In a huge victory for solar customers and the states's growing solar industry, state regulators with the California Public Utilities Commission unanimously voted Thursday to effectively raise the current "cap" on net energy metering.

Net metering, a popular policy that has been in place in California for 15 years, allows homeowners, school districts and businesses to offset the cost of their electricity with the rooftop solar power they generate and export to the grid.

Current state law requires California's major utilities to make net metering available to customers on a first-come, first-served basis, but the program is capped at 5 percent of a utility's "aggregate customer peak demand." That means that as soon as a utility gets 5 percent of its electricity from solar customers, it is no longer required to sign new contracts.

But Thursday's 5-0 vote more than doubles the size of the cap, ensuring that net metering will continue to be a key driver of solar adoption in California. The issue largely centered on jobs: Several commissioners spoke about the fact that the solar industry is creating desperately needed installation jobs in the state.

PUC President Michael Peevey's proposal, which was revised late Wednesday to require a new study of net metering's costs and benefits, changes the way that the cap on net metering is calculated, effectively raising the cap to more than 10 percent for customers within PG&E's service territory.

"This is a huge victory for California's environment, jobs and secure energy future," said Michelle Kinman of Environment California.

Critics, including the consumer advocacy group TURN, warned that the solar industry pushed for an indefinite extension of net metering when the popular program needs to be reformed. And because solar customers tend to be more affluent homeowners, utilities and others have argued that lower-income nonsolar ratepayers are basically subsidizing solar customers in a way that needs to be revised.

But PUC commissioners concluded Thursday that California must move forward with its ambitious renewable energy goals. Commissioner Timothy Simon also said the notion that solar customers are all wealthy is false.

"My barber has solar panels," Simon said. "We should expand solar and the net metering program in low-income communities."

PG&E has more than 65,000 net metering customers throughout its vast Northern California territory, which accounts for about a third of all rooftop solar installations nationwide. The San Francisco-based utility is adding about 1,000 new net meter customers each month.

Under the current net energy metering law, PG&E uses the highest peak demand ever recorded within its service territory -- the 20,883 megawatts PG&E customers used on July 25, 2006 -- as its aggregate customer peak demand. That means that 5 percent is 1,044 megawatts.

Peevey's proposal changes the formula and require utilities to calculate peak load for individual customers, which would raise the cap far beyond 5 percent. Under the new proposal, PG&E says, its net metering cap would expand to 2,414 megawatts -- or 11.6 percent of peak demand.

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.

WHAT IS NET METERING?
Net metering measures the difference between the electricity you buy from your utility and the electricity your solar system generates and feeds back to the electric grid over a 12-month period. Your meter keeps track of this "net" difference as your system generates electricity or uses electricity from the transmission grid.
Source: Mercury News reporting