The California 1st District Court of Appeal has issued a decision on remand from the state Supreme Court, siding with the California Public Utilities Commission (CPUC) and affirming the current Net Billing Tariff (NEM 3.0) framework.
The ruling marks a major setback for rooftop solar advocates who sought to overturn the 2022 decision that sharply reduced compensation for exported solar electricity.
The case returned to the appellate court after the California Supreme Court issued an opinion in August 2025 directing a re-examination of the CPUC’s decision. The lawsuit, filed by the Environmental Working Group (EWG), the Center for Biological Diversity, and the Protect Our Communities Foundation, argued that the commission failed to follow statutory mandates to ensure the sustainable growth of the solar market.
“We are extremely disappointed in the court of appeal’s decision on remand from the state Supreme Court,” said Bernadette del Chiaro, EWG senior vice president for California. “Instead of looking at this case with fresh eyes and doing the due diligence of reading and interpreting the statute, the court of appeal rushed to judgement, siding with the pro-utility CPUC and its utility allies.
The appellate court’s decision maintains the “Net Billing Tariff,” which transitioned the market away from NEM 2.0 and cut export credits by approximately 75% to 80%. In its ruling, the court deferred to the CPUC in its assessment of the costs and benefits of distributed generation.
The court found the CPUC met the requirements of Assembly Bill 327, concluding the commission adequately addressed the “cost shift” between solar and non-solar customers.
Despite instructions from the high court to review the case with “fresh eyes,” the appellate court ultimately backed the commission’s methodology for calculating the value of rooftop solar.
The ruling suggests that “sustainable growth” does not require the commission to protect the specific profit margins or historical growth rates of the solar installation industry.
The decision was met with sharp criticism from the petitioners, who pointed to the significant contraction in the California residential solar market since NEM 3.0 took effect in April 2023. Industry data indicates a 60% to 80% drop in sales and the loss of over 17,000 jobs.
“This decision favors the corporate utilities’ profit model to build the most expensive and brittle version of the grid and making ratepayers foot the bill which only worsens the affordability crisis,” said Roger Lin, senior attorney, Center for Biological Diversity. “At a time when California needs to accelerate local renewables to combat a federal obsession with fossil fuels, this is a huge step in the wrong direction.”
The value proposition for homeowners continues to shift toward solar-plus-storage configurations and away from standalone, solar-only projects. Under NEM 3.0, battery energy storage is required to capture the value of generated electricity on-site, as the “avoided cost” rates for exporting to the grid remain at record lows.
The ruling solidifies the position of the state’s three investor-owned utilities, Pacific Gas and Electric (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E), which have consistently argued that higher solar incentives increased the burden on lower-income ratepayers.
(Read: “Rooftop solar saved California ratepayers $1.5 billion last year, finds report”)
For installers, the solar-only business model in California is effectively over, and the market must now lean on storage integration to provide a viable return on investment.
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I was fortunate enough to get in and activated mere weeks before the end of 2.0. California deserves better. The state should supplement utility payments for those who can’t afford them and incentivize affordable, solar equipped housing. Just because our freaking country is going backwards doesn’t mean we should follow suit. Our world is on fire! Help!
“The state should supplement utility payments for those who can’t afford them and incentivize affordable, solar equipped housing”
And where is the state going to get this money?
I don’t mind the push to install storage batteries however 0.01 per KWh is a freaking joke! I went solar to combat the $500 electric bill I consistently faced monthly to now be forced into giving my excess generated power to PGE practically for free, so that they can turn around and charge full face value for it!? WTF! I do have batteries however There are still plenty of seasons where I can’t generate enough power for my home let alone charge my batteries to now have to still pay full value for the power I do receive.
Btw due to the way NEM 3.0 is written. I’m still being charged at least $200 a month even tho IM NOT TAKING ANY POWER FROM THE GRID RIGHT NOW… NONE!
Its sad California leaders abandon logic for idealogy. The whole state is sinking economically and morally
This is another example of how corporations and deciding how we live. There is no truth that existing solar owners are causing poor people to pay more. The court failed us all.
It’s too bad that the State can’t take these utilities, and make them serve the public instead of themselves, and PUC.
Of course they ruled this way. The California utilities are 2nd in corruption only to the California politicians. California is all about renewable, clean energy until the utilities who own the politicians want more money. Then to hell with solar/renewables.
The PUC increased the number of panels to be equivalent up to 150% of the annual usage up from 100%. The extra 50% was so banking for the winter months would still be available. Behind the meter batteries only store power for nighttime usage and not long term for winter usage. I had an off-grid system of 8,000 watts of solar and 96 deep cycle batteries and the batteries needed to be recycled every 6 years. The annual cost of batteries was $2,000.00 per year so the additional 50% of allowed solar orientated west to southwest just for banking makes more sense year around. When solar panels used to cost $8.00 per watt installed during NEM1.0 and now, they are $3.00 per watt installed in California under NEM3.0, we can install the 150%maximum and let utilities have a little of the extra power, so we do not need to buy batteries that have to be replaced every so many years. I just wish the utilities would install ahead of the meter batteries with all that extra cash they get by selling our electricity they take instead of lining stockholders and managements pockets.
It’s not just the NEM 3 giving you next to nothing for the electricity. It’s almost criminal to charge me $0.60 for a kilowatt and then tell me on the open market, the kilowatt that I put back on the grid is only worth $0.02. It’s insane that I have to generate 10 to 20 times the amount of electricity to regain one purchased kilowatt from the utility. Even if you get solar with a battery unless it’s incredibly oversized, you’re still going to need to buy electricity during the winter and at other random times.
On top of all this they are now adding, after the fact, a monthly fee to be connected to the grid. So now it’s about $300 and some odd dollars a year just to be connected. If they’re going to jack up the distribution rates give you next to nothing for the electricity force you to pay a monthly fee to be connected. I want them to buy my hardware back. It’s crazy that they’re allowed to change this after the fact. And there’s no way that monthly fee is staying at $24 a month. The state government, the federal government, the utilities, and the companies that manufacture the hardware all suggested and or said in writing that this was a good investment. Hang next to nothing for the electricity produced and forcing everyone to pay a monthly fee goes completely against that.
I agree with everything you say but with enough solar panels installed with the correct orientation, The $300.00 equivalent annual connection charge is far cheaper than owning and maintaining a battery system that costs anywhere from $2,000.00 to $6,000 per year when prorated over their 12-to-14-year life cycle. I have had both and on-grid systems and an off-grid systems and even under NEM3.0, the On-grid system costs less to run and maintain than the off-grid system. With the $.02 to $.03 Tru-up compensation, I just use up all the credits to Electric heating in the winter and have my true-up in the March bill when my systems goes positive again. Use it or lose it.
“So now it’s about $300 and some odd dollars a year just to be connected”
In Alberta it’s a bit over $2 a day, so $700 a year, plus $120 a year billing fee. Then there’s 13 cents per KWh delivery and transmission charges on what you draw, and finally 9 cents for the actual electricity.
The big difference here to there is that it’s flat out impossible to go offgrid in winter here, on solar. Unless you have almost nothing electric we’ve gotten as little as 88 KWh from our 10 KW array in the entire month of December. And 1700 KWh in June.
With NEM 3.0, the orientation and the number of panels needed to get enough electrical credits for winter usage needs to be modified. The PUC increased the number of panels to be equivalent up to 150% of the annual usage up from 100%. The extra 50% was so banking for the winter months would still be available. Behind the meter batteries only store power for nighttime usage and not long term for winter usage. The other thing is the additional 50% should be orientated to the west or southwest to lengthen and increase the Summer 4:00PM to 9:00PM time slot because the “Peak Time” rates are much higher in compensation and cost. When NEM 2.0 customers come to the end of their 20 years, adding the additional 50% to make the allowed 150% could also be done on trackers in the back yard to not only take advantage of all the daylight in the summer but also add more Winter sunlight during daylight hours on the shortest days reducing the usage of the summer banked compensation. The cost of adding 4,000 watts to an 8,000-watt system is about the same cost as adding one Tesla power Wall but would have a better payback for winter banking. Adding Trackers would be like two power walls instead of one in cost but give a better payback on the limited solar allowance.
States & utilities that do this are slowly cutting their own throat. As better & cheaper home batteries become available, it won’t be long before more homeowners can “cut the grid cord” (and bank their OWN power). Sad too because states could easily build community support & save money… by fostering Virtual Power Plants (via V2G) with homeowners. Piss them off (like there doing) and that option is gone.
Alberta deregulated about 30 years ago. We pay a flat rate, plus fees for handling any electricity drawn from the grid, then the actual electricity charge and credit is at the same rate.
It’s impossible to end up with a net rooftop solar credit all year, but it does eventually pay for itself. And no amount of battery and solar would power a house in winter anyway
Does Cali allow excess production to be assigned to another user? Say someone who doesn’t have solar or has high usage that would trade for the power?
We have two cases still pending relevant to California NEM program pending in the U.S. District Court Northern District of California.
Case 5:25-cv-01286-PCP Boyd v. CPUC et al is an antitrust claim against CPUC, P.G.&E., SCE, and S.D.G.&E. and an As-Applied PURPA claim.
Case 3:25-cv-10532-JSC CAlifornians for Renewable Energy, Inc. et al. v. California Public Utilities Commission et al. which claims CPUC failed to carry out the Court of Appeal’s Opinion in CAlifornians for Renewable Energy, Inc. et al. v. California Public Utilities Commission et al. 922 F. 3d 929 – Court of Appeals, 9th Circuit 2019.
I had solar with NEM 2.0. I wanted to add batteries and upgrade my panels which required I jump to NEM 3.0. I nearly doubled the solar output and added a 76kWh whole-home battery. I pay SoCal Edison more now with battery storage and significantly more solar than I did before. NEM 3.0 is a total sham. Nearly impossible to make the math work.
The corruption of our nation goes so deep its hard to keep reading this stuff everyday. California like my state of Minnesota is just bleeding money out of every program out of everybodies pockets except the corporations and the politicians. Its time to get a new system. We the people have been sold out a long time ago. . If we continue to believe in a system that allows for one kind of money one kind of banking, then were just slaves. Lets start with our city councils and planning commissions work our way through utilities and keep going. Get rid of all the dirty actors and simply not have them anymore. Homeschooling and quit buying . Make our own cars and grow our food again…create freedom from these dictators billing us everyday for shit we dont even need.