Net Energy Metering Rulemaking (R.)14-07-002

Net Energy Metering (NEM) Successor Tariff

On October 7, 2013, Governor Brown signed Assembly Bill (AB) 327 (Perea) directing the Commission to develop a successor tariff for eligible customers with a renewable electrical generation on their property.  The Commission opened Rulemaking (R.)14-07-002 on July 10, 2014 to investigate the best path forward for NEM, pursuant to Public Utilities Code 2827.1.

On January 28, 2016, the CPUC approved Decision (D.) 16-01-044, adopting a NEM successor tariff that continues the existing NEM structure while making adjustments to align the costs of NEM successor customers more closely with those of non-NEM customers. The Utilities filed Advice Letters with the CPUC implementing the new requirements on February 29, 2016. The Advice Letters were approved by the Commission in June 2016 in Resolution E-4792. The NEM successor tariff is currently in effect in SDG&E, PG&E and SCE's service territories. 


Pursuant to Public Utilities Code 2827.1 requires the Commission to do the following:

  • Ensure that customer-sited renewable distributed generation continues to grow sustainably;
  • Include specific alternatives designed for the growth of distributed generation among residential customers in disadvantaged communities;
  • Ensure that the successor tariff is based on the costs and benefits of the renewable electrical generation facility;
  • Ensure that the total benefits of the tariff to all customers and the electrical system are approximately equal to the total costs;
  • Allow distributed generation projects sized to customer load that are greater than 1 MW in size to interconnect under reasonable charges if they do not have significant impact on the distribution grid; and,
  • Establish terms of service and billing rules for eligible customer generators, consistent with all other relevant statutory requirements.

AB 327 mandated each large investor-owned utility to adopt the sucessor tariff either on July 1, 2017 or when NEM generating capacity exceeded 5% of their aggregate peak demand.  SDG&E and PG&E hit the program limit on June 29, 2016 and December 15, 2016, respectively, and SCE rolled over on July 1, 2017.  For details on the current NEM successor tariff, please see our NEM Overview page.  Energy Division Staff led a robust public process, including numerous public workshops, to develop and gather public input for the development of proposals of NEM successor tariff.  Information and supporting documents on the process and workshops can be found on the page Public Process to Develop Proposal for the Net Energy Metering Successor Tariff.

Current Policy Issues

The Commission is currently addressing a number of issues related to the NEM successor tariff as part of Rulemaking (R.)14-07-002.  These issues are summarized below.  To join this proceeding or any other proceeding's service list, please visit our Service List page.  For more information on how you can participate in this proceeding, please visit the Commission's Public Advisor page.

  • Alternatives for Disadvantaged Communities - D.16-01-044 directed CPUC's Energy Division to explore the design and implementation of alternatives for disadvantaged communities (DAC) in a second phase of the proceeding.  On March 14, 2017, the Administrative Law Judge Ruling sought updated proposals on DAC alternatives, which were received by the Energy Division on April 24, 2017.  A proposal decision adopting a policy will follow.
  • Mulitifamily Affordable Housing Solar Roofs Program - Assembly Bill (AB) 693 (Eggman) created the Multifamily Affordable Solar Housing Roofs Program (MAHSR). MAHSR is intended to provide financial incentives for the installation of solar PV systems on multifamily affordable housing properties throughout California. The statute, among other things, prescribes criteria for participation in the incentive program; sets targets for installation of solar PV systems; identifies various required elements for the program; and gives direction to the Commission on administration of the program. The Commission is currently in the process of implementing the statute.  
  • Consumer Protections - The NEM Successor Tariff Decision (D.)16-01-044 also directed Energy Division staff, in collaboration with R.14-07-002 parties, to consider further consumer protection measures, including but not limited to development of budgets to implement consumer protection, measurement and evaluation, and marketing and outreach like an information packet for NEM successor customer-generators.

As a first step, the CPUC held a workshop on October 20, 2016 on emerging consumer protection NEM issues. Agenda and presentation links are below. An Administrative Law Judge Ruling was issued on December 8, 2016 as a follow up to this workshop, seeking comments on consumer protection issues. A proposed decision adopting a policy will follow.

 Consumer Protection Workshop Agenda and Presentations

  • Evaluation of Successor Tariff Rate - Pursuant to direction in the NEM Successor Tariff Decision, the Commission will review the NEM successor tariff in 2019, when the proceedings related to distributed energy resources are completed and after default TOU rates are implemented. Energy Division staff will explore compensation structures for customer-sited distributed generation other than NEM, as well as consider an export compensation rate that takes into account locational and time-differentiated values.

If you have any additional questions, you can contact Kerry Fleisher at the CPUC Energy Division:

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