On Thursday, the California Public Utilities Commission will vote on a controversial reform of the state’s rooftop solar program. Proponents who want to scale back subsidies and eliminate the “cost shift” on poorer households argue that the revised proposal doesn’t go far enough.
It’s critical that California stands up to regressive policies that harm low-income residents. One such policy that desperately needs reform is the subsidy program for rooftop solar, which benefits wealthier Californians at the expense of disadvantaged and low-income households, including seniors.
Unfortunately, the California Public Utilities Commission looks unlikely to make the necessary reforms to ensure the Net Energy Metering program is equitable for all. To put it plainly, the latest proposal does not go far enough.
The current NEM program is Robin Hood in reverse. Those who don’t have or cannot afford rooftop solar panels and are paying hundreds of dollars more each year in their electricity bills to cover subsidies that historically have benefited wealthy homeowners.
The benefits for rooftop solar users has resulted in nominal or sometimes even negative electricity bills each month. As a result, homeowners with rooftop solar avoid paying their fair share of costs everyone else pays to maintain the electric grid and to fund other policy mandates, such as energy efficiency programs.
As a result, these costs unfairly get shifted to non-solar customers, creating a hidden solar subsidy tax that hurts those least able to afford it. The program’s unfair cost shift is regressive, and environmental groups, academics and even the CPUC’s Public Advocates Office have sounded the alarm.
Unfortunately, the revised proposal released by the CPUC last month does not eliminate the cost shift. It makes only very modest changes.
In fact, the proposal permanently locks in the excessive subsidies for the existing 1.5 million solar customers in California. These subsidies cost non-solar customers more than $3 billion last year alone.
It’s a disheartening development, and a missed opportunity if the CPUC adopts the proposal without any changes on Thursday. The big winners are large solar corporations, not consumers.
Just follow the money. After the revised proposal was released last month, shares of rooftop solar companies surged: Sunrun stock increased as much as 31%; SunPower jumped as much as 21%; and Sunnova Energy climbed as much as 29%.
The solar industry benefits from high subsidies. They sell more solar panels, their stock price goes up and their executives get higher pay.
Generous subsidies may have been needed 27 years ago when the NEM program was first introduced. Since then, costs have come down dramatically – yet none of that has been factored into the program.
Still, residential rooftop solar is the most expensive form of renewable energy.
We are strong believers in clean energy and want to see more rooftop solar on homes in California, but not at the expense of low-income customers. California can reform its NEM program to bolster equity and increase rooftop solar adoption when the CPUC votes on the proposal this week.
Other states have done it, and California can, too.
The vote by CPUC commissioners on Thursday will have lasting effects on the growth of rooftop solar in California. Opponents argue that the revised proposal will derail widespread adoption, while some proponents believe it strikes a necessary balance