Latest attack on net metering in California defeated - for now

The bill AB-1139, supported by California's investor-owned utilities, was defeated in the state legislature. Net metering in California is safe for now, but don't expect the utility companies to give up the fight.

Photo of a house with all-black solar panels.
Andre m/Wikimedia CC BY-SA 3.0

A revision to net metering rules in California that was working its way through the California Legislature failed to get enough votes on June 2 to move forward, killing the proposal for now.

The proposal, Assembly Bill 1139, was authored by state assembly member Lorena Gonzalez and contained several controversial changes to California’s current net metering rules for solar homeowners, most notably:

  • Substantially reducing the credit paid for selling excess solar electricity back to the utility.
  • Introducing a grid access charge that would add $50-$86 to the typical monthly bill.
  • Eliminate the current 20 year “grandfathering” provision for customers connected under the current net metering rules.

Had this bill passed, it could have devasted California’s solar industry. The grid access charges alone would have delayed the financial payback period for home solar. Combined with the reduced credit for exported solar electricity, the financial result for many homeowners would have been that an investment in home solar might never have paid off.

Why rewrite California’s net metering rules?

California’s net metering rules were updated not that long ago so why was AB-1139 introduced?

Gonzalez said the bill was intended to make net metering rules more fair. According to her, solar customers tend to be more wealthy than the average homeowner (which is true) which results in non-solar customers effectively subsidizing rooftop solar (mostly false).

This fairness argument is an old one promoted by utility companies across the country, including PG&E and SCE.

The question is: does this argument have merit?

One study commissioned by the California Public Utilities Commission [PDF] that examined the impact of the state’s current “Net Metering 2.0” system suggested that solar homeowners under NEM2.0 pay the utility companies 19% less than the value they receive from using the grid. So, given this analysis, there is merit to Gonzalez’s argument.

However, one major limitation of this study is that it takes a simplified approach to estimate one of the biggest benefits of home solar panels, which is the money utility companies save from avoided investment in big transmission grid projects.

If you’re a PG&E customer in California, you’re well aware of scheduled blackouts due to aging transmission infrastructure. Its under-maintained transmission lines are a fire risk and were implicated in the massive Camp Fire wildfires in 2018.

It should also be noted that this under-investment by PG&E and other utility companies occured over decades, well before the recent expansion of solar power. If there is under-investment in transmission infrastructure, it’s disingenuous for the utilities to point the finger at solar homeowners.

Furthermore, the fees and lower compensation proposed in AB-1139 would go far beyond correcting any imbalance in fair-use payments by solar homeowners for their use of the grid. The change in the net metering rate structure would be punitive and actively discourage homeowners for going solar - which is perhaps the true intent of the bill.

How does solar save money on electric grid operations?

Transmission line upgrades are extremely expensive: one project in the works to upgrade a 70 kV line for just 47,000 customers in Paso Robles is expected to cost around $100 million.

However, with distributed generation sources like rooftop solar, there’s no additional load on major transmission infrastructure because the electricity is consumed at the source. If there’s excess electricity, solar homes dump the unused power onto local low-voltage transmission lines in the neighborhood where it gets used by neighboring homes.

From the point of view of the utility company, all these rooftop solar panels look like a reduction in power demand by the homes. While grid-connected solar homes do make use of the local transmission grid, they reduce the need for investment in massively expensive long distance transmission. Rooftop solar doesn’t demand investment in high voltage power lines and substations because the electricity is used right where its generated.

One concrete example is a report by CAISO that concluded energy efficiency and rooftop solar helped the state avoid $2.6 billion in infrastructure upgrades.

In addition, it should be noted that it’s not just the upfront cost that’s important, but the ongoing maintenance cost of infrastructure. PG&E and other utilities are unable to adequately maintain their existing infrastructure; if home solar panels helped the state save $2.6 billion, that’s actually an ongoing savings due to avoided maintainance costs in future decades.

So while the upfront price tag of rooftop solar is higher than big solar farms owned by the utility companies, the benefits of distributed power generation mean long-term savings on infrastructure.

What happens with AB-1139 now?

This bill is dead until January 2022, where it could be reintroduced. So while this is a victory, it’s not a lasting one. Utility companies in California and across the United States will continue to fight against net metering for the simple reason that it reduces their revenue.

Lobbying has resulted in a successful rollback of net metering in Arizona, and it continues to be under attack.

In Wyoming, the nation’s largest coal producer, Republican lawmakers tried (and thankfully failed) to make renewable energy effectively illegal.

A great resource to stay on top of the state of net metering is Solar United Neighbors, a solar advocacy non-profit.

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