SAN FRANCISCO — The California Public Utilities Commission (CPUC) released a revised proposal to the net energy metering solar tariff. If approved, Californians who install rooftop solar after April 15, 2023 would receive 75% less in credit payments from utility companies than residents who have solar now.
If the CPUC votes yes to this proposal on Dec. 15, it would be the largest decrease in solar credit compensation in the nation. If approved, this proposal would also remove a previously proposed $8 fixed monthly fee for residents who have solar units and put $900 million into new incentive payments for rooftop solar systems. $630 million would go towards solar incentive money for low-income households.
GRID Alternatives, the nation’s largest non-profit solar installer, released a statement saying that the new proposal defines “low-income” too narrowly and ignores “millions of (lower-income) households that now have a more difficult time affording solar or solar and storage.”
The CPUC doesn’t explicitly define who qualifies as low-income in their new proposal. However, in their Single-Family Affordable Solar Homes (SASH) Program, the CPUC defines low-income as families with a household income that is 80% of below the income of their town and families who live in affordable housing.
However, not everyone thinks that the CPUC’s new proposal will increase solar inequity among Californians. Severin Borenstein, E.T. Grether Professor of Business Administration and Public Policy at UC Berkeley’s Haas School of Business and faculty director of the Energy Institute at Haas, believes that solar activist groups are focusing on the wrong group of people.
“It will affect Californians who want to switch to solar in the future. It will lower the compensation for exporting power to the grid. But there’s another group that’s being ignored here, which is all the people who don’t switch to solar,” Borenstein said.
The cost shift from people who switch to solar onto people who don’t have solar falls disproportionately onto lower income individuals. Solar adopters save about 30 cents per kilowatt hour, while the energy system itself only saves about 8 cents per kilowatt hour. This is due to the pricing of electricity being based not on its generation, but on the fixed cost of the grid, wildfire mitigation, and energy efficiency programs. To make up for the loss in profits from solar adopters, utility companies raise the rates for everyone else to make up for the remaining 22 cents per kilowatt hour that’s not paid by solar users, according to Borenstein.
By 2035, California plans to triple all forms of solar. The CPUC’s revised proposal “is absolutely counter to the state’s clean energy goals. It’s just completely, the right hand and the left hand are mixed up. And I don’t think it’s an innocent mistake. This is what happens when you allow the utilities to warp and twist and corrupt our government,” according to David Rosenfeld, executive director of the San Diego-based Solar Rights Alliance.
Solar supplies 26% of California’s energy production, according to Solar Energies Industries Association. In California, about 12% of households have solar.
The solar industry is on the rise in the United States, with a 34% increase in residential solar power installations nationwide last year. In August, President Biden expanded the Federal Tax Credit for Solar Photovoltaics, or the Investment Tax Credit, from 26% to 30%, allowing homeowners with solar to claim more money on their federal income taxes.
Lawrence Berkeley National Laboratory released a report in early November stating that solar adopter incomes skew high, especially since almost half of all residential solar adopters nationwide were in California and also because installing solar is costly—the average price in California is around $15,000. Fifty-nine percent of solar adopters in California last year had annual incomes above $100,000.
“[$125,000 per year income] is not what most people think of as low and middle income and the low-income are still disproportionately underrepresented.” Borenstein said.
More than 500 people from rooftop solar advocate groups and environmental groups protested in ten cities statewide on Dec. 1 in response to the CPUC’s recent proposal. In front of the CPUC’s headquarters in San Francisco, about twenty people gathered.
“I don’t want to see rooftop solar get devalued as the CPUC is doing,” said Jeff Gould, a decades-long advocate of clean energy and homeowner with rooftop solar. “I want to leave a message for Gavin Newsom that one million solar roofs isn’t enough. I want to see five, 10, 20 million.”
Susan Green, a climate activist and a homeowner with rooftop solar, believes that this proposal will “slow down the growth of the solar industry in California.” Green said that the particularly rainy day resulted in a lower-than-expected turnout at the rally.
The CPUC maintains that their revised proposal will support the rooftop solar industry and increase access for low-income homeowners by providing incentive money for low-income homeowners to go solar and more payback credits for low-income homeowners than high-income customers.
Despite these promises, rooftop solar groups remain skeptical about the impact of the revised decision.
“[The CPUC] talks as if they care about low income people and the cost shift, but that’s not what’s driving them at all. And everyone knows that,” said Rosana Francescato, Principal of Rising Sun Communications and a solar energy advocate of over a decade. She believes that the problem with the proposal lies in the outdated business models of the utility companies that brought them profits from building infrastructure more than from selling energy.
“That made sense a hundred years ago when we needed to build the system out. Right now it doesn’t make sense,” Francescato said.
Rosenfeld believes the CPUC’s new proposal will render “solar unaffordable for most people,” especially since a low six-figure salary is considered middle class for families of four in big cities in California.
Even though the CPUC removed the monthly fixed $8 fee from the proposal, a proposed fee that many solar rights groups were upset to see last year, Rosenfeld said that “there’s nothing about the proposal that we’re happy about.” He reasoned that as long as the CPUC sticks with the 75% decrease in payments back to customers with solar, the entire proposal is “lethal.”
Rosenfeld wants Governor Gavin Newsom to step in and stop the CPUC from passing the proposal. However, the CPUC is an independent constitutionally-established commission composed of five members appointed by the Governor. The commissioners will have the final say in the vote. Governor Newsom hasn’t commented on this revised proposal.
Supporters and non-supporters can find common ground in the desire to decrease California’s carbon footprint and fight climate change in the state. “The point should not be to keep the solar industry making money. The point should be to decarbonize our energy use in the most equitable and cost effective way. And if rooftop solar is the way to do it, I’m all for it. But it’s not right now,” Borenstein said.
Californians await Dec. 15 for the CPUC’s final vote on the proposal. If it’s passed, the new proposal will go into effect 120 days after the vote on April 15, 2023.
