Community solar group challenges assertions by CPUC

Earlier this month, the California Public Utilities Commission (CPUC) issued a proposed decision that the Net Value Billing Tariff in the Community Renewable Energy Act conflicts with federal law, leaving to question the future of the potentially burgeoning community solar market. However, not willing to let this decision stand, the Coalition for Community Solar Access (CCSA) directly addressed the CPUC’s decision.

Community solar enables small businesses and residents who are renters or who otherwise cannot put solar on their roof to subscribe to a portion of an off-site solar facility, receiving a utility bill credit for the power it generates.

The Community Renewable Energy Act (AB 2316) was sponsored by the Coalition for Community Solar Access (CCSA), and supported by the Solar Industries Energy Association, GRID Alternatives, Vote Solar, the Sierra Club, and more. Notably, investor-owned utilities, which serve over 75% of the electricity usage in the state, opposed the bill.

The CPUC asserted in its proposed decision that the Net Value Billing Tariff (NVBT) outlined in the Community Renewable Energy Act “conflicts with federal law and does not meet the requirements” of the bill.

In comments filed by CCSA, it characterized the proposed decision (PD) as misguided and misinformed, and determined it will not result in the development of community solar projects as envisioned by the legislature with the enactment of AB 2316.

The PD embraces a myopic view of the breadth of the Commission’s authority to regulate the retail relationship between energy consumers and their utility advanced by the investor-owned utilities (IOUs) that is contrary to federal law. Building off this flawed framework, the PD then argues that the NVBT will result in cost shifts to nonparticipating customers because the NVBT export credit rate includes compensation for avoided transmission and distribution capacity and avoided generation capacity. This conclusion is directly contrary to prior determinations by the Commission that the value of exported energy – for both behind-the-meter (BTM) and in-front-of-the-meter (IFOM) DERs – is accurately assessed by the Avoided Cost Calculator (ACC). The PD’s cost shift conclusion also ignores significant record evidence demonstrating billions of dollars in benefits the NVBT offers versus the status quo.

CCSA estimates that a successful program that embraces its market-tested approach would enable more than one million Californians to save at least $300 per year for a total of approximately $9 billion.

CCSA advocated for the Commission to reconsider its NVBT proposal as the most cost-effective and scalable community solar-plus-storage option that will produce bill savings for one million low-income Californians, without raising costs for others.

“The judge’s proposed decision doubles down on existing programs that have not only proven to be more expensive than our proposal, but will also result in far fewer projects being built and serve hundreds of thousands fewer low-income customers,” said Derek Chernow, Western Director for CCSA.

“Ultimately, the decision does not support affordability and leaves California stuck in the past without a viable path forward to meet the state’s clean energy and environmental justice goals, Chernow said.”

The comments also pointed out that the Federal Energy Regulatory Commission (FERC) lacks jurisdiction in community solar.

The PD erred in finding that a FERC-jurisdictional wholesale sale occurs when the community solar facility flows power into the IOU’s distribution system.19 For FERC to assert jurisdiction, three requirements must be met. There must be (1) a sale, (2) at wholesale, (3) in interstate commerce.20 If any one of those three requirements is not met, FERC does not have jurisdiction. Here, none of those requirements is met.

Led by Attorney Norman Bay, former Chair of the Federal Energy Regulatory Commission (FERC) and Co-Chair of the Energy and Commodities Practice Group at Willkie Farr & Gallagher LLP, the comments demonstrate that the NVBT does not violate Federal law.

“One thing is clear: FERC has never invalidated a state community solar program,” said Bay. “As a legal and policy matter, FERC has refrained from asserting jurisdiction over community solar. States have exclusive jurisdiction over retail rates, and community solar quintessentially involves state retail rate design and state energy policy. Further, the Inflation Reduction Act shows that Congress intended to promote community solar, not to pre-empt it.”

In February the Department of Energy (DOE) reaffirmed the Federal Government’s significant commitment to rapidly deploying third-party developed community solar by establishing the National Community Solar Partnership (NCSP). The DOE reaffirmed the federal government’s commitment to community solar by challenging the community solar industry to meet a target of 20 gigawatts (GW) of community solar by 2025.

This goal aligns with the DOE’s greater target of 100% clean electricity by 2035 and places a focus on ensuring that American citizens can meaningfully access the benefits of the energy transition.

The Inflation Reduction Act, passed in 2022, creates multiple programs to spur the growth of community solar including the Low-Income Communities Bonus Credit Program and the Solar for All Program, a $7 billion grant competition to create new or to expand existing state community solar programs.

CCSA noted that private developers, operating under similar models to the NVBT, have installed more than 6.6 GW of community solar capacity in more than a dozen states across the country.

Community solar is expanding rapidly in the U.S. with 22 states, including Washington D.C. with policies supporting third-party shared or community solar. According to CCSA, 6.6 GW of community solar generation capacity has been installed to date, and Wood Mackenzie’s most recent U.S. community solar market outlook predicts that there will be 14 GW power installed across the country by the end of 2028.

CCSA contends that if this proposed decision is adopted by the CPUC, California would only reach an estimated 155 MW of new capacity, or 2% of the national five-year outlook. If CPUC were to adopt the NVBT proposal, however, California could become a market leader with19% of the nation’s installed community solar.

Opening comments by all interested parties were due March 25, with reply comments due April 1. The CPUC Commissioners may vote on a final decision as early as April 18.

“We urge the Commission to reject the PD in its entirety or to modify it significantly,” said Chernow. “We still have time to get this right and create a program that spurs development of local, clean energy projects that foster a more equitable energy future.”

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