AB 327 and Net Metering: What Consumers Should Know

When consumers use alternate forms of energy—solar, wind, fuel cell, or biogas—to meet their residential energy needs, they can sell the excess production to utility companies. These “customer generators” then receive a credit or even a payment based on the amount of energy they provide above and beyond their own residential use. In California, more than 120,000 accounts are enrolled in this type of program, which is called net metering. 

By using a net metering program that is mandated by the state, consumers are able to meet their annual load of consumption instead of just what they need in the moment. For example, an especially sunny week could bring in much more solar energy than you need while a rainy, cloudy week may not bring in enough. Net metering programs allow for these fluctuations and ensure that consumers who invest in renewable energy see value for it and have their own energy demands met.

Until now, California utility companies have been able to create their own rules and definitions when it comes to consumer-generated renewable energy. Assembly Bill 327 seeks to regulate the way that utility companies credit consumer generators to make solar energy more valuable for everyone.

What is AB 327?

In October 2013, California Governor Jerry Brown put his signature to Assembly Bill 327, which deals with consumer-generated energy and establishes a standard contract between these consumers and utility companies by January 2017. The mandates in the bill:

• Preservation of the current net metering program until the end of 2016
• Power given to the California Public Utilities Commission to lift monetary caps on net metering
• Initiatives to encourage the growth of consumer energy generation
• Focus on ways to introduce energy generation in disadvantaged communities
• Potential for the CPUC to require utility companies to receive more than 33 percent of their electricity from renewable sources
• Assurance that the successor tariff is developed with the costs and benefits pertaining to the electrical generation location
• Assurance that the total benefits of the tariff are equal to the costs to the electrical system and the consumers
• Billing rules and other rules for consumer generators that align with other legal requirements

What Does it Mean for Consumers?

AB 327 wasn’t well received by the solar industry initially because the bill made consumer installation of solar technology less attractive by devaluing the financial return they could potentially see. But amendments to the bill have improved the outlook for consumers, and so it now has the backing of The Alliance for Solar Choice and the Solar Energy Industries Association.

Consumers should continue to have faith in the value of solar energy and that their best interests are being represented when changes to net metering policy are introduced. Renewable energy is only going to become more relevant and financially sound as fossil fuel methods continue to rise in price and inefficiency.