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California’s new solar energy rules contain major revisions

Solar Powered Building in San diego in this undated photo.
Sullivan Solar
Solar Powered Building in San diego in this undated photo.

California regulators hope their proposed new solar rules will encourage people to install solar arrays and battery systems, but some observers are not convinced.

The California Public Utilities Commission on Thursday unveiled details of their second attempt to change how the solar marketplace is regulated. The new proposal is markedly different from the plan released last December.

That December proposal largely adopted utility-backed calls for a steep mandatory monthly grid connection charges, a deep reduction in the value of electricity generated by rooftop solar and sold back to the grid, and it moved existing solar customers onto the new plan after 15 years.


The old rules gave solar customers 20 years before any rates changed.

That first plan was met with blistering criticism from people who warned the impact would be drastic on California’s largest in the nation solar industry. They said solar would stop being installed because there were no longer any financial incentives for consumers to invest thousands of dollars in rooftop solar arrays.

Shortly after, the governor broke his silence on the plan in early January saying the document needed more work, the CPUC pulled the proposal to reexamine it.

The plan unveiled Thursday is designed to encourage new solar and battery storage systems by instituting time-of-use electricity rates that rise sharply during peak usage hours between 4pm and 9pm when solar cannot help ease demand for power.

The new proposal also slashed the value of electricity sold back to the grid.


“They’re proposing a 75% decline in the value of solar energy exported to the grid effective April 2023,” said Bernadette del Chiaro of the California Solar and Storage Association. “That’s a pretty big drop in the value of solar and it’s hard to imagine that that’s not going to hurt.”

Others worry the new rules will make it harder for the state to meet its greenhouse gas reduction goals, because the new rules reduce the financial benefit of adding a solar system.

“It is absurd that the state is making cuts to net metering when we should be investing drastically in clean energy technologies,” said Karinna Gonzalez, the Climate Justice Policy Manager for Hammond Climate Solutions Foundation.

Observers say the commission made substantial revisions to their initial plan, but they did not go far enough.

But the onerous monthly mandatory grid connection fees are gone.

The CPUC proposal says those fees cannot just be charged just on homeowners who have solar panels. Grid access charges would have to be levied on all customers or none.

The proposal hints regulators might consider that approach in a separate proceeding.

But connection fees might still be levied in San Diego.

Regulators say the time-of-use fees levied in San Diego might look like the plan offered to electric vehicle owners. Prices can reach 64 cents a kilowatt hour during peak times, but fall to 10 cents an hour overnight and in the early part of the day. That plan carries a $16 a month fee.

A utility-backed group called Affordable Energy For All (AEFA) said the plan does not balance the scales.

“We would like to see reform of the net energy metering program to eliminate this cost shift and bring the program more in balance,” said Kathy Fairbanks of AEFA. “So that all customers are paying their fair share.”

California’s investor-owned utilities have long contended that solar customers are being subsidized by low income residents who can’t afford to install solar panels.

"The state wants to increase renewables, which includes rooftop solar and battery storage, but this ruling contradicts that, especially in Communities of Concern.” said Eddie Price of the San Diego Urban Sustainability Coalition. “The benefits of this ruling seem to go to the investor-owned utilities at the expense of consumer investments and also leaves the door open to future subjugation by the utilities of the consumer.”

California’s 1.5 million homeowners who have already invested in solar systems will not be affected if the proposed solution is adopted.

Regulators will stand behind the commitment to give Net Energy Metering 1.0 and 2.0 customers the deal they were promised when they installed their solar arrays.