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War over new rooftop solar rules rages on

July 9, 2023

A conspiracy between big government and big utilities to protect big corporate profits? No, no, the regulator said.

A violation of law requiring rooftop solar to keep growing rapidly in California? That isn’t the law at all, the regulator said.

Government spewing a lie that financial breaks given to (wealthier) rooftop solar owners shift burdens to their (less-well-off) neighbors — to the tune of billions of dollars? That’s just wrong, the regulator said, and asserting the cost shift doesn’t exist is “a false statement and a factual misinterpretation.”

Rancho Mission Viejo (Photo by Jeff Gritchen, Orange County Register/SCNG)

And so the California Public Utilities Commission has rejected requests for a do-over of its wildly controversial new rooftop solar rules, which went into effect in April. They gave everyone something to hate. But alas, the solar wars rage on: Opponents continue their battle in court, armed, for better or worse, with the same arguments that failed to convince the powers that be at the PUC.

At issue: The update to how much new rooftop solar owners are paid for exporting energy to the grid, depending on how much clean energy is available at the time (among many other things).

Folks who install new systems with batteries to store solar power, and who can pump energy out after dark when it’s most needed, will get the most handsome compensation. Folks without batteries, who only pump excess energy to the grid during the day — when it’s already plentiful — will get much less compensation.

Even at its best, compensation will be lower than it is for folks who had solar before these changes. And that will vastly increase the amount of time it takes folks to recoup their investments — from 3-5 years up to nine years. And that will tank the growth of solar in California, in violation of the law, critics argue.

Have you looked at your electric bill lately? Have you wept? The average price for residential electricity in California is nearly 80% higher than in the rest of the nation.

Solar or non-solar, this war hits your home, too.

Violates laws?

The arguments for a redo that were rejected by the PUC, and are now pending before the Court of Appeal of the State of California, First Appellate District, Division Three, go deep into the weeds about formulas used or not used, variables weighed or not weighed, costs accurately accounted for or not accurately accounted for.

The burden is on the petitioning critics — the Center for Biological Diversity, Environmental Working Group, and the Protect Our Communities Foundation — to prove that the PUC made legal errors in reaching its decision on the new rules.

Workers installing solar panels (Staff file photo)

“For the past 25 years, California has led the transition from fossil-fuel generation to clean, renewable power,” the petitioners argue in an appeals court filing. “Individual Californians have spearheaded the effort, installing rooftop solar on over one and a half million homes, schools, churches, and businesses. State policy encouraged this transition to clean power through the Net Energy Metering (‘NEM’) tariff, which allowed residents to earn a reasonable return on their substantial upfront investments ….

“This local generation confers significant societal benefits, including reduced greenhouse gas emissions, resilience to extreme weather and power outages, and avoided land use impacts by decreasing the need for utility transmission infrastructure which also keeps electricity bills down.”

Owners of rooftop solar systems receive credit for energy they generate and use on site. The utilities also compensate NEM customers for excess energy they supply back to the grid, traditionally paying them the same rate that regular customers pay for energy from the grid.

Despite the benefits of locally generated solar, “for-profit utilities across the country have targeted NEM programs,” they argue. “Because investor-owned utilities earn guaranteed returns on capital spending for transmission infrastructure, distributed energy resources, like rooftop solar, threaten the utility business model. Thus, for-profit utilities across the country have embarked on a multi-state campaign to gut NEM programs, promoting a false narrative that NEM causes a ‘cost shift’ from wealthier NEM customers and increases rates for everyone else, ignoring completely the billions of dollars utilities spend on transmission infrastructure that drives increased rates.”

The utilities’ narrative was swallowed whole by the PUC, and the changes it made violate the Legislature’s mandate to ensure “the continued, sustainable growth of distributed generation,” the critics say.

The petitioners asked the PUC to hold off on implementing the new rules while challenges were pending, said Roger Lin, senior attorney with the Center for Biological Diversity, but “crickets.” And despite the PUC’s purported concern about costs being shifted onto less-well-off customers, the $600 million fund to help lower-income customers get solar has been sliced in half, and must be distributed by 2026, a narrow window for action.

The petitioners ask the court to do what the PUC wouldn’t. “The decision makes the installation of new solar systems economically unattractive and, as a result, will dramatically decrease growth” of solar, they said.

Doing our job?

(File photo by Michael Goulding, Orange County Register/SCNG)

The generous subsidies embedded in the old system contributed to the “staggering success” and rapid expansion of the rooftop solar industry, transforming a nascent technology into a mature industry, the PUC argues in its court filing.

It’s past time for an update, “in part because NEM customers in 2019 were paid six times what electricity generated by solar panels is worth to the grid,” it said. Customers who do not have rooftop solar systems have subsidized their solar neighbors by as much as $31,402 per solar owner.

“The Legislature recognized that the net energy metering tariff might require occasional updates or changes,” it said. “Thus …the Commission revised the NEM program to better align with the state’s current grid conditions and updated findings regarding costs and benefits of the program.”

The old system — which remains intact for folks who had solar before April — pays far more for rooftop solar power than its market value, analyses have said. It totals roughly $4 billion a year, borne by less-affluent consumers without rooftop solar who subsidize their wealthier solar neighbors.

This “troubling” cost shift — which critics say doesn’t really exist — came to the attention of lawmakers a decade ago. The Legislature ordered the PUC to address it. It has, it says.

The law does indeed require solar to grow sustainably — but that doesn’t mean it must gallop as fast as it has under more generous subsidies. Market growth “should not come at the undue and burdensome financial expense of nonparticipant ratepayers,” it said.

“Although Petitioners may disagree with the determinations made by the Commission, they have failed to establish that the Commission’s determinations lack substantial evidence,” the PUC said in its filing with the appeals court. “To the contrary … the Commission met all statutory obligations and its findings are supported by substantial evidence in the record.”

The PUC is not an ordinary administrative agency, it argued, “but a constitutional body with far-reaching powers, duties, and functions. There is a strong presumption of validity of the Commission’s decisions. In the Court’s review, the Commission’s interpretation of the Public Utilities Code, as the agency constitutionally authorized to administer its provisions, should be given great weight.”

When conflicting evidence is presented, from which conflicting inferences can be drawn, the PUC’s findings are “almost always” treated as conclusive, it argued. “Here, the Commission has complied with the law in all respects and Petitioners’ arguments are without merit. Petitioners’ have not shown legal error and their Petition should be denied.”

What’s next?

The Center for Biological Diversity et al. will reply to the PUC’s reply this month. Then everyone will wait to see what the appeals court does.

It might schedule oral arguments. It might not.

Boxes of petitions at a rally in Sacramento in 2021. (AP Photo/Rich Pedroncelli)

“We’re very hopeful the court will take up this case,” Lin said. “There are clear violations of the law.”

In a prepared statement, Lin lamented. “It’s really disturbing that state regulators continue to block working-class Californians from the benefits of rooftop solar. State lawmakers have added to the insult by making deep cuts to an equity fund intended to help everyday folks afford renewable energy. It’s mind-boggling behavior for a state that’s supposed to be leading the transition to a just and affordable energy system.”

Reminder that the new solar rules do not affect folks who owned rooftop solar before April; they’ll remain on their current tariff plans for 20 years after their systems hooked into the grid.

What’s just, and what’s not, is oft in the eye of the beholder. We’ll see what the appeals court decides.

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