Controversial rooftop solar bill glides through California’s Appropriations Committee

The California State Assembly’s Appropriations Committee passed AB 942 9–1, a bill that seeks to cut compensation rates for existing rooftop solar customers that send electricity to the grid.

The bill requires sold or transferred homes to shift to net energy metering (NEM) 3.0, which pays about 80% less for electricity sent to the grid. Opponents argue this retroactively changes the terms set by the state, breaking the contract and reducing the value of the solar panels when the owner sells their home. Assemblymember Lisa Calderon’s introduced version also sought to sunset NEM contracts made prior to April 2023 (NEM 1.0 2.0 rate plans), but an amendment removed that from the bill. The bill previously passed the Utilities & Energy Committee in a 10-4 vote.

Calderon had a 25-year tenure in a government affairs and political compliance role with one of the state’s investor-owned utilities, Southern California Edison.

Nine groups registered in support of the bill, mainly utilities, along with the California Wind Energy Association and utility-affiliated labor groups. More than 160 groups registered in opposition of the bill, spilling beyond solar and environmental groups to other industries, such as the San Diego and Los Angeles school districts, Baptist, Methodist and Unitarian Universalist churches, political activist group Indivisible, Physicians for Social Responsibility, and so forth.

“Instead of bringing down electricity costs to Californians, AB 942 will slice into the value of many working-class families’ home equity improvements involving solar,” the California Association of Realtors, wrote in opposition of the bill. “These numerous homes, which include moderately priced housing stock, will become a costly liability for home-sellers and will minimize a whole class of buyers who rather not purchase a home that has solar panels that only provide marginalized savings in energy costs.”

The NEM program enabled 1.8 million project installations as of 2024, equating to roughly 16 GW of customer-sited renewable generation, almost all of which is rooftop solar, according to California’s Distributed Generation Statistics database.

The utility-backed bill would force more than 300,000 low- and moderate-income Californians who invested in solar panels after April 2023 to potentially lose tens of thousands of dollars when they sell their homes. Almost one quarter (24%) of homes have solar in California, according to the Solar Energy Industries Association.

“This is not the story that utilities tell of wealthy Californians getting too much savings,” Brad Heavner, executive director of the California Solar and Storage Association said during Wednesday’s committee meeting. “This is working class California trying to stabilize their energy rates. They signed long-term lease agreements with the expectation of savings over time.”

According to the the California Public Utilities Commission (CPUC), almost all NEM 1.0 and NEM 2.0 customers would have more than 10 years before they are defaulted onto the net billing tariff.

Contract

The bill “breaks contractual promises with millions of solar users,” said Heavner.

The Assembly Committee on Utilities and Energy’s analysis of the bill said, “While accurate that the CPUC has the authority to change the NEM rate structure, as the 2022 NBT decision demonstrates, the CPUC has to date declined to adopt any changes retroactively.”

However, the bill’s sponsors point to investor-owned utility interconnection agreements as evidence that the customer-generator is aware that the NEM tariff is not a binding contract, where these agreements note the rate schedules “shall at all times be subject to such changes or modifications by the Commission.”

During Wednesday’s committee meeting, Rachel Koss, an attorney who represents the Coalition of California Utility Employees, a coalition of unions whose members are employees of most of the private and publicly owned electric utilities and combined electric and gas utilities in California, said the claim that the bill would break NEM contracts “is 100% false.”

“There is no such thing as a contract for the NEM rate structure,” she said. “The NEM rate structure was created by the CPUC. They have complete jurisdiction over it and they can change it at anytime.“

Heavner disagreed, saying, “There is absolutely a breaking of a contract” because the interconnection agreement signed by the utility and the customer incorporates the NEM tariff. “So it is a violation of federal contract law.”

Costs

The analysis of the bill said, “Whether one believes the policies put forward in this measure will result in actual cost savings to non-NEM customers will largely be determined by the belief – or disbelief – in the solar cost-shift.”

“I feel that my district, which is the fifth poorest district in the state, is subsidizing those with that luxury,” Assemblymember Mark González (D) said during Wednesday’s Assembly’s Appropriations Committee. “So what I want to know is how many non-solar folks are subsidizing those with non-solar?”

“The answer is zero,” Heavner responded. “It’s the opposite effect that more solar reduces the need for utilities to spend money on the grid. It’s an overall net savings for non-solar customers, so we should appreciate the fact that these customers have responded to the signals from the state to install those systems and reduce costs for everybody.”

According to the bill’s analysis, “Regardless of numbers, most of the debate boils down to a philosophical discussion around “self-generation” and grid usage.”

Rooftop solar was estimated to save all California ratepayers, including non-solar customers, $1.5 billion in bills in 2024 alone. However, rooftop solar represents direct competition to the profit model for the state’s largest investor-owned utilities, which has placed it in the crosshairs as a regulatory scapegoat.

“This debate over the “cost-shift” may lead observers to wonder what is accurate,” the bill’s analysis said. “Do rooftop solar systems result in $8.5 billion in costs to non-participants, as asserted by the PAO? Or $4 billion as calculated by Borenstein? Or does it result in $1.5 billion in grid benefits as asserted by the rooftop solar industry?”

The CPUC Public Advocates Office released a report on how it arrived at the $8.5 billion price tag for rooftop solar. However, a report from M.Cubed Consulting and the California Solar and Storage Association said this analysis was flawed and found that rooftop solar provided a $1.5 billion net benefit to all California ratepayers.

Heavner said the numbers Calderon and Koss pointed to are 100 percent false. “The utilities make money by building grid capacity. The more they spend on the grid, the more profit they make, so they are incentivized to spend money, actually inefficiently, in addition to building things that may not be needed,” he said.

“They view us as competitive pressure. Solar allows them to build less grid capacity,” he said. “When you generate more locally, you need to have less grid to deliver energy from far away sources. Utilities don’t like that and that’s why they have concocted this math that blames high rates on solar customers, instead of on their own runaway spending.

“Solar customers do buy less energy from the utilities,” Heaver said. “We want people to buy less energy for the utilities. We’ve always encouraged that we should continue to encourage that”

The Assembly’s Appropriations Committee’s meeting over the bill is available to watch here.

Read about other solar-related bills state lawmakers are debating this legislative session here.

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