As Californians & planet sweat, rooftop solar revisions stuck in limbo

The future of rooftop solar in California is uncertain. Efforts to revise the state’s landmark Net Energy Metering (NEM) program that incentivizes rooftop solar installations are more than a year old and currently stuck in a political limbo at California’s Public Utilities Commission (CPUC). What alterations might ultimately be made, how they will support state clean energy goals, and when Californians might see them remain a murky mystery to all involved.

According to its current timeline, the CPUC could rule on its latest proposal any time between now and Sept. 29, but it’s also possible they delay a decision into next year. The uncertainty does not please either side. Kathy Fairbanks, spokesperson for the Affordable Clean Energy for All, a pro-NEM reform coalition, said the CPUC has largely kept its deliberations out of public view.

“There’s not a lot of dialogue between the commission staff and everyone else. A lot of what they do is done within the walls of the CPUC,” Fairbanks said. “No one knows what’s going on.”

Bernadette Del Chiaro, executive director of the pro-incentives group California Solar & Storage Association, echoed this: “There hasn’t been any real utterance from the CPUC other than issuing new questions, but those questions don’t suggest or give us a clear sense of direction. So, honestly, we really don’t know what is going to come.”

Critics of the current incentives claim these largely benefit richer electricity users at a cost to less affluent, non-solar users. Proponents of greater rooftop solar adoption dispute this and worry CPUC revisions proposed so far would stifle meeting the state clean energy goal to be carbon neutral by 2045 and benefit only the electricity utilities seeking to protect their monopoly positions.

NEM was originally adopted in 1996 to encourage Californians to implement rooftop solar systems. Its incentives made the upfront investment more cost-effective by giving solar customers bill credits for the excess electricity their rooftops generate and is returned to the electrical grid. This helped encourage 1.2 million residential and commercial customers statewide to go solar so far and make California the country’s frontrunner in solar energy.

The program was updated slightly in 2016, but proposals so far for “NEM 3.0” would represent a much more comprehensive change. A state legislative attempt last year to significantly reduce incentives failed last year. This tossed the job of revising the program to the CPUC, but its first proposal would have reduced the NEM rate credit by roughly 80% for new solar power customers. The rate for the 1.2 million existing customers in the program would gradually decrease until matching NEM 3.0’s proposed rate. NEM 3.0 would also let utilities for the first time charge rooftop owners a monthly fee to be in the program.

The CPUC has expressed a desire to share solar rooftop incentives and benefits more broadly among lower-income and rental customers who have yet to convert as easily to solar as more affluent customers. Fairbanks says that because NEM customers are not paying their fair share, non-solar customers pay about $240 more per customer per year, and by decreasing benefits for NEM customers, the CPUC could lower utility costs for non-solar customers.

Pro-solar-power organizations oppose any increased costs for solar customers, said David Rosenfeld, executive director of the nonprofit Solar Rights Alliance. Rosenfeld says instead of cutting broad consumer incentives the CPUC should be giving more incentives to all citizens.

“There should be no solar tax. They shouldn’t be penalizing people for putting solar panels on the roof. They should leave the net metering credits alone. It’s good, fair credit.” Rosenfeld said.

Fairbanks, though, says that her coalition doesn’t want to abandon the NEM program completely, but does believe changes are needed to make NEM more equitable.

“There’s a cost shift going from people who have solar panels who aren’t paying their fair share and who are dramatically reducing their utility bills every month. And those costs are shifted to non-solar customers, many of whom are from disadvantaged communities,” Fairbanks said. “Let’s make sure everyone is paying their fair share. We still support some kind of subsidies. But they’re far too generous the way they are today.”

Fairbanks says these subsidies do make a sizable difference in utility costs. Californians in the NEM program generally save an average of between 22 and 36 cents for every kilowatt-hour of electricity generated by their panels, which results in solar customers with average size rooftop solar systems currently receiving an average monthly bill credit of $200, according to Affordable Clean Energy for All.

Rosenfeld said that this “cost shift” does not exist and is a deception created by the utility industry. He pointed to the Solar Rights Alliance’s website which he said provides evidence that the numbers behind the cost shift have been manipulated.

Over the last year, NEM 3.0 has gone through a bumpy process muddled by revisions and complaints. The first major road bump occurred in June 2021 when AB 1139 failed to earn majority support in the California Assembly. The CPUC then proposed its first NEM 3.0 draft in December 2021 with a vote scheduled for the Jan. 27 CPUC meeting.

After early negative comment against this draft, Gov. Gavin Newsom said at his Jan. 10 news conference that he believed “we still have some work to do” on the CPUC’s plan. No long later, The CPUC removed the Jan. 27 NEM vote from the schedule. Despite the vote being delayed, the Jan 27 meeting featured 329 comments against NEM 3.0 while only four comments supported the utility’s position on NEM, according to one pro-solar power website. On Feb 4. the CPUC announced it would delay its proposal until further notice.

Del Chiaro said that Newsom’s comments were likely reason for the delays, though the CPUC did not provide an official explanation.

This is the “most popular, fastest-growing, largest clean energy market in the country. It’s critical to his administration’s [clean energy] goals and legacy. You just can’t extract Gavin Newsom from a big decision like this,” Del Chiaro said. “This is a once in five years type decision that is a directional movement for a whole state. His vision needs to be honored.”

The continued delays to NEM 3.0 have been cause for cautious celebration among solar power advocates and organizations. But the CPUC’s next set of idea revisions on May 9 did not please them. This included gradually phasing in lower NEM bill credits eventually reaching the previously proposed rate for NEM 3.0. The CPUC requested public input on what the rate of decrease and timeframe of the decrease should be.

Rosenfeld and the Solar Rights Alliance were disappointed by CPUC’s update. For them, the lack of a major shift in ideas for the proposal after six months of overwhelming negative public comment showed a lack of collaboration and responsiveness.

“What they put on paper on May 9 was almost exactly what they put out in their original [draft] in December. The wrapping was different. The mechanisms were different. There were little things here and there. But the gist of it was basically the same,” Rosenfeld said. “It is just obvious that the CPUC is so captured by the utilities, that public input just doesn't matter to them. And they’re just gonna keep doing what the utilities want and just try different ways of giving the utilities what they want.”

In early June, the commission again opened public input, this time for new ideas and how to specifically implement them. That window ended July 1. According to the CPUC website, more than 500 comments were received. Most of the latest comments were again opposed to CPUC’s latest draft revisions.

“Ultimately the decider is going to be Gov. Newsom. He doesn’t have a formal vote on the CPUC, but he’s the most powerful person in the state,” Rosenfeld said. “So people really need to make their voices clear to the governor, and make it clear that their future support for him is contingent on him doing the right thing here and taking a stand against the solar tax.”

The only current certainty is NEM 3.0 remains in limbo, which leaves all sides restless for final action by the CPUC.

“Every delay means that people are paying more than they should be paying. Low-income people are being hit with higher utility bills for no reason,” Fairbanks said. “[The CPUC] needs to take action. When is it going to happen?”