NEM 3 – Net Energy Metering is changing, don’t wait.

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The time for Californians to act is now. If you enjoy energy at a reasonable rate, then you can wait no longer. What do I mean by that? Net energy metering. You may not be familiar with it, so before we get to why you need to act now, let’s bring you up to speed. (Just want to see the changes, click here)

What is Net Energy Metering (NEM)

Net energy metering, or NEM, was created based on technology and concept by the same name. Homeowners who have solar energy attached to their homes are able to measure the energy they produce by an energy meter versus the energy they consume. The sum, or net, of what is left decides whether or not they pay a bill to their utility company. If you produce more electricity than you consume, then you get a credit towards your bill. Some places apply this to your account, while others issue payments. Most companies now place you on a 12-month billing cycle where you and the utility company “settle up” at the end of each year. 

The regulation details for repayment are set by California State Assembly Bill 920, allowing utilities to make payments to NEM customers who generate more electricity than they use over their 12-month billing cycle. This payment, known as your Net Surplus Compensation (NSC), the utility calculates over your 12-month billing cycle. They use the 12-month average of market rates for energy, usually about two to four cents per kilowatt-hour (kWh), for what you have consumed and subtract your solar credits, the energy you produced that year multiplied by its monetary value. Basically, you are using the utility grid as a battery to support your solar panel system and energy delivery for your home. Your solar panels are now your real energy provider.


NEM sounds great, so what’s the problem?

Well, the NEM program, or regulations created by legislation, has undergone changes throughout the years. We currently are in NEM 2.0. This current regulation standard has been favorable to solar energy owners and producers. The passage of California AB 327 in 2013 set NEM 2.0’s guidelines, which went into effect at the end of 2016. The legislation safeguarded solar investments for homeowners keeping utilities from deviously changes rates, fees, etc., to hinder or steal credits from those generating solar energy. The state was the one making the rules and determinations now, not utility companies.

Recently, the California Public Utility Commission formally opened its NEM-3, something that they lobbied for heavily, that will change the rules for NEM tariffs for California solar energy system owners. Their claim is, “it’s not fair for non-solar ratepayers to be subsidizing solar for the minority that does have solar.” When, in actuality, they are not happy that residents who generate solar power pay only a third to half of their energy bill than those who don’t have solar panels. Over the years, the NEM system has made it where people could generate more solar energy for their residents, just making their bills cheaper and cheaper. The utilities did not well receive this fact. Now you see the rub, especially when utilities can add fees and increase rates pretty much on a whim.

Why wouldn’t every Californian resident switch to solar? And that is what keeps utility CEOs up at night, especially with rates on the continual rise. The new proceedings expected to be adopted will change the NEM system and plan to occur in January 2022. 

What to do?

The simple answer is to install a solar energy system, if you don’t have it already, and get in the NEM program before the change. Why? Here’s the beauty of it all. Anyone who signs up under the current system, NEM 2.0, is locked into its rules and regulations for 20 years. Yep! That means if you get in now, the new and worse NEM 3.0 will not affect you. They grandfather in your system or account. Talk about protection for the residents of California. While this new NEM system hinders solar development, you will enjoy your energy independence and little to no energy bills for at least two decades, guaranteed.

Get started protecting your budget and energy future by installing solar on your property today. Expert and dependable solar installers, like Option One Solar, are here to help you get a system today.

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