California moves to end unfair $230/year rooftop solar subsidy for rich

The California Public Utilities Commission (CPUC) voted to end an unfair rooftop solar subsidy that generally favors the rich.   The CPUC action highlights that after 25 years, the rooftop solar industry is mature and no longer needs to be subsidized on the backs of the poor and middle-class Californians.  

Whether it’s compensating rooftop solar owners at avoided (wholesale) cost or instituting a grid or standby charge to pay for the benefits of the electric distribution system, the position of Energy Fairness has been clear and consistent: both at the regulatory and legislative levels, policymakers should develop net metering policies that accomplish three simple goals:

• Treat all customers fairly by avoiding cost-shifting
• Accurately reflect the benefits and costs to the grid of rooftop or distributed solar
• Don’t distort the marketplace by paying inequitable rates for excess rooftop generation.

Last week’s action by the CPUC comes on the heels of an effort by Assemblywoman Lorena Gonzalez (D-San Diego) to ween the rooftop solar industry off of its 25-year-old subsidies because, as she aptly noted, “…a non-rooftop solar customer pays $230 a year to subsidize those of us who have rooftop solar…We want people to have rooftop solar, but it can’t be on the backs of people who can’t have solar.”

Her legislation, AB 1139, would have done precisely that.  It would have given the CPUC until February 1, 2022, to establish a new rate structure that ends the current $230/year subsidy, grandfathered in existing rooftop solar customers at their current rates for ten years, and instituted grid access fees ranging from $50-80 a month.   In short, it would have satisfied our three, and previously mentioned, simple goals for net metering. 

Unfortunately, AB 1139 only received 27 of the required 41 votes to pass the bill out of the California Assembly.  

In the wake of the action by the Assembly last week, the California PUC moved to create more equity for rooftop solar customers. So what did the commission do?  The CPUC voted unanimously to reduce the “avoided cost calculator” used to determine the compensation rate rooftop solar customers receive for excess electricity sold into the grid after meeting their own needs.  

The avoided cost is the cost a utility avoids by not having to produce the electricity at a power plant when it receives power from a rooftop solar system.  The CPUC approved a 50% reduction to that avoided cost due to projections illustrating a doubling of large-scale solar sites coming online by 2025.   

Reducing the avoided cost will lower the subsidy paid to rooftop solar owners and shouldered by poorer ratepayers throughout California. 

 In a 2019 guest blog for Energy Fairness, Harvard’s Ashley Brown called net metering policies “a socially regressive regime in which lower-income customers pay more for the benefit of more affluent customers.  It is a ‘Robin Hood’ in reverse.”

We agree.  Fortunately, a unanimous vote by the California PUC commissioners last week finally starts California down the road of ending this “Robin Hood in reverse.”