On October 11, 2009, Governor Schwarznegger signed into law AB 920, requiring California utilities to compensate Net Energy Metering (NEM) customers for electricity produced in excess of on-site load over a 12-month period. The law requires that the utilities notify their NEM customers by January 31, 2010, that they are eligible for net surplus electricity compensation, and it directs the CPUC to establish by January 1, 2011, a net surplus compensation rate to be paid to NEM customers who produce more kilowatt hours than they consume in a 12-month period. Customers may sign up for net surplus compensation immediately, although they will not know the rate at which they will be compensated until the CPUC establishes the rate, some time in 2010.
AB 920 stipulates that the utilities will receive the renewable energy credits (RECs) associated with those excess kilowatt hours for which they have provided customers compensation. In addition, the law requires the CPUC to set the net surplus compensation rate at a level that is just and reasonable for the net surplus customer-generator but that does not create a cost for other bundled service customers.
As a first step in this process, on January 15, 2010, the CPUC issued an Assigned Commissioner Ruling directing the utilities to file applications proposing a net surplus compensation rate that meets the requirements of AB 920. Utilities filed applications on March 15, which were then consolidated into a single proceeding, and the public was provided several opportunities to provide input before a final net surplus compensation rate was put forward for Commission vote. Customers may sign up for net surplus compensation immediately, and will be compensated at the rate determined on June 9, 2011 in Decision (D.) 11-06-016 following staff advice letter disposition.