In a unanimous vote by the state’s Public Utilities Commission (PUC) last month, the State of California abruptly reduced incentive payments for rooftop solar power. The state’s solar incentives program, which led to solar panels on the roofs of 1.5 million homes and businesses, had put California front and center of the energy transition.
Now, three groups are pushing the California PUC to reverse that decision. The Protect Our Communities Foundation, the Environmental Working Group, and the Center for Biological Diversity filed an application for a rehearing to reverse the ruling on January 18, citing a section of the Public Utilities Code instructing the Commission to ensure “that customer-sited renewable distributed generation continues to grow sustainably and include specific alternatives designed for growth among residential customers in disadvantaged communities.”
The program provided financial incentives to homeowners and businesses to install solar power systems and was designed to offset the cost of installing solar and to make it more affordable.
The appeal says the commission should redo its analysis. The groups say regulators devalued rooftop solar based on flawed modeling that ignored net metering’s benefits to environmental justice communities, such as decreasing the state’s dependence on fossil fuels and providing local economic benefits, including new jobs. The commission also failed to analyze non-solar customer bills and ignored or underestimated the harms of fossil fuel energy, particularly to low-income communities and communities of color.
California has been a leader in solar power generation and continues to have one of the highest amounts of installed solar capacity in the United States. This latest decision, however, undermines the state's plan to achieve an 85 percent reduction in carbon emissions by 2045.
The penetration of rooftop solar in California has largely been fueled by net metering. Net metering allows customers with solar power systems to send excess electricity back to the grid and receive a credit on their utility bills.
California’s three big incumbent utilities – Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric – have used their political power to lobby state officials for years to cut net metering rates. Before the PUC lowered the rate, net metering paid rooftop solar owners the same retail rate for the excess electricity they add to the grid that utilities charge their customers.
“California’s private utilities have been relentless opponents of rooftop solar for many years, because it undercuts the golden goose — new high-profit transmission line construction. They have convinced regulators of the alchemy that they are protecting the interests of lower-income customers — and not shareholder interests — by devaluing rooftop solar,” said Bill Powers, a board member of the Protect Our Communities Foundation.
Incumbent utilities have argued that the old net metering rate led to higher electricity prices for consumers. However, they have not vowed to reduce their rates since the PUC voted unanimously to change net metering rules.
The Commission estimates the updated rules will save residential customers roughly $136 a month on their utility bills thanks to upfront incentives for customers to pair solar generation with battery storage systems.
However, according to the three groups working on getting the decision reversed, the reduced installation incentives discourage customers from investing in solar in the first place and decrease the savings customers receive on their utility bills.
One of the key provisions in the PUC's ruling modifies how owners are compensated for the surplus electricity their systems send back to the grid. Instead of being credited at the retail rate of electricity, customers will get paid for the “actual avoided cost” which is lower during daylight hours when solar energy is abundant.
The new rules take effect in mid-April and target new solar customers.
According to the LA Times, PUC spokeswoman Terrie Prosper said that although the Commission will issue a formal decision regarding the applications for a rehearing, “there is no specific timeline” as to when that decision will be issued.
The Protect Our Communities Foundation told the LA Times it is “not optimistic that the Commission will reverse its decision but cited a procedural requirement called ‘exhaustion of administrative remedies’ that mandates that challengers pursue all available administrative avenues and raise all issues before bringing a lawsuit against a public agency.” The application for rehearing and reversal puts them one step closer to bringing this case to court.
Public opposition to the commission’s decision is widespread. More than 125 California and national climate and equity groups representing millions of people previously called on the governor’s office to reject the commission’s flawed analysis and maintain the state’s solar credit to grow rooftop solar in environmental justice communities.