2. Background

The Net Energy Metering (NEM) program was established by Senate Bill (SB) 656 in 1995 (Stats. 1995, ch. 369). At that time, the NEM program cap was defined by statute as "0.1 percent of the utility's peak electricity demand forecast for 1996" and the statute included the exact figures for the 1996 system peak forecast for each utility. The statute has been modified on numerous occasions since 1995. Currently, the language regarding a cap on participation in the NEM program is contained in Pub. Util. Code § 2827(c)(1), which provides that:

Every electric utility shall develop a standard contract or tariff providing for net energy metering, and shall make this standard contract or tariff available to eligible customer-generators, upon request, on a first-come-first-served basis until the time that the total rated generating capacity used by eligible customer-generators exceeds 5 percent of the electric utility's aggregate customer peak demand.

In essence, a utility's progress toward reaching the NEM cap can be expressed by the following equation:

Total Rated Generating Capacity of Eligible Customer Generators x 100 = % of NEM cap

Aggregate Customer Peak Demand

In July 2011, the Interstate Renewable Energy Council (IREC) filed a motion requesting clarification that the scope of this rulemaking include the issue of how to calculate the NEM cap. IREC maintains that the three investor-owned utilities (IOUs) use different methods of calculating the NEM cap due to a lack of clarity in the definition of the term "aggregate customer peak demand," which appears in § 2827(c)(1).

A ruling dated December 14, 2011 granted IREC's motion and allowed parties to file suggested methodologies for calculation of the NEM cap. The ruling noted the variation in the methods currently used by Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas and Electric Company (SDG&E) to calculate aggregate customer peak demand, which is the denominator of the NEM cap equation. As described in the ruling, each utility currently uses a different demand interval - either 5, 30 or 60 minutes - to calculate aggregate customer peak demand.

Comments containing NEM cap calculation proposals were filed on January 17, 2012 by Distributed Energy Consumer Advocates (DECA),¹ PG&E, SCE, and jointly by IREC, the Vote Solar Initiative, the California Solar Energy Industries Association (CALSEIA), the Solar Energy Industries Association (SEIA), and the Sierra Club (collectively, the Joint NEM Parties). Reply comments on these proposals were filed on January 27, 2012 by DECA, the Commission's Division of Ratepayer Advocates (DRA), PG&E, SCE, SDG&E, and the Joint NEM Parties.

¹ On March 23, 2012, DECA filed a motion to withdraw its comments and its Notice of Intent to Claim Compensation in this proceeding, stating it was no longer able to participate in this phase of the proceeding. DECA's motion is granted and its comments on the NEM cap methodology will not be considered at this time, although the comments will remain in the formal file of this proceeding.