Charging / billing tenants for solar energy in California

Is billing of tenants for energy legal in California?

Yes. For details, see Story v Richardson, a 1921 decision of the California Supreme Court holding that a landlords’ provision of utility service to a tenant is not public utility service subject to regulation by the California Public Utilities Commission (CPUC). Story v. Richardson, 198 P. 1057, 186 Cal. 162

In summary, you can charge tenants for electricity at market rate and not be subject to the rules and regulations of CPUC.

California's Rising Commercial Electricity Costs

California businesses pay some of the highest rates for electricity in the country. From 1990 to 2020 electricity costs have risen at least 3% higher each year. In 2020, major rate increases were approved by the California Public Utilities Commission. Increases of over 8% were made by PG&E, SDG&E and SCE to pay for neglected infrastructure. Between 2020 and 2022 rates in California rose by 30% (15% in 2020, 15% in 2021).

Net Energy Metering (NEM) 3.0

Now is the time to lock in NEM 2.0 rates. Proposed changes to Net Energy Metering by utilities will significantly increase the payback period and reduce potential savings that solar provides. NEM 3.0 proposed charges:

1. Grid Participation Charge of $8/KW installed. A typical office building install of 200kW will now pay an additional $1600/month to be connected to the grid.
2. New TOU schedules with a new peak rate of 55¢/kWh.
3. Credit for excess generation will drop from 22¢ to 36¢ per kWh to 4.7¢ to 5.8¢ per kWh.
4. Increased solar payback period from under 5 years to more than 10 years. 
5. Incentives to purchase expensive battery systems to reduce grid and demand usage.
6. Reduce the economic value of going solar 50% from what it is today. 

How does Energy311 (E3) turn California’s rising energy costs into profits?

E3 is a billing service that helps commercial property owners sell clean energy to tenants at market rates. Since electricity rates are far higher than the cost of solar in many areas, E3 helps owners turn their rooftops into a new revenue stream, increasing building value by > 10%.

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