California scores victory for rooftop solar owners, retaining contracts on home sale

California senators voted 9-4 not to break contracts signed by rooftop solar customers, amending the controversial AB 942 during its Senate Energy, Utilities and Communications Committee hearing.

The bill required that homes with rooftop solar that are sold or transferred must be shifted off their net energy metering agreements, a change that would damage the expected electricity bill savings from the system.

California lawmakers amended the bill to maintain rooftop solar net metering for homeowners upon a sale or transfer of the home. The amendments also removed language that would deny cap-and-trade climate credits to solar customers.

The Senate Energy Committee, following this legal analysis, voted to strike down the anti-solar language under the leadership of Senator and Committee Chair Josh Becker.

“Senator Becker is respecting past investments while focusing on a future of innovation and energy affordability,” said Brad Heavner, executive director of the California Solar and Storage Association.

The average rooftop solar customer would have seen their home’s electricity bills increase by about $63 per month after selling or transferring their home, presenting a potential sticking point in a real estate transaction.

“The previously drafted version of the bill would have undermined consumer confidence, devalued home solar investments, and stalled progress toward California’s clean energy goals,” said JD Dillon, chief marketing and customer experience officer at San Francisco-based solar company Tigo Energy. “The solar industry thrives when legislation supports innovation, consumer choice, and long-term resilience, not when it introduces unnecessary friction between emerging technologies and legacy power structures.”

An earlier draft of AB 942 sought to force-shift all existing solar customers off of their net energy metering (NEM) agreement within a 10-year window.

As proposed, the bill would have forced customers who already invested in solar onto NEM 3.0, which pays about 80% less for electricity sent to the grid, making electricity bill savings from investing in solar more difficult to achieve.

However, the bill continued to contain language that would have forced customers off their NEM contract upon sale of their home. This May, California State Assembly’s Appropriations Committee passed AB 942 9–1, leaving the Senate Energy Committee in control of the fate of net metering contracts.

An amended, AB 942 would be “unworkable in practice, putting utilities in the position of verifying real estate transactions,” said Heavner.

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

However, the bill’s sponsors point to 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 [California Public Utilities] Commission.”

“There is no such thing as a contract for the NEM rate structure,” said Rachel Koss, an attorney who represents the Coalition of California Utility Employees. “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.”

The controversial bill was filed by Assemblymember Lisa Calderon. 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.

Proponents of cuts to rooftop solar net metering, including the California Public Utilities Commission’s Public Advocates Office (PAO), argued that net metering creates an $8.5 billion annual cost for California ratepayers, especially non-solar customers.

However, analysis by third-party group M.Cubed Consulting found solar was estimated to save all California ratepayers, including non-solar customers, $1.5 billion in bills in 2024 alone. It identified four flaws in PAO’s analysis that landed on the $8.5 billion price tag, including the false assumption that rooftop solar self-generation and consumption represented a direct cost to the utility.

Rooftop solar represents direct competition to the profit model for the state’s largest investor-owned utilities, which have placed it in the crosshairs as a scapegoat for high electricity prices.

“AB 942 backers claim it is intended to lower energy rates, but it is actually designed to protect utility profits. The real reason electricity rates keep skyrocketing in California is out of control utility spending on transmission infrastructure,” said Heavner.

(Read: “Six ways for California to lower electricity rates”)

According to the California Public Utilities Commission, the state’s three largest electric utilities PG&E, SCE and SDGE have raised customer rates by 110%, 90% and 82%, respectively, over the last decade. Despite relatively flat electricity usage, transmission and distribution spending by utilities has increased 300%.

“Thank you to Chairman Becker for listening to the voices of solar customers, environmental advocates, and community leaders across our state,” said Heavner. “He is amending this bill at the same time that he promotes legislation to encourage using networks of customer batteries to avoid costly expansion of the electric grid.”

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