On October 7, 2013, Governor Jerry Brown signed Assembly Bill (AB) 327 (Perea) creating Public Utilities Code 2827.1, which directed the CPUC to develop a successor to the net energy metering (NEM) tariff for customers with a renewable electrical generation facility. The CPUC opened Rulemaking (R.)14-07-002 on July 10, 2014 to investigate the best path forward for NEM

R.14-07-002 also responds to AB 1070 (Stats. 2017, Ch. 662), which directed the CPUC to develop standardized inputs and assumptions to be used when presenting expected electric bill savings to a prospective solar customer; and to AB 693 (Stats. 2015, Ch. 582), which created the Solar on Multifamily Affordable Housing (SOMAH) Program.

On June 24, 2021, the CPUC adopted Decision (D.)21-06-039, extending the statutory deadline in this proceeding to October 1, 2021. On December 23, 2021, the CPUC closed the proceeding with a decision on consumer protection measures, D.21-09-024. On September 15, 2022, the CPUC reopened the proceeding with a decision on the SOMAH Program, D.22-09-009

NEM Successor Tariff (“NEM2”) Decision

AB 327 requires the CPUC 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.

CPUC Energy Division staff led a robust public process, including numerous public workshops, to develop and gather public input for the development of proposals for a NEM successor tariff.

On January 28, 2016, the CPUC approved D.16-01-044, adopting a NEM successor tariff (commonly known as “NEM2”) that continued the existing NEM structure while making adjustments to align the costs of NEM successor customers more closely with those of non-NEM customers. The large investor-owned utilities (IOU) filed Advice Letters with the CPUC implementing the new requirements on February 29, 2016. The Advice Letters were approved by the CPUC in June 2016 in Resolution E-4792.

AB 327 mandated each IOU to adopt the successor tariff either on July 1, 2017 or when NEM generating capacity exceeded 5% of its aggregate peak demand. SDG&E and PG&E hit the program limit on June 29, 2016 and December 15, 2016, respectively, and SCE moved to NEM2 on July 1, 2017. The NEM successor tariff is currently in effect in SDG&E, PG&E and SCE's service territories. It is available for new customers until April 14, 2023. For information on its successor adopted in the more recent NEM Revisit Rulemaking (R.20-08-020), please visit the NEM Revisit webpage.

For details on the current NEM successor tariff (NEM2), please see the NEM Overview webpage.

Alternatives for Disadvantaged Communities

AB 327 directed the CPUC to create alternatives to the NEM successor tariff that are designed for growth of customer-sited renewable distributed generation among residential customers in disadvantaged communities (DAC). D.16-01-044 directed the Energy Division to explore the design and implementation of alternatives for DACs in a second phase of the NEM2 proceeding. In June 2018, the CPUC created three programs to increase access to solar for residents of DACs located within PG&E's, SCE's, or SDG&E's service territory in Decision (D.)18-06-027. See the Solar in DACs webpage for more information.

Solar on Multifamily Affordable Housing

AB 693 (Eggman) created the SOMAH Program. SOMAH is intended to provide financial incentives for the installation of solar PV systems on multifamily affordable housing properties throughout California. See the SOMAH webpage for more information

Solar Consumer Protections

D.16-01-044 directed Energy Division staff, in collaboration with R.14-07-002 parties, to consider further NEM consumer protection measures. In September 2018, the CPUC adopted D.18-09-044, which established a process for creating a solar information packet for consumers. The Decision also required that solar providers upload three documents before interconnecting a residential solar customer to the electric grid in the IOU territories. These documents include: the solar installation contract, a signed copy of a CPUC solar information packet, and the Contractor State License Board Solar Disclosure Document. In February 2019, the Energy Division held a workshop to seek stakeholder feedback on a draft of the required solar information packet.  The documents related to the workshop are: Agenda | Context Document | Draft Information Packet | Energy Division Presentation | Discussion Questions. In April 2019, the Energy Division distributed a revised information packet to service lists R.14-07-002 and R.12-11-005 and requested comments about the information packet’s content and implementation. The solar information packet is now named the California Solar Consumer Protection Guide

In July 2019, the CPUC issued a ruling with a staff proposal on standardized inputs and assumptions to be used by solar providers in the calculation and presentation of expected electric utility bill savings to residential consumers of solar photovoltaic energy systems. In August 2019, the CPUC held a workshop to build understanding of the elements in the staff proposal (workshop agenda). In August 2020, the CPUC adopted D.20-08-001, which adopted standardized inputs and assumptions.

In June 2021, the CPUC adopted D.21-06-026, which directed the electric IOUs to each establish a search engine for regulatory agency staff to retrieve NEM interconnection application documents, authorized a public list of solar providers with recent interconnection application(s) or associated project(s) in non-compliance with state law or regulatory agency rules and regulations, and modified the semi-annual spot audits originally required by D.18-09-044.

How to Participate in this Proceeding

Visit the CPUC's brochures webpage to find information on what happens in a proceeding, informal and formal participation, making public comments, participation at hearings and workshops, the CPUC's Intervenor Compensation Program, and ex parte communications with CPUC decisionmakers. If you want to be notified of events in R.14-07-002, sign up for the proceeding's service list.

Contact Us

If you have any additional questions about information on this webpage, please contact the CPUC Energy Division at