From pv magazine USA
A new proposal in the California legislature, AB 942, seeks to break nearly two million rooftop solar net metering contracts and shift existing customers onto a rate structure that would decrease credits on their electricity bills by roughly 80%. If passed, the proposal would increase a typical solar customer’s bill by $63 per month.
Over two million rooftop solar projects are installed in California on homes, schools, small businesses, and other rate-paying customer sites. Californians invested tens of thousands of dollars or entered 20+ year contracts with the expectation that they would secure predictable, stable electricity rates for the next two decades or more.
This predictable cost for electricity amid steadily increasing utility-provided electricity rates was made possible by net energy metering (NEM), which enables customers to export excess daytime production to the local grid in exchange for credit on their electricity bills.
“AB 942 is a direct attack on California families who made long-term investments in solar with the promise of fair, 20-year Net Energy Metering agreements—guarantees that were clearly outlined in the state’s own consumer protection documents,” said Steve Campbell, Western Regional Director, Vote Solar.
In April 2023, California moved its NEM structure to a net billing tariff, also known as NEM 3.0. The new rate structure cuts the rate credited to new solar customers by roughly 80%. The California rooftop solar market subsequently crashed as the return on investment for installing a project was heavily damaged.
The shift to NEM 3.0 cut the average export rate in California from $0.30 per kWh to $0.08 per kWh. Now, AB 942 proposes to force existing solar customers onto the unfavorable NEM 3.0 rates.
An average home uses 870 kWh of electricity per month. Solar customers typically export 20% to 40% of their production to the grid. This means with the average net metering rate decrease and assuming a 30% export of production, solar customers would have their monthly bills increase by $63 under the proposed bill.
The bill requires that starting July 1, 2026, an eligible customer-generator that has taken service pursuant to NEM 1.0 or 2.0 for 10 or more years is no longer entitled to take service under that contract or tariff. The bill would then require that existing customers are shifted onto the NEM 3.0 tariff.
“More than a million Californians signed contracts and state-issued guides in good faith, trusting that regulators would keep their word,” said Campbell. “Retroactively breaking those agreements would set a dangerous precedent for all consumer protections in California.”
The bill was filed by Assemblymember Lisa Calderon. Calderon had a 25-year tenure in a government affairs and political compliance role with one of the state’s investor-owned utilities, Southern California Edison.
Rooftop solar was studied to provide roughly $1.5 billion in savings to utility ratepayers, including non-solar customers, in 2024. But California’s utilities have made rooftop solar has the scapegoat for high electricity rates.
According to the California Public Utilities Commission (CPUC), the state’s three largest electric utilities PG&E, SCE and SDGE have raised customer rates by 110%, 90% and 82%, respectively, over the last decade. Despite relatively flat electricity usage, transmission and distribution spending by utilities has increased 300%.
A sign-on letter including nearly 100 organizations opposes AB 942.
“To address rising rates, California must focus on what’s really wrong with our energy system: uncontrolled utility spending and record utility profits,” the letter states. “A.B. 942 would increase rates, limit choice, derail the state’s clean energy progress, erode public trust in government, and avoid the hard work of actually reforming our state’s utility industry.”
(Read: “Six ways for California to lower electricity rates”)
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The government giveth, the government taketh away.
Absolutely messed up anti-consumer, pro-business garbage.
The CPUC made a major mistake by incentivizing residents to size their systems to generate a full year of electricity consumption. Since all solar is generated during the day, but includes the nighttime consumption (which is generally about the same as daytime consumption), which means solar customers export about 1/2 of their production. To pay for this 2x oversizing, the CPUC decided to reimburse these exports at the full tariff rate for 20-years.
The CPUC, in its proposed fix for this error (in AB942), will dump NEM1/2 customers over to NEM3. The CPUC has not given any consideration to how residents used the NEM1/2 incentive. In particular, the hundreds of thousands of residents who installed solar by renting systems through 20-year Power Purchase Agreements (PPA’s) will potentially lose all their savings for going solar, and reducing the value of their solar systems to essentially zero upon resale of their homes.
The increased costs of AB942 would be substantially higher than a $63/month – just look at the CPUC’s own analysis during the NEM3 proceeding.