For years, California has been a leader in solar energy in the United States, but its very popularity is prompting state regulators to take a close, critical look.
Former Gov. Arnold Schwarzenegger championed an effort to install a million solar energy systems throughout the state. Fifteen years later, lured by incentives, there are more than 1.3 million solar rooftops that produce enough electricity for millions of homes across California.
But a sharp debate is brewing among energy experts, the utilities, activists, consumers, and labor interests about the fairness of the original program, called “net metering.” This means that homeowners who install rooftop solar units — those installations on average currently cost about $15,000 each — sell the energy they generate back to the utility grid and reduce their utility bills.
The utilities are key players in the net metering debate and have sought the PUC’s review.
The California Public Utilities Commission, the powerful panel that regulates everything from railroads to cell phones, is expected to take up net metering in March, amid a barrage of complaints about the system. A PUC staff report has proposed changing the way net metering currently operates.
The PUC also regulates California’s big, investor-owned utilities — Pacific Gas and Electric, Southern California Edison and San Diego Gas and Electric. The utilities are key players in the net metering debate and have sought the PUC’s review.
Right now, those with rooftop solar can sell their surplus energy at the retail rate, which is what they would pay the utilities for electricity.
*The new plan would slash that, however, paying them 5 cents per kilowatt-hour instead of the 20 to 30 cents the retail rate currently gives them.
The proposal would add a “grid participation charge” of about $8 per kilowatt per month — or $48 per month for a 6-kilowatt system — for solar-equipped homes.
“Either of these two policies — the up to $700 a year tax and slashing the credits by 80% — would kill the economics of rooftop solar for consumers.” — Bernadette Del Chiaro
Schwarzenegger, a critic of the new proposal, wrote an opinion piece denouncing it in the New York Times, calling it a “solar tax.”
Bernadette Del Chiaro, the executive director of the California Solar and Storage Association, also lists this “solar tax” as one of the biggest problems with this proposal. She argues that it would be “bad public policy to tax good behavior [when] we need more solar power in California.”
Her assessment is that “either of these two policies — the up to $700 a year tax and slashing the credits by 80% — would kill the economics of rooftop solar for consumers.”
Environment California, an environmental group that is also against the proposal, seems to agree with this argument in their letter from 70 national and state environmental organizations to the commission and Gov. Gavin Newsom.
They point out that “the Imperial Irrigation District abandoned net metering in July 2016, causing residential solar installations to fall from a peak of more than 11 MW per year to less than 2 MW annually two years later – a decline of 88%.”
Nevada, they add, shows a similar trend, one that was eventually reversed when net metering was restored the following year.
In effect, net metering subsidizes wealthier customers who can afford solar installations, and shifts the cost to lower income utility customers.
But the Natural Resources Defense Council, one of the nation’s best-known environmental groups and one of the few to support the proposal, argues that the current net metering system is unfair and inequitable.
Net metering results in overpayments for the electricity that rooftop solar produces by four to six times its value, and “because these overpayments are largely paid by customers who don’t have solar, they increase electricity rates and bills for these customers.”
In effect, net metering subsidizes wealthier customers who can afford solar installations, and shifts the cost to lower income utility customers who can’t afford the installing solar units on their homes.
One of the biggest proponents of changing the current system is the Affordable Clean Energy Coalition, a campaign started and funded by the utility companies to show support for their anti-net metering stance.
The group is made up of scores of community, low-income, labor, business and advocacy groups across a broad spectrum that includes the Los Angeles Urban League, the California Chamber of Commerce, business groups from across the state, the California Business Roundtable, among others.
Spokesperson Kathy Fairbanks says that the members of the coalition “represent seniors, consumer groups, low-income groups, business and taxpayer groups that are concerned about the cost shift and the negative impact it will have on their families and their members.”
A recent Los Angeles Times analysis found that two-thirds of these organizations are connected to the utility companies either through receiving direct funding from them within the past year or having a sponsorship from one of the utilities on their website.
“We don’t think that all the other customers should pay an exorbitant rate to buy that power.” — Hunter Stern
In response to a question about the utility companies’ funding, Fairbanks acknowledged their role in the campaign, but noted that “the solar industry is funding all the efforts on the other side just like the utilities are providing funding for our coalition.”
Another group urging net metering reform are some locals of the International Brotherhood of Electrical Workers. The union has been known to clash with the solar industry in the past, particularly in a dispute over solar battery safety and workforce training requirements.
Hunter Stern, the assistant business manager at IBEW Local 1245, made it clear that they are in favor of solar energy and said they want “more rooftop solar installed by our members, or at least installed by workers making a prevailing wage, all over the state.”
The problem, he added, is that “we don’t think that all the other customers should pay an exorbitant rate to buy that power. That power should cost in line with what other solar resources cost.”
Newsom, meanwhile, has said work still needs to be done on the proposal laid out by the PUC, but he has not said much else, careful not to get publicly involved in the workings of an agency meant to be independent in their decision making — even though Newsom appoints its members, including the president of the five-member panel.
Newsom said Jan. 21 that “changes need to be made” to the state’s controversial proposal to slash financial incentives and add fees for new home rooftop solar systems — but he added that he doesn’t intend to interfere in the process.
“We have work to do,” Newsom told reporters. “Do I think that changes need to be made? Yes, I do.”
*Editor’s Note: Due to an editing error, CORRECTS 7th graf to delete reference to net metering position of the California Solar and Storage Association. Joshua Aalcides is a Capitol Weekly intern from UC Davis.