anthony Mejia Cc: CityManager Subject: Agenda Item 1 D NEM Resolution - Public Comment Attachments: Proposed Net Billing Tariff FAQ.pdf NOTICE: This message originated outside of The City of Palm Springs -- DO NOT CLICK on links or open attachments unless you are sure the content is safe. Dear Honorable Mayor and Council members, I am a registered lobbyist with the City of Palm Spring and I am writing on behalf of Southern California Edison (SCE) in regard to Consent Calendar item number 1D. I respectfully request the City Council not adopt the proposed resolution as written. Net Energy Metering (NEM) is a policy that has outlived its useful life and must evolve. The NEM program started in the 1990s to stimulate the rooftop solar market by providing solar adopters a subsidy paid by residential and business customers without solar. Now that the market is mature, the California Public Utilities Commission (CPUC) has proposed to reduce, but not eliminate, the NEM subsidy. The cost shift created by the current NEM subsidy is making electricity less affordable for customers who can afford it the least. Importantly, the proposal by the CPUC would create at minimum a $600M fund to support growth of the solar industry among lower income customers. The CPUC has confirmed installation of distributed generation is less frequent in low-income households. Palm Springs has over 8,000 homes on SCE's low-income CARE tariff. SCE is committed to helping the state, local governments, and our customers build a clean energy future, as outlined in our Pathway 2045 vision. This vision includes almost half of all single-family homes adopting rooftop solar, ideally paired with storage. Energy storage is key to our clean energy future and the current NEM framework does not properly incentivize it. Also, electricity must remain affordable so as to incentivize the adoption of clean technologies like electric vehicles and heat pump water heaters, but the cost shift caused by NEM is putting upward pressure on rates. As such, the NEM program must evolve. The CPUC's Proposed Decision focus heavily on changing the way we compensate customer exports to better incentivize more customer -owned storage and reduce the financial burden on non -solar customers. Currently, a misalignment exists between the compensation provided to participating NEM customers for load reductions and grid exports, which greatly exceeds the incremental benefits provided by rooftop solar. Most rooftop solar exports occur during times of day and seasons of the year when the grid already has an overabundance of solar. This is driving the value of exports down yet NEM customers get full retail compensation, which is about 5X higher than the avoided cost. This misalignment has led to higher bills for non-NEM customers. The cost of solar systems has dropped 70% since the NEM program was enacted in 1995, but the subsidy, paid for by customers who don't have solar, has regularly increased, and will continue to do so unless something changes. The cost of the NEM subsidy is not borne by SCE as 13 -- Z02Z ITI .M NO. a company or shareholders. It is passed on to the remaining non -solar customers, hence the "cost -shift" from solar customers, who tend to be wealthier homeowners, to non -solar customers, who tend to be lower -income and renters. Currently, the average non-NEM customer is paying $245 more per year to pay for the cost shift. If changes are not made, by 2030 the cost shift will increase to $555. Increasing solar access to vulnerable populations is of utmost importance to SCE as we strive to meet our sustainability and climate equity goals. There are innovative ways to increase solar access to this group of customers as outlined in the joint -utility proposal. However, there will be some customers that will not be able to adopt solar due to home ownership limitations or structural limitations that prevent optimal solar production. It would be unfair and unequitable for those non -solar customers to continue seeing rising electricity bills to fund subsidies being provided to wealthier solar adopters. While not completely eliminating the cost shift, the CPUC's Proposed Decision makes meaningful steps to address these concerns. There is no proof NEM reform will kill or harm the solar industry in California. In fact, the opposite is occurring as other states, such as Hawaii, Nevada, and Arizona, have updated their solar programs to mitigate the inequitable cost shift imbalance between solar and non -solar customers. The solar industry in those markets continues to thrive. In addition, the Sacramento Municipal Utility District (SMUD), a publicly -owned utility, voted unanimously to reform their NEM program on September 16, 2021. Notable changes included reductions to export compensation that aim to align more with today's wholesale cost of renewable energy. Reforming NEM will not harm California's ability to achieve its 2045 zero -carbon electricity goals. The exact opposite is true - power generated from rooftop solar costs about 8X more than electricity generated from large scale systems, making it the most expensive means of expanding renewable energy. Recent studies by Next 10 and UC Berkeley have also confirmed NEM as a significant driver of higher electric rates in California. As we continue to transition away from fossil fuels, energy storage will become more important. Economist Dr. Severin Borenstein recently wrote, "...the ballooning subsidies have induced residential solar firms to go big on selling more dumb systems, without storage or grid communication. Those installations now do little to reduce grid costs or cut GHGs in California, but are still the vast majority of new systems going in today. The result is costing non -solar households boatloads of money." Many of the proposed changes in the CPUC's Proposed Decision focus heavily on changing the way we compensate customer exports so as to better incentivize more "smart" systems paired with storage. It is important to note that the California Public Utilities Commission (CPUC) is not only considering the joint -utilities proposal. Solar parties have also submitted proposals, as have multiple parties who are also advocating for NEM reform, including The Utility Reform Network, California Public Advocates, Natural Resource Defense Council, Sierra Club, and The American Association of Retired Persons. Many academics have also weighed in on the issue. The commission's Proposed Decision, which was published in December, does not pick one proposal over another and instead incorporates elements from multiple parties. SCE appreciates our longstanding partnership with the City of Palm Springs. We look forward to continuing to with the Council to help the City achieve its sustainability goals. We urge the Council to consider the impacts the current NEM program has on affordability and economywide decarbonization. We urge the Council to vote no on this resolution. Please let me know if I can provide any additional information related to this or other energy related matters. Respectfully, Jennifer Cusack Government Relations Manager Southern California Edison Government Affairs I Local Public Affairs Cell. 760-419-3510 Twitter @SCE JenniferC ------------------------------------------------ I Fit R%(A"Icoo .. SO N ( Energy for What's Ahead" If you see fallen power line(s), please stay away and call 911 immediately. Emergency Hotline: 800-611-1911 or www.sce.com/outage General Customer Service: 800-655-4555 or www.sce.com/contactus Local Planning: https://www.sce.com/partners/consulting-services/localplannina Wildfire Safety Program & Rebates: https://www.sce.com/safety/wildfire Energy Savings Assistance: 800-736-4777 or www.sce.com/esap Savings By Design (new construction/remodel): https://www.savingsbvdesign.com/ Energy Education Center FREE Online Classes https://www.sce.com/business/consulting-services/energy-education- centers Energy Efficiency for Businesses/Non-profits: https://sceonlineapp.com/ Clean Energy Pathway https://www.edison.com/home/our-perspective/pathway-2045.htmi Electric Vehicles: https://www.sce.com/residential/electric-cars Edison News: https://energized.edison.com/ Request a Speaker: https://www.sce.com/ko/about-us/community/outreach/speakers-bureau Customer PSPS & Emergency Preparedness Programs/Rebates COVID-19 SCE Programs 1. What is the status of NEM in California currently? o As of today, all existing NEM rules and policies continue to be in effect. On December 13, 2021, the CPUC issued a Proposed Decision addressing the future of NEM including implementation of a new "Net Billing Tariff." A final decision may be decided as early as the Commission's Business Meeting on January 27, 2022. 2. What is the cutoff date for submitting a valid interconnection request under NEM 2.0? o If the Commission adopts its Proposed Decision, the last day a customer can submit a valid interconnection request for NEM 2.0 will be four (4) months after the Commission issues its final decision. 3. lam a current NEM customer, how will the proposed Net Billing Tariff impact me? o The proposed Net Billing Tariff will not change the way current NEM customers are billed until the legacy period on their current tariff expires. The Commission's proposed decision will shorten the current legacy periods for NEM 1.0 and 2.0 from 20 years to 15 years. Once that period expires, SCE will serve existing and new customers on the new Net Billing Tariff. 4. What is the payback period under the new proposed Net Billing Tariff? o The proposed Net Billing Tariff estimates that the payback period for customers' adopting energy storage with their solar system will average 10 years. 5. Does the proposed Net Billing Tariff change the interconnection processor related fees? o The proposed Net Billing Tariff does not make any significant changes to the interconnection process or related fees. 6. How will customers be paid for generation in the proposed Net Billing Tariff? o Under the proposed Net Billing Tariff, customers will be compensated for energy exported to the grid based on a predetermined estimated value of the energy at that time of day. The value of these credits varies by the time of day and season and are affected by the supply and demand for electricity on the grid. The value of this credit will usually be lower than the rate that customers pay for electricity, just as wholesale prices for other commodities are lower than their retail prices. 7. Will the proposed Net Billing Tariff include any new fees? o The proposed Net Billing Tariff includes a fixed Grid Participation Charge for residential customers, which will pay for the costs of maintaining, improving, and reliably operating the grid that both NEM and non-NEM customers depend on for reliable power but that NEM customers currently avoid. This charge also pays for public purpose programs like those supporting bill assistance for low-income customers. Low-income customers are exempt from the Grid Participation Charge. 8. Are there any changes to the MASH or SOMAH Programs? o The proposed decision does not include changes to the MASH and SOMAH program. Customers who are new to this program will be placed on NEM 2.0. 9. Why is NEM Changing? o The NEM program was started in the 1990s to stimulate the rooftop solar market by providing solar adopters a subsidy paid by customers without solar. Now that the market is mature, the Commission has proposed to reduce, but not eliminate, the NEM subsidy because it has created a financial impact on customers without solar. The current subsidy is more than seven times greater than the cost of solar energy on the open market. The proposed reduced subsidy will continue to support the growth of rooftop solar in California. o One result of the high subsidy is that NEM customers not only avoid paying for the full cost of energy they receive from the utility, they also avoid the fixed costs of service that are meant to be shared among all electric service customers. Those costs include paying for the use of the existing electric grid, as well as necessary efforts to modernize it. Customers without solar must therefore pay those costs ---- up to $240 per year -- on behalf of NEM customers. Without the proposed reform, that amount will continue to rise. o In addition to avoiding paying the cost of utility service, NEM customers export their excess power to the grid. Those exports are purchased by utilities at the NEM customers' retail rate, which is significantly higher than the wholesale rate utilities typically pay for power. These costs are then passed through to non-NEM customers. o Reforming the NEM subsidy has widespread support from a diverse set of organizations, including groups like the Natural Resource Defense Council (NRDC) and Sierra Club, as well as groups representing customers, union labor, and utility reform. o California has committed to 100% of electricity coming from renewable and carbon -free resources by 2045. SCE has a Pathway to reach that 2045 goal. Reducing the NEM subsidy is essential to reaching that goal so that customer rates remain affordable.