S1: Hey , San Diego. I'm Andrew Bowen in for Jade Hindman. The California Supreme Court hands a badly needed victory to the rooftop solar industry. This is KPBS Midday Edition. Connecting our communities through conversation. Environmental groups are celebrating a ruling from the California Supreme Court related to rooftop solar panels. The state's Public Utilities Commission in recent years has reduced the financial incentives for homeowners to install their own solar power. The high Court didn't overturn those rules currently in place , but it did order lower courts to take a fresh look at them and to more heavily scrutinize the Public Utilities Commission going forward. Here to break down what this means for solar customers and ratepayers. payers is Marlena Carollo , business reporter for Cal Matters Molina. Welcome.
S2: Thanks for having me.
S1: And also joining me is Melinda Dickinson. She argued the case before the Supreme Court on behalf of the Protect Our Communities Foundation , where she serves as legal and executive director. Melinda , welcome to you.
S3: Thank you so much for having me.
S1: So , Marlene , I'll start with you. Let's dig into what these financial incentives are that help homeowners pay for rooftop solar panels. What is net metering and how has it been changing in recent years ? Yeah.
S2: So net metering is a program where people who have solar panels on their homes , if they generate extra electricity , they can sell it back to the utilities. Previous iterations of the program had a much higher rate that they were able to get. They were able to sell it back to the utilities for the same price that the utilities would then go on to sell that to other customers for. And that was very helpful to customers because it's very expensive to have rooftop solar. And that was part of the way that a lot of folks justified paying the cost for that. And so the new version of it , it's called nicknamed NEM three that started in mid-April 2023. That lowered the cost by about 75% that that folks receive. So instead , with this latest program , they're getting the avoided cost. So what utilities would have had to pay on the open market ? Um , instead of the retail rate. And so this just dropped it quite a bit for , for rooftop solar customers.
S1: So this rule that was approved in late 2022 took effect in 2023 , basically reduced the amount of savings that a solar customer would see on their electricity bill. Right.
S2: And so. Utilities and others had argued that it was too expensive to have it in the way that it was before , and they argued that there it was expensive for folks who didn't have solar because they were paying a higher share of fixed costs for things like maintaining the grid. And so they the commission wanted to sort of even that out and still encourage people to make renewable decisions , but lower what was called a cost shift.
S1: Melinda , your organization , the Protect Our Communities Foundation , sued the Public Utilities Commission over this new version of net metering.
S3: They did not follow. What's the public utilities code specifically ? Section 2820 7.1 , which requires a rooftop solar. The statute refers to it as customer generators and renewable distributed generation. But it's basically the large majority of the customer generators are people that put up rooftop solar on their homes. Like you and me , we were advocating that the commission must follow the law , and the legislature in 2013 adopted AB 327 and set forth , um , several factors that the Commission has to include and consider when it is , uh , coming up with its new tariff system. And the Commission did not include all of those factors , and did not consider all of the things that the legislature said. This is what you have to consider on a top line. The legislature said rooftop solar or customer generation has to continue to grow , and instead , what the commission did was they reduced it dramatically. They made it much more difficult to have regular people installing rooftop solar on their on their roofs , at their homes.
S1: So Molina explained the prior versions of net metering gave solar customers a really good deal , essentially getting a lot of that savings on their electricity bills. But the utilities had argued that those solar customers weren't paying their fair share in maintaining the electrical grid , even though they were relying on that grid for safety and reliability. How do you respond to those utility concerns ? They say , you know , solar customers are getting a sweet deal , but everybody else is having to pay even more.
S3: Well , what the utilities are talking about when they are saying those kinds of things is just looking at the system myopically they're just looking at their piece of the electrical system and what the legislature said in AB 327 in 2820 7.1 was that the customer generators , the rooftop solar , people like you and me putting solar on their own roofs. That's a system that's a part of the electrical system that is supposed to coexist with the utility system. So when you're just talking about the costs that are avoided by the utilities when demand on their system is reduced. You're not looking at the part of the system , the big part of the electrical system , the customer generators , part of the electrical system that the statute is talking about. So the entire focus on the one issue of the avoided costs on the utility system , when demand on the utilities system is reduced. That's just looking at a one little piece of the electrical system , and it's not the whole story. Hmm.
S1: Hmm. And Marlena , what happened to rooftop solar adoption in California after the net metering rules were changed in 2023 ? Yeah.
S2: So it dropped significantly. There was about a 80% drop in customers requesting connections in 2023 for solar. Then there was the year prior , and some industry reports that have come out since then show that installations installations have gone down by about 45% since those new rules took effect.
S1: So that's quite a big drop. Melinda , the impacts of this change in rules was actually an important factor in the legal case that you argued , wasn't it ? That solar has to remain viable. That was sort of the goal that was given to the Public Utilities Commission. Yes.
S3: Yes. One of the factors that the commission is required to include when it's adopting its new tariff or its new system of rules , is that a customer sited , renewable , distributed generation has to continue to grow sustainably , and there has to be specific alternatives designed for growth among in disadvantaged communities.
S1: So so those low income communities are supposed to have an extra incentive to install solar , and you feel they're not getting it.
S3: Well , what's interesting is that the commission itself says , hey , we have all these other programs that exist to help residential customers in disadvantaged communities. But when the commission designed its tariff , it didn't include all those benefits when it was doing its equation to determine the impact of the tariff on all customers and the electrical system. It said , hey , we're not going to include all those benefits. So really it was just looking at a limited subset of the electrical system , a limited subset of the benefits involved. And it really was not including the benefits of rooftop solar.
S1: We've been talking about the California Public Utilities Commission , which is a very large , very important state body. Marlena , can you explain for us what the CPUc actually does and what its mandate is ? Yeah.
S2: So the California Public Utilities Commission is the main regulator for utilities in the state. And so a lot of the time when you hear about them , it's regulating power companies. And so they're the ones who are in charge of saying yes or no to rate hikes. Um , and making sure that in overseeing regulatory processes for utilities , anytime a utility has to do something in the state , they go through the CPUc , um , in these sort of very lengthy , convoluted processes. And so they regulate energy. They have oversight of water and rail safety , some rideshare and self-driving cars. They have , you know , their hands in quite a bunch of different buckets.
S1:
S2: California has the second highest rates for energy bills in the country , usually after Hawaii. And people really feel those those are something that people pay every single month and they really impact folks lives. And so utility commission meetings can be pretty dry , pretty boring. But a lot of times , especially at recent commission meetings , customers are deeply angry for all of the rate hikes that the commission has allowed , especially PG and E customers and groups that represent PGE customers typically show up with quite a number of folks who let the commission know and no uncertain terms how unhappy they are with them.
S1: And you've heard some colorful language in these meetings , I gather , haven't you ? Yes.
S2: There have been folks who said who want them to have poor holidays and choke on their meals. Yikes.
S1: Yikes. Molina.
S2: And so they've they haven't responded in depth. But right now , they're happy that their decision is still standing while this is going on.
S1: Melinda , your case is now going back to the Court of Appeal to be heard essentially what happens next.
S3:
S1: Melinda , you talked about the benefits of rooftop solar to society at large.
S3: They're actually preventing blackouts. Those with batteries as well can ride out blackouts with full power when they occur. People with rooftop solar can add electric vehicles voluntarily. There's no mandate needed. They they can because they're generating their own power on site. That's much different than the utility System where huge solar and wind farms are being built in far away , remote places , and you need to bring that power from far away to the urban centers where the power is used. Rooftop solar customers are generating and using their own power on site , and then when they have extra , it goes to the nearest source that goes to their neighbor. So there's so many different benefits , and none of those benefits have been considered by the commission. And we're hoping that the Court of Appeal will see that , and that the Commission will ultimately be required. And to make a tariff that includes all of the factors in the statute.
S1:
S2: I think we're not quite sure exactly what this will mean for future decisions , but advocates I've spoken to said that , you know , the CPUc needs to take a little bit of extra care to make sure that its decisions fit within the law , and so I'd be curious to see how exactly this changes decisions , if at all , with the CPUc.
S1: Well , certainly a lot to keep watching here. I've been speaking with Cal Matters business reporter Marlena Carollo and Melinda Dickinson , legal and executive director of the Protect Our Communities Foundation. Thank you to both of you for joining us.
S3: Thank you.
S2: Thank you.
S1: And that's our show for today. I'm your host , Andrew Bowen , in for Jade Hindman. Thanks for listening to Midday Edition. Have a great day.
