Regulators want to destroy rooftop solar to protect the obscene profits of utility companies, one side charges.
The other side claims rooftop solar owners are circling the wagons to protect their own profits — the over-market amount they’re paid for exporting power to their neighbors — and to avoid paying their fair share to maintain the electric grid.
The California Public Utilities Commission, which regulates electric rates, has been working for years on a major revamp of how rooftop solar works in the Golden State. Its proposal to make the system more fair for all was released last month and slated for final approval on Jan. 27. But after thousands of blistering comments poured in from rooftop solar owners and the governor cast a stink eye at the proposal, it’s officially off the PUC’s Thursday agenda.
It’s not clear when it will be back, or in what form.
“We have two new Commissioners, one of whom has not started yet,” CPUC spokeswoman said Terrie Prosper by email. “Comments from parties on the Proposed Decision have just been received for this extremely important policy matter. We will provide more information once a schedule has been determined.”
The new commissioners who’ll be wrestling this bear are John Reynolds and Alice Reynolds. Both were appointed by Gov. Gavin Newsom late last year, after the proposed decision was released by the CPUC.
John Reynolds is an attorney who has held multiple positions at the CPUC. Alice Reynolds, unrelated, also is an attorney, who has served as Newsom’s senior energy adviser. She’s the CPUC’s new president.
Neither returned requests for comment, but the marching orders of the boss are clear. “I’ll say this about the plan: We still have some work to do,” Newsom said on Jan. 11. “Do I think changes need to be made? Yes I do.”
The battle may get even more intense: Those who want to protect the old rules have filed ballot initiatives with the Attorney General’s Office.
Two versions of the Solar Bill of Rights Act of 2022 were filed Jan. 14 by Los Angeles attorney Philip R. Recht of Mayer Brown. It costs some $2 million to get an initiative on the ballot these days. Recht did not return requests for comment about who is funding the effort.
Pain is real
There are about 13.2 million households in California, according to the U.S. Census Bureau. The overwhelming majority of them — about 11.9 million — do not have solar. About 1.3 million of them do.
The pain, on all sides, is real.
Under the now-tabled proposal, rooftop solar owners like Raj Pandey of Irvine would have seen the credit they get for sending electricity to the grid for neighbors to use plummet from some 40 cents per kilowatt hour to about 5 cents — in line with the actual value of solar energy produced by day, the utilities say.
Solar owners also would have seen their monthly charge for grid connection and maintenance soar to an average $57 from about $10.
Homeowners who have invested tens of thousands of dollars in solar systems under the old assumptions said it will significantly increase the amount of time necessary to recoup costs through energy savings, and some said they’d never break even. That’s despite a provision that would grandfather some solar owners in under old rules. And the makers of solar systems fear a massive plummet in demand as well.
Meanwhile, homeowners without solar are subsidizing those with solar, officials say.
Non-solar households pay $115 to $245 more per year to subsidize their neighbors with solar, and, if nothing changes, that subsidy will grow to $385 to $550 per year by 2030, according to a joint filing by California’s three big utilities.
That amounts to robbing the poor to pay the rich, and that’s what the proposal attempted to address, proponents argue.
The PUC’s public advocate — a quasi-independent, in-house Solomon the Wise charged with protecting consumers — said that fairness requires change.
“California ratepayers are currently paying too much toward incentives for (rooftop solar) generation,” it said in a filing.
The cost of those incentives “unfairly raises electricity rates for those customers without (rooftop solar) generation. These nonparticipating customers are paying unreasonable amounts of money … to subsidize the customers who can afford to install (them).”
Instead, it favored a new rate system that would foster sustainable growth for solar while equitably benefiting all customers.
The ultimate goal is a future where rooftop solar is paired with battery storage systems, so the electricity created by day can be used after dark. That would reduce or eliminate the need for plants powered by dirtier fossil fuels to fire up at night.
Clash of titans
Those who want to protect the current system paint those who want change as pawns in the utility giants’ scheme to decimate competition from rooftop solar.
“We urge the governor to use his bully pulpit to push regulators to start from scratch and take no action to curb rooftop solar until they fully examine the real reason why working-class families and communities are paying so much for power, and how they can be put at the forefront of the rooftop solar and storage revolution,” said Ken Cook, president of the Environmental Working Group, in a statement.
“It is clearly meant to increase profits for the utilities and crush the only competition they now face — the competition from Californians who are investing to install solar panels and, increasingly, battery storage on homes, businesses, schools and in communities.”
Those who want change portray those who cling to the current system as beholden to the greed of the solar panel manufacturing and installation industry.
“It’s wrong that non-solar customers, many of whom live in disadvantaged communities or are renters without the option to install solar, are paying for subsidies that go to primarily wealthier property owners with solar panels,” said Kathy Fairbanks, a spokeswoman for Affordable Clean Energy for All, in a statement.
“Solar industry attempts to fight any proposed reforms are motivated by their desire to protect their bottom line profit margin. The higher the subsides, the more the solar companies profit and the more their executives and shareholders are compensated. We believe everyone who uses the electric grid should pay their fair share.”
The cost of rooftop solar has dropped 70% while the subsidies have continued to increase over the past 25 years, making rooftop solar the most expensive source of clean energy — eight times costlier than the market value of solar energy, she said, promising to keep fighting to fix the unfair “net energy metering” cost shift, as the issue is technically called.
Somehow, the PUC must bridge the abyss between them.
“Although I’m not breathing easy by a long shot, it’s good that Gov. Newsom sees that hindering the growth of rooftop solar and battery to the extent the CPUC’s recommendations may have done is counterproductive,” Pandey of Irvine said by email. “I think he heard the voices of current and potential solar owners and solar companies pretty clearly.
“I know the presumed motivation behind the CPUC’s recommendation is to prevent lower-income non-solar residents from subsidizing solar and battery installations. That is well-intentioned. However, I hope CPUC considers alternative ways to do this.”
It could provide higher incentives for landlords to install solar and battery, especially in lower-income rental units. It might consider a monthly solar fee lower than $57. It might actually increase net metering for lower-income customers and pay out cash rather than just bill credits.
“None of these ideas is perfect, and perhaps they’re not workable,” Pandey said. “But I think if my only job were to figure out a good solution, it seems like it could be done a lot better than what was proposed.”
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