California regulators close to new solar rules
San Diego County resident Belinda Martinez is feeling pretty good about the solar power investment her family made about five years ago.
Martinez has lived in a Spanish colonial cottage on an oversized lot in a more established Oceanside neighborhood for about 20 years.
“We fell in love with the neighborhood,” Martinez said. “Our neighbors, just sweetheart neighbors.”
Just over five years ago, the family installed 13 solar panels.
And Martinez said the uncertainty over the future of California’s solar market is clearing a bit since the California Public Utilities Commission (CPUC) has unveiled its plan to reshape the state’s solar rules.
Regulators are at the tail end of a nearly two-year review of California’s Net Energy Metering (NEM) program, the rules that govern a solar owner’s relationship with their power company.
The Martinez family was leasing an electric car at the time, and they were looking for ways to reduce their monthly energy budget.
So, the solar panels went up, on top of their family home’s flat roof.
Those panels are mostly hidden from the street, but the impact is very visible on the Martinez electricity bill.
“We’ve only seen credit on our utility, so basically, we have no electrical bill,” Martinez said.
They receive that credit because of the state’s NEM rules.
The first iteration of the program required utilities to pay homeowners the retail rate for electricity generated by rooftop solar.
NEM was last adjusted in 2017.
Under NEM 2.0 solar owners had to enroll in time of use rate plans, where the cost of electricity went up during peak demand periods and went down when there was plenty of electricity fed into the grid.
And utilities also paid a few pennies less for a kilowatt hour of electricity they bought from solar owners, in an effort to help utilities pay for costs of maintaining the grid.
“We’re putting out energy to them, they pay a certain fee for that energy output,” Martinez said. “We’re obviously paying for the energy in the peak period (when solar is dark) and it still allows us to have credits.”
But changes proposed last December would’ve upended that system.
A utility backed plan for NEM 3.0 would have slashed the value of rooftop generated electricity by 80%.
The proposal had steep mandatory grid access fees that would be in the neighborhood of $60 dollars a month, depending on the size of a homeowner’s solar system.
The public outcry was immediate and sustained.
After a few weeks of blistering dissent, regulators put that plan on hold.
The move was welcomed by solar advocates, but they were not convinced a good outcome was coming.
“We knew that, just because the CPUC paused, didn’t mean that they were convinced they were wrong,” said Dave Rosenfeld of the Solar Rights Alliance. “And the governor did say that changes need to be made but he didn’t say what those changes ought to be. Well, that’s a pretty wide spread.”
Solar supporters spent the year shining a light on the threat posed by the December proposal.
Protesters rallied at utility offices around the state, including San Diego-based Sempra’s headquarters in July where one protester tried to deliver a petition to San Diego Gas & Electric CEO Caroline Winn.
“Please reverse course on your attack campaign on rooftop solar,” implored the man as he tried to deliver a petition. The door never opened and he was turned away.
Rallies happened across the state.
A Sacramento protest in October appealed to Gov. Gavin Newsom asking him to protect the solar industry's 67,000 jobs.
Advocates lobbied the governor and lawmakers and for months they flooded CPUC meetings with public comments supporting the solar industry.
“It’s very rare for the regular public to interact with the CPUC,” Rosenfeld said. “And for most of the time that this campaign has been going on, too, we’ve been in a COVID type environment where the CPUC wasn’t even meeting in person. So, it wasn’t until the spring there was even an in-person meeting where the CPUC would be in a position to look the public in the eye and hear from members of the public.”
Economics are at the heart of the solar issue.
Advocates want to make sure homeowners get the financial benefits for installing solar arrays.
“If you put $25,000 into a solar system, how many years does it take for that upfront investment to pay for itself in savings in utility bill savings,” said Bernadette Del Chiaro of the California Solar and Storage Association.
Remove the financial incentive, supporters say, and solar installations grind to a halt making it difficult for the state to hit its aggressive climate goals, which call for renewable clean energy.
But the state’s investor-owned utilities say solar owners are not paying their fair share of grid expenses because they aren’t buying electricity from the utility.
San Diego Gas & Electric said at a recent city council meeting that rooftop solar is cutting into the amount of electricity they can sell.
And, utility backed groups say if solar owners are not paying to maintain the grid, non-solar residents are paying for them.
“We want the CPUC to reform the net energy metering program to make sure that everyone is paying their fair share,” said Kathy Fairbanks of the utility funded group Affordable Energy For All.
The new proposed rules unveiled by regulators last week did not seem to please either side.
The onerous grid connection fees are gone, but the value of electricity generated by rooftop solar is being slashed. Pro-solar groups argue that hurts the state’s largest solar marketplace by reducing the incentive to install solar panels.
Pro-utility groups say non-solar customers still pay an unfair share of baked in grid costs.
The decision falls on the shoulders of the five member CPUC.
They will hear from interested parties this week and they plan to vote on a proposal to reform NEM rules by the middle of next month.