Virtual Net Energy Metering

The Virtual Net Billing Tariff was adopted in Decision 23-11-068 as the successor to the VNEM tariff. As of February 15, 2024, all new, interested applicants will take service on the Virtual Net Billing Tariff unless they qualify for the SOMAH or MASH VNEM tariffs (Rulemaking 20-08-020).

Virtual net energy metering (VNEM or VNM) enables property owners to share benefits of an onsite renewable electrical generation facility (REGF) with their tenants.1  In a VNEM arrangement, the owner of a multi-meter property allocates portions of the energy credits from the property's REGF to the property's tenants and common areas.  The generated electricity does not flow directly to a tenant or common area meter but goes through its own meter onto the electric grid.  The participating utility applies bill credits for the energy produced by REGF to the tenants' and common areas' individual monthly electrical bills, based on the pre-arranged allocation agreement.  On their monthly electrical bill, a tenant or common area account may be a 1) net producer whose generation allocation exceeded their energy consumption, so they will receive a dollar credit that can reduce their monthly electrical costs, or 2) net consumer whose generation allocation is less than their energy consumption, so they will be charged for the remaining energy consumption.  Like single-family home NEM solar customers, VNEM customers undergo an annual true-up, where their generation and consumption are compared over a 12-month period to comply with federal regulations.

VNEM arrangements are allowed to include battery storage, which may or may not be used for emergency back-up.

The CPUC proposed a successor to the VNEM tariff on August 2, 2023, to replace it with a virtual net billing tariff.  For updates on the review of VNEM in Rulemaking (R.) 20-08-020, please visit the NEM Revisit webpage.

Note:  The content on this webpage mostly applies in the territories of the large electric investor-owned utilities (IOUs): Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E).  Liberty Utilities and PacifiCorp also offer a VNEM tariff for Solar on Multifamily Affordable Housing program participants.

Background

Historically, multi-tenant buildings with individual electric meters for each tenant faced difficulties installing distributed REGFs because of the problem of physically connecting the generation to each onsite account. A system could easily be connected to a common area load or to an individual tenant, but if it was connected directly to multiple loads, there would be no way of ensuring equitable distribution of the generation. Some tenants could benefit more than others. Installing multiple systems, one for each tenant or load in the building, is cost prohibitive.

Following the enactment of Assembly Bill (AB) 217 (Bradford, 2013), the VNEM tariffs were first piloted under the CSI Multi-family Affordable Solar Housing (MASH) Program as a means of providing equal and direct benefits of the solar system to low-income tenants in an affordable housing complex. Based on the merits of the pilot, the CPUC authorized the expansion of VNEM to the general multi-tenant market in July 2011, with the general market VNEM tariffs being approved in April 2012. Following the enactment of AB 693 (Eggman, 2015), the CPUC implemented the Solar on Multifamily Affordable Housing (SOMAH) Program in December 2017 and directed the creation of SOMAH VNEM tariffs that incorporate program participation criteria.

The MASH Program and Current Availability of the MASH Successor Tariff

The MASH Program ran from 2008 to 2021 and utilized the first VNEM tariff in California. Though the MASH Program is closed, multifamily properties in PG&E, SCE, or SDG&E service territories that satisfy the MASH eligibility criteria and meet all other utility interconnection requirements may utilize the MASH successor tariff. More information can be found on the MASH Program webpage. 

The SOMAH Program

The SOMAH Program is available through 2030 and offers incentives to qualified affordable multifamily properties for eligible solar installations. In accordance with D.17-12-022, in March 2018, PG&E, SCE, SDG&E, Liberty Utilities Company, and PacifiCorp submitted advice letters creating VNEM tariffs for use by SOMAH participants. More information can be found on the SOMAH Program webpage.

General Market VNEM Tariffs

In D.11-07-031, the Commission directed PG&E, SCE, and SDG&E to file advice letters proposing VNEM tariffs for market rate multi-tenant and multi-meter properties. On December 8, 2011, Energy Division Staff hosted a workshop at the CPUC to discuss issues pertaining to the proposed VNEM general market tariffs (Agenda | SDG&E Presentation | PG&E Presentation | Service Delivery Point Presentation). On April 19, 2012 Energy Division issued Resolution E-4481 authorizing the large electric IOUs' VNEM tariffs.

In D.16-01-044, the Commission created a successor (commonly known as NEM 2.0) to the original NEM tariff with new requirements for VNEM customers such as payment of interconnection fees and non-bypassable charges, and utilization of time-of-use electric rates. For more information, please visit the successor tariff rulemaking (R.14-07-002) webpage.

In D.22-12-056, the Commission maintained NEM 2.0 for VNEM pending further review in the NEM Revisit rulemaking (R.20-08-020), but reduced the legacy period from 20 years to 9 years for new customers applying to interconnect after the NEM 2.0 tariff sunset date (April 14, 2023). In August 2023, the Commission issued a proposed decision that, if adopted, would replace the VNEM tariff with a virtual net billing tariff. For updates on the review of VNEM in R.20-08-020, please visit the NEM Revisit webpage.

Important Procedural Documents

  • D.08-10-036 – Established VNEM as part of the MASH program.
  • D.11-07-031, section 4.0 – Directed PG&E, SCE, and SDG&E to file advice letters proposing VNEM tariffs for market rate properties, allowed VNEM arrangements of properties in the MASH program to include multiple service delivery points, and proposed cost recovery for VNEM billing.
  • Resolution E-4481 – (April 2012) Authorized the large electric IOUs’ VNEM tariffs.
  • D.16-01-044 – Directed PG&E, SCE, and SDG&E to file advice letters proposing VNEM successor tariffs and adopted an industry proposal to make VNEM available to non-MASH program participants served by multiple service delivery points on a single property.
  • Resolution E-4792 – (June 2016) Authorized the large electric IOUs’ VNEM successor tariffs.
  • D.17-12-005 – Allowed VNEM interconnection with storage.
  • ALJ Ruling – (August 2017) Sought comment on VNEM and Energy Storage.
  • D.17-12-022 – SOMAH implementation decision requiring new SOMAH VNEM tariff.
  • D.19-09-027 – Removed barriers to multifamily property participation in SGIP by causing SGIP eligibility requirements to include systems that interconnect to the distribution system under the VNEM tariff and modifying the definition of host customer in the SGIP handbook (p. 52).
  • D.20-08-007 – Modified D.16-01-044 "to permit netting of energy from a single eligible renewable generating facility among customers or accounts behind multiple service delivery points and on multiple contiguous parcels, provided that those customers or accounts are part of the same multitenant or multi-meter facility (as specified)."
    • Authorized PG&E, SCE, and SDG&E to submit a joint Advice Letter to propose modifications regarding a "common function" to the definition of "property" in the Joint IOUs' respective general market VNEM rate schedules.
    • The joint Advice Letter was rejected by the Energy Division by non-standard disposition on April 6, 2022.
  • SDG&E application for rehearing – (September 2020) Alleged that D.20-08-007 (a) improperly eliminated the common function requirement from tariffs without developing a properly litigated record, and (b) improperly placed the common function requirement into a staff process, rather than considering the issue in the new NEM Revisit proceeding.
  • D.21-06-005, pp. 76-80 – Refined requirements for multifamily property eligibility for SGIP and use of VNEM tariff.
  • D.21-12-031 - Directed PG&E, SCE, and SDG&E to speed up approval of interconnection applications for VNEM arrangements including energy storage installed for resiliency purposes, i.e., storage that can operate in isolation of the grid.
  • D.22-04-056 – Denied SDG&E's application for rehearing of D.20-08-007.
  • D.22-12-056 – Maintained NEM 2.0 for VNEM pending further review in R.20-08-020, but (a) allowed multiple solar arrays on a property to be treated as one VNEM generator, and (b) reduced the legacy period from 20 to 9 years for customers applying to interconnect after the NEM 2.0 tariff sunset date, April 14, 2023.

Contact Us

If you have any questions about information on this webpage, please contact the CPUC Energy Division at energy@cpuc.ca.gov.

 

1 Per Senate Bill 489 and D.11-07-031, all technologies that are eligible for the full retail NEM tariff may participate in VNEM.  See www.cpuc.ca.gov/nem