Under existing law, the California Public Utilities Commission (CPUC) has regulatory authority over public utilities and authorizes the commission to fix the rates and charges for every public utility.

Net-metering

Currently California law requires every electric utility in the state to develop a standard contract or tariff providing for net metering and to make this contract or tariff available to eligible customer generators for a renewable electrical generation facility, typically rooftop solar PV.  This is made available to all customers on a first-come-first-served basis until the aggregate generation through this program exceeds 5% of the utility’s peak demand.

Assembly Bill No. 327 (AB 327), which was passed toward the end of 2013, requires large power utilities to provide net energy metering to new customer-generators in its service area through July 1, 2017.

The bill requires the CPUC to develop a standard contract or tariff for eligible customer-generators with a renewable electrical generation facility. The bill requires large utilities to offer the standard contract or tariff to all eligible customer-generators beginning July 1, 2017.  The bill stipulates that there will be no limitation on the number of new eligible customer-generators entitled to participate in the net metering program.

Restricted time-of-use pricing

In addition the bill prohibits the CPUC from requiring or allowing a power utility to implement mandatory or default time-of-use pricing prior to January 1, 2018.  After that time the CPUC will be permitted to require or authorize a power utility to implement default time-of-use pricing to residential customers.  The bill would permit the CPUC to authorize a power utility to offer residential customers the option of time-of-use pricing and other demand response programs, but the residential customer would have the option to decline time-of-use pricing.

Flattening power rates

California law requires the commission to establish an assistance program for low-income electric and gas customers, referred to as the California Alternate Rates for Energy (CARE) program.  Basically this creates a tiered rate structure.  The first two tiers, 1 and 2, are for ratepayers who use average or below average amounts of electricity. The upper tiers 4 and 5 are for heavy electricity users. Tiered pricing is not based on income, just usage.  Tier 1 users pay $0.14/kWh whereas Tier 4 users pay $0.31/kWh.

AB 327 repeals the limitations upon increasing the electric service rates of CARE customers. It removes the long-standing restriction on raising rates for those users in the two lowest tiers and lowering rates for those users in the upper tiers. The effect of AB 327 is to flatten rates between the different tiers.