Groups opposed to recent rooftop solar decision seek a rehearing

A trio of environmental groups wants the California Public Utilities Commission to upend last month’s decision that overhauled the rules affecting the 1.6 million Californians who have installed rooftop solar on their homes and businesses.

The Protect Our Communities Foundation, based in San Diego, joined the Environmental Working Group and the Center for Biological Diversity in filing an application for a rehearing and a reversal of the Dec. 15 ruling by the commission.

“They made a mistake,” said Bill Powers, an engineer and board member of the Protect Our Communities Foundation. “This was the wrong decision.”

At issue is what’s colloquially called NEM 3.0 — the third iteration of Net Energy Metering rules in California that determine the size of the credits customers receive on their utility bills when their rooftop solar systems generate more energy than they consume.

Passed with all five commissioners voting in favor, the complicated 260-page decision will include $900 million in upfront incentives for customers to pair solar with battery storage systems, with $630 million set aside for low-income customers. The commission estimates the updated rules will save average residential customers with solar-plus-storage at least $136 a month on their utility bills.

One of the key provisions alters the way rooftop solar owners are compensated for the excess electricity their systems send back to the grid.

Instead of being credited at the retail rate of electricity, customers will get paid at the “actual avoided cost.” That figure is lower than the retail rate during the daylight hours when solar energy is abundant and cheap, but it’s higher during the evening hours — when solar production ramps down to practically zero when the sun goes down and California’s electric grid is under the most stress.

The California Solar & Storage Association — which vehemently opposed the rules changes — has estimated the average compensation rate would drop from 30 cents per kilowatt to 8 cents, a reduction of 75 percent.

NEM 3.0 rules are scheduled to go into effect in mid-April and will affect new solar customers. The request for a rehearing zeroes in on a state law that became part of the Public Utilities Code. A section of the code instructs the commission to ensure “that customer-sited renewable distributed generation continues to grow sustainably and include specific alternatives designed for growth among residential customers in disadvantaged communities.”

The filing by the Protect Our Communities Foundation, the EWG and the Center for Biological Diversity argues NEM 3.0 as written “fails to comply” with that mandate.

Installing rooftop solar can run into the tens of thousands of dollars and the groups say the new rules will extend the system’s payback period, discouraging customers from investing in solar, and decrease the savings customers receive on their utility bills.

Therefore, they say, the decision “will devastate solar adoption rates and thus (fails) to ensure the continued sustainable growth of distributed generation.”

On the day the new rules were adopted, CPUC commissioner John Reynolds predicted the changes will not undermine solar’s growth in California. When the rules were last updated in 2016, Reynolds said, there was a decline in the number of solar systems connected to the utility grid but the numbers rebounded and reached record highs in 2022.