Flawed ‘net energy metering’ system needs to be fixed

Workers install solar panels on a southern California home. (Photo: Joseph Sohm, via Shutterstock)

All Californians deserve not only a clean energy future, but assurance that the programs we invest in will achieve this goal equitably and at the least possible cost. This is particularly important for seniors living on a fixed income and working families already struggling to make ends meet.

This is why it is critical that reforms are made to the state’s rooftop solar subsidy program called Net Energy Metering (NEM). Without changes, the rooftop solar program will continue to be the most expensive way to increase the renewable generation in the state and a driver of higher electricity rates in California.

Today credits for the excess solar power generated from rooftops are eight times higher than the price of the same solar power purchased from a large-scale solar system.

The goal of NEM when it launched 25 years ago was to encourage more Californians to install rooftop solar panels on their homes and help drive down the cost of solar technology. Given that we have more than 1 million rooftop solar systems today and the cost of the technology has dropped by 70 percent, the program clearly succeeded.

The vast majority of Californians want cleaner energy and many of us don’t mind paying a bit more for it if it means a healthier future for our children and grandchildren. But that’s not what’s happening with NEM.

Here is how NEM works: Customers with rooftop solar receive a credit on their electric bills when their system generates more energy than they need, and that energy is sent back to the grid. That’s only fair.  But the mandated bill credit for excess power is tied to the retail price of electricity, which is typically increasing.

Today, credits for the excess solar power generated from rooftops are eight times higher than the price of the same solar power purchased from a large-scale solar system.

The bill credits provided to rooftop customers are so high that these customers pay only nominal electric bills even though they continue to use the grid.  That means one million Californians are no longer contributing their fair share to grid maintenance, energy efficiency, wildfire mitigation and other expenses that benefit us all. And these customers are still using the grid: they draw energy from the grid at night or when the sun is not shining, and they use the grid to export excess energy from their solar systems.

These costs don’t go away. They instead are shifted to customers without solar, increasing electric bills year after year for millions of Californians – many of whom are low-income or simply can’t install rooftop solar because they rent or live in a too shaded area.

California’s leadership in jumpstarting rooftop solar should be celebrated, but the basic cost-benefit proposition of the program has been broken for some time. While the cost of technology has decreased, the subsidies paid to NEM program participants have continued to increase. Last year, electricity customers without rooftop systems paid an extra $2.8 billion in their electric bills or roughly $200 per customer each year.

And because rooftop solar customers tend to be wealthier, that means costs are not just being shifted from some customers to others, but they are being shifted to those customers least able to pay.

More solar energy is a good thing. But one customer’s decision to install a rooftop system should not substantially increase the electric bill of another customer who can’t afford a solar system. Many of these customers are middle, low income or live in underserved communities.

We need new rules that keep rooftop solar growing, but do not impact or disadvantage customers without solar.

Editor’s Note: Deborah Howard is the board president of the California Senior Advocates League, a non-profit advocacy organization supporting policies that empower California seniors, their families and their communities.


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