Existing law vests the Public Utilities Commission with regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are generally under the direction of their governing boards. Existing law requires each electrical utility, including each electrical corporation, local publicly owned electric utility, electrical cooperative, or other entity that offers electrical service, except as specified, to develop a standard contract or tariff that provides for net energy metering (NEM) , which, among other things, compensates each eligible customer-generator, as defined, for the electricity it generated during a preceding 12-month period that exceeds the electricity supplied by the electrical utility through the electrical grid to the eligible customer-generator during that same period, as provided. Existing law requires each electrical utility to make the contract or tariff available to eligible customer-generators, upon request, on a first-come-first-served basis until the time that the total rated generating capacity used by those eligible customer-generators exceeds 5% of the electrical utility's aggregate customer peak demand, except as specified. This contract or tariff is commonly known as NEM 1.0.
Existing law requires the commission to develop an additional standard contract or tariff, which may include NEM, for eligible customer-generators that are customers of large electrical corporations, as defined. Existing law requires each large electrical corporation to offer this standard contract or tariff to its eligible customer-generators beginning July 1, 2017, or before that date if ordered to do so by the commission because it has reached the above-mentioned 5% NEM 1.0 program limit, and prohibits limiting the amount of generating capacity or the number of new eligible customer-generators entitled to receive service pursuant to this standard contract or tariff, as specified. This contract or tariff is commonly known as NEM 2.0. Existing law authorizes the commission to revise the standard contract or tariff as appropriate to achieve specified objectives.
Pursuant to its authority, the commission adopted Decision 22-12-056 (December 19, 2022) , commonly known as the net billing tariff, that creates a successor tariff to the NEM 1.0 and 2.0 tariffs and includes specified elements, including, among other things, retail export compensation rates based on hourly avoided cost calculator values averaged across days in a month, as specified, and an avoided cost calculator plus adder, based on cents per kilowatt-hour exported, available during the first 5 years of the successor tariff, as specified, known as the avoided cost calculator plus glide path.
This bill would provide that, on and after July 1, 2026, an eligible customer-generator that has taken service pursuant to NEM 1.0 or 2.0 for 10 or more years is no longer entitled to take service under that contract or tariff. The bill would require that eligible customer-generator to take service under the then-current applicable tariff adopted by the commission after December 1, 2022, disqualify that eligible customer-generator from eligibility for the avoided cost calculator plus glide path, as specified, and would require the eligible customer-generator to pay all nonbypassable charges that are applicable to customers that are not eligible customer-generators.
This bill would, on and after January 1, 2026, for a customer that becomes a new eligible customer-generator by purchasing real property that contains a renewable electrical generation facility upon which a prior eligible customer-generator took service, require the new eligible customer-generator to take service under the then-current applicable tariff adopted by the commission after December 1, 2022, would disqualify the new eligible customer-generator from eligibility for the avoided cost calculator plus glide path, as specified, and would require the new eligible customer-generator to pay all nonbypassable charges that are applicable to customers that are not eligible customer-generators.
This bill would authorize the commission to adopt a new tariff for an above-described eligible customer-generator that has taken service pursuant to NEM 1.0 or 2.0 for 10 or more years, or a new eligible customer-generator that purchased real property that contains a renewable electrical generation facility, and to require those eligible customer-generators to use that new tariff if it results in a lower cost impact on customers who are not eligible customer-generators than the prior tariff that was applicable to those eligible customer-generators, as provided.
Existing law, the California Global Warming Solutions Act of 2006, designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases and requires the state board to ensure that statewide greenhouse gas emissions are reduced to at least 40% below the 1990 level by 2030. The act, until January 1, 2031, authorizes the state board to adopt a regulation establishing a market-based compliance mechanism that meets certain requirements. Pursuant to this authority, the state board adopted the Cap-and-Trade Program that, among other things, makes certain electrical distribution utilities eligible for direct allocation of greenhouse gas allowances, as specified.
Existing law requires the commission to require revenues, including any accrued interest, received by an electrical corporation as a result of the direct allocation of greenhouse gas allowances to electric utilities pursuant to the program, as provided, to be credited directly to the residential, small business, and emissions-intensive trade-exposed retail customers of the electrical corporation.
This bill would, beginning January 1, 2026, disqualify eligible customer-generators from receiving this credit.
Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of a commission action implementing this bill's requirements would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.

Statutes affected:
AB 942: 451 PUC
02/19/25 - Introduced: 451 PUC
03/25/25 - Amended Assembly: 451 PUC