A Basic Guide for Commerical Solar Customers to Verify Their Credits

California’s net metering program (“NEM”) mandates PG&E, SCE and SDG&E (the large investor-owned utilities in the state) to provide participating customers a bill credit for excess solar generation that is exported to the electric grid.  On a month-to-month basis, bill credits for the excess generation are applied to a customer’s bill at the same bundled retail rate that the customer would have paid for energy consumption.

While NEM has empowered many commercial and industrial (“C&I”) utility customers to realize savings of 25% or more on their electricity costs when they go solar, many C&I customers have found it difficult to understand and verify the accuracy of their annual NEM true-up statement.  Here, Cenergy Power explains the basic NEM billing process and provides a practical guide for commercial customers to independently verify the credit and usage figures in their NEM true-up statements.

How do C&I customers get billed by their utility after they go solar?

Once a C&I customer goes solar at its facility, the governing utility will install a bi-directional meter that measures and records the facility’s net usage.  Every 12 months following the solar system’s interconnection to the grid, the customer will get a NEM true-up statement.

This true-up statement is basically a written reconciliation of all electric usage charges and solar generation credits measured by the utility meter.  If the customer has an outstanding balance remaining (i.e., more electricity usage than solar generation for the year), the statement details what amount is due from the customer; if the customer has a credit remaining (i.e., more solar generation than electricity usage), it resets to zero.  Finally, the statement will also indicate if the customer is eligible to receive payment for any excess electricity generated.  Since such excess electricity generation is discouraged by the utilities, it is compensated at a wholesale price range of $0.03 to $0.04 per kilowatt-hour (“kWh”).

Once all the customer’s charges, credits, and compensation are reconciled, the process begins all over again for a new 12-month billing cycle.  While the customer will also continue to receive a monthly utility energy statement that tracks net usage charges and solar generation credits, the customer is generally permitted to defer payment on any net usage until the end of such annual true-up period.  On a monthly basis, the customer is charged for only certain minimum non-usage amounts that all utility customers are required to pay every month.

The following is a sample summary PG&E true-up table that can be found in a commercial customer’s annual NEM true-up statement:

It sets forth a 12-month history of generation credits (negative amounts) and net electricity usage (positive amounts), and serves as the most relevant piece of information in the annual NEM true-up statement.  We’ve highlighted certain areas that are important to understand in this statement:

• The red area represents the time-of-use and seasonal components of generation credits and net electricity usage (net of any solar generation) in kWhs;
• The green area sets forth the total monthly credits and net usage in kWh and in dollars; and
• Underscored in blue is information relating to the 30-day billing period from February 12, 2014 to March 13, 2014.  During this period, the commercial customer generated credits of -89,104 kWh at Winter partial-peak time periods and -34,579 kWh during Winter off-peak time periods, for a total credit of -123,683 kWh.  This credit has a dollar value of $10,024.92.

How can customers independently verify that their solar systems are performing as forecasted and that their NEM True-Up Statements are accurate?

The utilities’ bi-directional meters are currently capable of measuring only the kWh energy flow into or out of a solar-powered commercial facility, and unfortunately, cannot measure the components of that energy flow.  Like measuring water flow along a single pipeline, the meters measure energy flow at only one location along the wire.  This means that to the extent a customer has a reduced monthly net usage after going solar, the utility (as well as the customer that is dependent on the utility’s billing data) will not know what portion of that reduced usage was attributable to solar generation and what portion was due to reduced electricity usage.

While not perfect due to certain variability in utility billing practices, commercial solar customers can at least indirectly verify the material accuracy of their NEM true-up statements by cross-checking their NEM true-up statements against certain data points set forth in such customers’ 3-Year customer management tool (“CMT”) (or similar utility report) and solar generation reports (“SGR”) for the relevant monthly periods.

The following is an excerpt of a PG&E 3-Year CMT Report relating to the same commercial customer with the NEM true-up statement above; such report is available to commercial customers when they request it from their PG&E representative:

As with the annual NEM true-up example, red areas show the time-of-use components of solar generation credits in kWh (negative amounts) and net usage in kWh (positive amounts), green areas highlight the total monthly amounts in kWh and dollars, and the blue underscore shows data related to a 30-day billing period from mid-February to mid-March 2014.

Also required for an indirect analysis is data from the SGR, which can be generated by commercial solar customers that have a solar monitoring solution as part of their solar system; below we show the SGR for the same customer above across similar months:

Armed with independent solar generation metering data and the customer’s 3-year CMT data (including average electricity usage in pre-solar installation years), our sample commercial solar customer can now analyze its solar system’s performance and indirectly verify the accuracy of its true-up statement by answering “YES” or “NO” to each of the basic questions set forth below.  If commercial solar customers can confidently answer “YES” (similar to the responses below from our sample customer) to each question, they would gain some level of comfort that their solar system is operating without issue and that their NEM true-up statement is substantially accurate:

• Is the solar system’s actual generation equal to or greater than its forecast generation?  YES.  In the SGR, AC Energy YTD is 1,712,264, which is above the Forecast AC Energy YTD of 1,608,035.  Actual generation for the relevant period is above forecast by about 6.5%, which is a good indication that the system is performing at an optimal level.
• Do the monthly figures in the CMT report match the figures in the NEM true-up statement? YES.  The blue underscored figures for the sample 30-day period between Feb-Mar 2014 are the same in both the CMT report and the NEM statement (e.g., total monthly generation credit was -123,683 kWh in both documents).
• When the actual monthly solar generation amount in the SGR is added to the negative solar generation credit figure or the net usage figure (as applicable) in the NEM statement, the product is a gross kWh usage figure.  Does this monthly gross kWh usage figure substantially match customer’s gross usage figure pre-solar installation (accounting for any known increase or decrease in usage since installation)?  YES.  As an example, when we add the March solar generation amount of 171,517 in the SGR to the blue underscored generation credit of -123,683 kWh for the 30-day period from February 12, 2014 to March 13, 2014, customer shows a gross usage figure of 47,834 kWh.  Pre-solar installation, customer’s CMT report shows a 2-year average gross usage figure of 17,000 kWh for this 30-day period.  The discrepancy of 30,834 kWh between 47,834 kWh and 17,000 kWh can be reasonably explained by the fact that PGE’s 30-day period begins in mid-February and ends in mid-March 2014.  Customer’s solar generation figure from the SGR is for the entire month of March 2014, which also had 50,801 kWh more solar generation than the month of February 2014.  While not a perfect match, customer’s estimated gross kWh usage, which was derived by backing out the solar generation credit for the sample 30-day period, is substantially similar to customer’s gross usage figure prior to solar installation.

While there are several other data points that can be cross-checked to ensure NEM true-up accuracy, a “YES” answer to each of the above basic questions may be sufficient to signal that our customer has a properly functioning solar system and that its NEM true-up statement is substantially accurate.  If our commercial customer answers “NO” to any of those questions, it should escalate the matter to Cenergy (or a qualified independent solar expert) for assistance in sorting through the NEM issues with the appropriate representative at the utility.

Our basic solar and NEM verification guidance above is not intended to detect all potential discrepancies.  Rather, it should be viewed as a simple method for commercial solar customers to preliminary cross-check their NEM figures to determine whether there are more significant problems to investigate.  And in the not too distant future, distributed energy companies (like Cenergy) will be introducing cost-effective solutions that will automate and refine much of this work in order to equip commercial customers with direct auditing capabilities over their true-up statements.