California Bill to Cut Solar Incentives Prompts Fierce Debate

Fighting about rooftop solar in California never seems to get old.

Kicking off the latest conflict is legislation that would reduce the benefits that longtime solar customers receive for extra electricity they produce and export to the grid. While the bill hasn’t had a hearing yet, it’s already garnering strong support and fiery opposition.

The legislation would apply to customers, both commercial and residential, who installed solar before April 2023. It would cut the time period in which they get certain credits from 20 years to 10 and bring their remaining rates in line with those of newer solar customers.

Los Angeles Assemblymember Lisa Calderon, D-Whittier, introduced the legislation, saying it would reduce energy costs for non-solar customers by adjusting unequitable rooftop solar subsidies.

Calderon and others argue that older deals for solar incentives overcompensate customers and, therefore, shift costs of maintaining the energy grid — which solar customers also use — onto people without the panels.

“This outdated formula shifted $8.5 billion to non-solar customers’ bills last year alone, with ratepayers in my district paying on average of $230 a year as a result of these solar subsidies,” Calderon said in a statement to KQED.

Calderon noted that the California Public Utilities Commission had already reduced subsidies for new solar installations in 2023.

“It’s time to do the same for legacy customers,” she said.

The legislation echoes research by the state’s consumer-focused Public Advocates Office, which suggested cutting legacy solar payback rates to bring down the state’s soaring electricity prices.

UC Berkeley energy economist Severin Borenstein agrees with the bill’s underlying idea.

“I think that many legislators have now realized that one cause of the high electricity prices is the cost shift from solar owners to other ratepayers, and that is particularly for customers who put in solar before April 2023,” Borenstein said.

That was the date when the California Public Utilities Commission slashed compensation that new solar customers would get for sending energy from their panels to the grids back to the grid, which resulted in plummeting rooftop solar installations.

“I think for most customers who have had their systems for at least 10 years, they have saved far more than the initial cost of the system,” Borenstein said.

Investor-owned utilities Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, along with environmental group Natural Resources Defense Council and even The Utility Reform Network, a group that often clashes with large utilities, agree with these arguments. However, none of them have officially backed Calderon’s legislation.

Rooftop solar advocates are balking at the proposal, which would upend contracts that homeowners, schools, and businesses signed years ago, as part of an effort to help Californians increase solar adoption.

“These are customers who did the right thing at the encouragement of the state,” said Brad Heavner, who directs the California Solar and Storage Association. “These customers should be thanked and not punished.”

Heavner called the legislation bad policy and pointed out that Assemblymember Calderon worked for more than two decades for Southern California Edison, which is backing the changes.

Rev. Ambrose Carroll, who founded Green The Church, an organization that helps install solar on Black churches, also opposes the bill.

“We believe that AB 942 is a blatant and unprecedented attempt to retroactively rewrite over two million rooftop and community solar contracts, agreements entered into under good faith under clear long-standing state rules, before April 2023,” said Carroll.

Carroll said wealthy homeowners are not the only ones who have installed solar panels and that the reduction in payments could be a financial setback for some.

“We’ve been trying to make sure that medium income folks and to a degree low income folks have also signed on and were taking advantage of that,” Carroll said, adding that changing the incentives feels like a “move backwards.”

The bill could affect nearly two million solar customers across California and is scheduled for its first hearing in the state Legislature at the end of this month.