California pushes a new plan cutting rooftop solar incentives

California is poised to reduce payments to homes and businesses that go solar for clean electricity they supply to the power grid — a landmark shift in how the state promotes a crucial technology for fighting climate change.

The Public Utilities Commission’s proposal would keep the payment rates higher — at least for a few years — than a previous plan that faced sharp criticism from the solar industry and climate activists. A vote by the utilities commission, whose five members are appointed by Gov. Gavin Newsom, is expected as soon as next month.

Thursday’s proposal generated immediate criticism from both the solar industry and a group backed by the state’s monopoly utility companies, who say low-income households are being forced to subsidize wealthier solar customers.

The California Solar and Storage Assn. estimated that new solar customers would be paid a base rate of 5 cents per kilowatt-hour of electricity that they don’t use at home, sending it the larger power grid — down from as much as 30 cents now.

But for most houses with solar panels, that rate would be supplemented by additional payments during the first few years of a rooftop solar system’s operation — potentially higher payments than contemplated under the previous proposal, and for five years rather than four. New solar customers also wouldn’t have to pay an $8 monthly charge that was part of the previous proposal.

Those changes rankled the utility companies that have pushed state officials to slash rooftop solar incentives: Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, a subsidiary of Sempra Energy.

In a written statement, the Affordable Clean Energy for All campaign — which is funded by the three monopoly utilities — said the new proposal “fails to make the meaningful reform necessary to ensure that all electricity customers, those with rooftop solar and those without, pay their fair share of the costs” for maintaining the electric grid.

“It is extremely disappointing that under this proposal, low-income families and all customers without solar will continue to pay a hidden tax on their electricity bills to subsidize rooftop solar for mostly wealthier Californians,” said Kathy Fairbanks, a spokesperson for the utility-backed campaign.

“The failure to finally eliminate the growing cost burden carried by non-solar customers in California is particularly troublesome given the billions of dollars in new federal clean energy subsidies that will ensure continued growth and healthy profits for large solar corporations for the next decade,” she added.

The rooftop solar industry was similarly frustrated by the proposal.

Bernadette Del Chiaro, who leads the California Solar and Storage Assn., said in an email that the new plan “would protect utility monopolies and boost their profits, while making solar less affordable and delaying the goal of 100% clean energy.”

“California needs more solar power and more solar-charged batteries, not less,” she said.

Del Chiaro urged Newsom and the utilities commission “to make further adjustments to help more middle- and working-class consumers as well as schools and farms access affordable, reliable, clean energy.”

“Better than ridiculously awful is hardly something to cheer,” she added via text, referring to the previous proposal.

Homes and businesses that already have solar panels wouldn’t be affected by the changes to California’s “net metering” incentive program. Neither would utility customers who add solar panels within the first few months after the new rules are adopted.

The changes would affect Edison, PG&E and SDG&E customers. Homes and businesses served by the Los Angeles Department of Water and Power and other city-run electric utilities would continue to have access to existing solar incentives.

But the hotly anticipated proposal significantly alters how the state promotes rooftop solar, a key issue for all Californians because the renewable energy technology is crucial as the state works to phase out planet-warming fossil fuels while avoiding blackouts and keeping electricity bills from spiraling out of control.

California needs all the climate-friendly power it can get: Power plants fueled by natural gas generate more than one-third of the state’s electricity, even as solar and wind energy continue to grow. Gas plants are especially crucial on hot summer evenings — getting hotter as the planet heats up — when people come home from work and crank up their air conditioners, even as the sun goes down and solar panels stop generating. California has had trouble keeping the lights on some of those evenings.

Solar panels paired with batteries are one solution, allowing households to stay powered with clean electricity generated during the afternoon without straining the power grid. Already, more than 1.5 million homes, businesses and other utility customers in California have gone solar. An increasing number are installing batteries as well as prices begin to drop.

Last December’s proposal from the Public Utilities Commission was met with fury from climate activists and solar companies, who said the changes would undermine a successful renewable energy program and crash the solar industry. They pressured Newsom to lean on his appointees — which he did, prompting the utilities commission to reconsider its decision.

At least one major environmental group wasn’t satisfied by the changes unveiled Thursday.

The Center for Biological Diversity said in an emailed statement that the new plan “abandons the hefty solar tax from last year’s proposal but still threatens to put affordable renewable energy out of reach for most communities.”

“California needs a strong net-metering program to achieve a just transition away from fossil fuels and utility monopoly control,” said Maya Golden-Krasner, deputy director of the group’s Climate Law Institute. “The commission needs to strengthen renewable energy solutions that benefit marginalized communities. To do otherwise leaves these folks behind.”

But critics of the current rooftop solar incentives — including ratepayer advocates and a handful of environmental groups — say the net metering program as it exists now could actually make it harder for the Golden State to fight climate change.

That’s because getting more people to drive electric vehicles, rather than gas-guzzling cars and trucks, is crucial to California’s climate ambitions. Same with persuading homes and businesses to replace their natural gas-burning furnaces and stoves with electric heat pumps that provide both heating and cooling, and induction cooktops.

The more electricity rates rise, the more expensive it will be for Californians to invest in those technologies. And rates are rising, spurred in part by Edison, PG&E and SDG&E spending billions of dollars to stop their electric lines from sparking wildfires.

The cost of rooftop solar incentives is just one more factor driving up electric rates and making life harder for all but the wealthiest families, some experts say — and also making it harder for them to afford electric cars, heaters and stoves.

UC Berkeley energy economist Severin Borenstein said the Public Utilities Commission’s new proposal wouldn’t do nearly enough to address the “cost shift” — the amount of money being transferred from non-solar households to their net-metered neighbors. The utility industry has estimated the cost shift at more than $3 billion per year.

Even with new solar customers getting paid less for electricity they send to the grid, there would still be a “massive cost shift” during the first few years of the new program, as payment rates slowly decline to give the industry time to adjust.

“You look at the growth rate of rooftop solar right now, this isn’t even putting a Band-Aid on the bleeding. This is starting to walk to the cabinet to find a Band-Aid,” Borenstein said.