As a longtime Chair of the California State Senate Energy Utilities and Commerce Committee, I have been a passionate advocate for policies that not only advance the state’s transition to 100-percent clean energy but do so in the most affordable and equitable manner for all Californians.
One current policy that flies in the face of affordability and equity is the state’s rooftop solar subsidy program, Net Energy Metering. It is critical the California Public Utilities Commission (CPUC) take action this year to better align subsidies with the value of the energy being provided and to ensure non-solar customers are no longer shouldering an unfair cost burden for this program.
Since property ownership is a requirement for rooftop solar panels, customers without solar are disproportionally renters, seniors on fixed incomes and Californians who live in disadvantaged communities. It is wrong that families who are already struggling are paying higher electricity bills to subsidize solar panels for homeowners and wealthier Californians.
No one deliberately wanted it to be this way. The NEM program was created 25 years ago to incentivize the installation of rooftop solar and to help jump start renewable energy technologies. The original goal was 10,000 systems and today there are more than 1.3 million homeowners with rooftop systems. Under the program, customers who install rooftop solar panels receive a credit on their bill for any excess power they generate and send back to the grid. That credit equals the retail cost of electricity, which has increased over time.
That lucrative subsidy made sense 25 years ago, but not anymore. The cost of rooftop solar systems has dropped 70 percent, but the subsidy continues to rise. Solar owners receive such generous credits that many pay nominal or no charges on their electric bill.
This means they aren’t contributing their fair share for maintenance and upgrades to the electric grid even though they still use it. Those costs that should be borne by rooftop solar homeowners have not gone away, they have just been shifted to non-solar customers.
Today, electricity customers without solar panels pay an additional $3.4 billion in their bills – or roughly $245 more per customer per year – to subsidize rooftop solar panels for higher-income earners. If changes are not made to the program, the cost burden on renters and lower-income Californians without solar will grow to $555 per customer per year by 2030.
The excessive bill subsidies also result in rooftop solar being the most expensive form of clean energy. The NEM program requires that excess power generated by rooftop systems be paid at a rate eight times higher than what it would cost to purchase the same solar power from a solar farm. That needlessly drives up electricity costs for all Californians.
Frankly, reform is long overdue. While in the Assembly, I voted for AB 327, which required the CPUC to fix this cost burden by 2017. Not only is reform five years overdue, but the cost burden keeps getting worse.
Those opposed to modest NEM reform claim updating the program in any way will jeopardize California’s transition to a clean energy future. That’s ridiculous. The Newsom Administration, State Legislature and voters have repeatedly reinforced their commitment to clean energy. The debate about reform of rooftop solar subsidies has never been about whether or not it should continue. It is about how much we should spend to incentivize the continued growth and, more importantly, who should pay.
There is no question in my mind that the status quo is unacceptable. The intent of this program was never to have renters and low-income Californians subsidize rooftop solar panels for their wealthier neighbors. We can’t allow another year to go by without righting this wrong.
Hueso is a California state senator representing District 40 which includes National City and Chula Vista.