In an outcome more helpful to residential than institutional customers, the Public Utilities Commission has interpreted the AB 327 solar legislation of 2013 to grant a 20-year extension of the current Net Energy Metering (NEM) payback deal for solar panel owners who send energy back into the grid.

The extension will apply for 20 years for each customer of Pacific Gas and Electric, San Diego Gas and Electric and Southern California Edison who connects a solar system to the grid before either July 1, 2017 or the date the local cap for participation is reached, whichever comes first. The cap will be reached when the local utility's "eligible customer-generators" together have the capacity to meet 5 percent of the system's peak demand. Customers who beat that cutoff date will have the right, for 20 years from their respective dates of connection, to be paid for power they generate based on the existing NEM tariff structure.

Among many other findings, the decision said that, since 2010 in California, it takes residential customers 8 to 12 years to break even and commercial customers 8 to 18 years, so a 20-year grandfathering period meets the AB 327 requirement for a "reasonable expected payback period". It said the paybacks to solar generators at NEM rates might cost other ratepayers as much as $1 billion per year by 2020 if by then the 5 percent capacity limits had been reached.

For people and companies newly entering the program after the cutoff date, and for the initial adopters after their 20-year periods end, a new tariff structure is to be set that will likely pay solar-generating customers less for their energy in order to reduce burdens on other ratepayers.

Some commenters in the PUC proceeding had said the initial rates should be maintained for up to 30 years, based on the expected useful life of a solar power system. The San Diego Union-Tribune wrote that "Schools and water districts that installed solar sought a 30-year transition to a new tariff and fear they may ultimately lose money." It said "Many publicly financed solar projects have a long payback period". See http://www.utsandiego.com/news/2014/mar/28/solar-tariff-grandfathered/.

Because the value of a solar energy system will depend in part on whether it qualifies for the NEM tariff structure, the decision told the utilities to report their progress toward the "transition trigger level" cutoff point when the program will stop accepting new participants on the original terms. Likewise it said "The Commission expects solar installers to provide honest and complete disclosures".

The PUC press release is at http://bit.ly/1lxlKxk and the proposed decision that was approved is at http://bit.ly/P83Zt0.