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In case you missed it, in December 2022, the California Public Utilities Commission (CPUC) issued a decision that ended a nearly two-year long battle between the investor-owned utilities and environmental groups over the future of rooftop solar in California. Although there was a coalition over 600 strong comprised of environmental and climate change organizations, nonprofits, schools, cities, churches, businesses and elected officials who spent two years urging the CPUC to keep solar growing sustainably, as instructed by law, the CPUC ultimately decided to side with the investor-owned utilities and made significant cuts to agreement solar customers go on, known as net energy metering. You can read more about the coalition here.
Under the new net energy metering (NEM) agreement (known as NEM 3), solar customers will get about 75 percent less from the utility for the clean, local and reliable excess energy they share with their neighbors (which the utilities still charge their neighbors full transmission and distribution fees for). Just to give you a sense of how the new tariff compares to what solar customers are receiving currently, compensation for energy will go from an average of $.25/kWh all the way down to about $0.05/kWh. NEM 3 customers will also be forced to go on rates that have higher rates in the evening. All in all, these changes will nearly double the time it takes to pay off a residential system.
There is some good news.
If you already have solar, these changes will not affect you! All NEM 1 and NEM 2 customers will continue to receive benefits until their agreement expires, which is 20 years after the system was turned on. The only scenario that would make a customer lose their current NEM status is if a customer adds additional panels that exceed the allocated amount.
The NEM 3 decision includes a “sunset period” that ends 120 days after the approval of the final decision, meaning anyone who goes solar before the sunset period date is still eligible for NEM 2. In order to go solar and receive maximum benefits, a solar contractor must submit a completed interconnection agreement without significant errors and a signed contract by April 14, although we recommend getting this submitted as soon as possible in case there are errors that need to be resolved. The solar power system can be installed after the cutoff date, so long as the application is submitted by April 14 and it is approved by the utility, however, if any significant changes are made to the equipment being used or system size, that would trigger a new application and cause the customer to lose their NEM 2 status.
As the proceeding currently stands, customers should be prepared to go solar by the cutoff date, April 14, in order to receive the maximum benefits, however, there is a small possibility that this decision could be reversed entirely. Last month, the Center for Biological Diversity, Environmental Working Group and Protect Our Communities Foundation filed a formal appeal to reverse the CPUC’s final decision. The appeal highlighted ways in which the CPUC violated the law.
The first and perhaps most obvious issue is that the decision violates a California law requiring the sustainable growth of rooftop solar. The California law is very clear in stating that the new NEM tariff must “ensure that customer-sited renewable distributed generation continues to grow sustainably,” During the course of the proceeding, some commissioner’s even stated that this decision may slow rooftop solar adoption but the CPUC has to consider other issues as well. The appeal rightfully argues that this decision is not the CPUC’s decision to make, as the law is very clear.
The second issue is that the decision violates another California law that requires the CPUC to put forward an alternative option that would increase solar in communities of concern. The current California law states that any changes to NEM must include an option that will grow solar in “disadvantaged communities.” Not only does the decision actually make rooftop solar more expensive for everyone and disproportionately impacts communities of concern, but the CPUC promises funds to disadvantaged communities that are not available unless the legislature allocates them and are only for battery storage, not rooftop solar.
The overarching issue of the entire proceeding is that the CPUC completely failed to account for all of the benefits and costs of rooftop solar. Any changes to NEM should have been based on the costs and benefits to all ratepayers and the CPUC not only disregarded the benefits of rooftop solar, but also misrepresented the impacts of long distance transmission lines. The appeal claims that in disregarding evidence presented to them, they violated their own process and precedent.
What's next?
Although the appeal is strong in its merits, this appeal is simply administrative, meaning that the CPUC has no real timeline to respond to the appeal or make any decisions. If the CPUC fails to respond within 90 days, the organizations that filed the appeal can escalate the appeal to an appeals court, which representatives have stated is the plan.
The appeal is strong, and has already gained support from groups like 350.org and Solar Rights Alliance, however appeals similar to this have been filed in previous CPUC proceedings and were ultimately dismissed by a court of law and the CPUC. While we should remain optimistic about the appeal, customers should still plan to follow the current deadlines on the table to ensure they don’t miss the opportunity to go solar.
Bottom line is that if you can go solar now, we recommend it as you’ll be able to maximize your savings and start producing clean energy soon!
