By mid-December, the California Public Utilities Commission (CPUC) is expected to release a proposal to update the state’s 25-year-old rooftop solar subsidy program known as net energy metering (NEM). Changes are long overdue. The current program is a poster child for a nonsensical, regressive policy that burdens the state’s most economically disadvantaged residents with a disproportionate share of the costs for the state’s clean energy objectives.
Renters, seniors and lower-income Californians who don’t have the option or financial resources to install rooftop systems are paying about $250 extra in their electric bills each year to subsidize the cost of rooftop solar systems for homeowners — many of whom are in the highest income bracket and could easily pay for the systems themselves. If no changes are made to the program, this cost burden on customers without solar systems will balloon to $550 per year.
How did we allow this to happen?
Let me be clear: I strongly believe we need to take action to address climate change and fully support California’s commitment to cleaner energy. However, NEM was established a generation ago and has only been updated once since the state committed to zero carbon emissions by 2045.
Rooftop solar can and should be part of a broader set of tools to achieve our climate goals, but it’s wrong for us to expect customers to pay a premium if more affordable options are available. Consumer and environmental advocates like the AARP, The Utility Reform Network, Sierra Club and the Natural Resources Defense Council agree that net energy metering needs reform.
The NEM subsidy program raises rates on non-solar customers because it requires that homeowners with rooftop systems be paid an average of 25 cents per kilowatt hour for any excess power generated by their systems, even though the same solar power can be purchased from solar farms for 3 cents. The payments for excess power have become so inflated that many electricity customers with solar have nominal electric bills. That means they no longer contribute to maintenance and upgrades to the electric grid they still rely on at night.
Those costs don’t go away. Electricity customers without solar end up paying more than their fair share. Moreover, these customers are disproportionately lower income and live in disadvantaged communities.
The mismatch is evidenced in a study by researchers at UC Berkeley and Tufts University who evaluated ethnic disparities in rooftop solar installations. Based on the latest data, 58% of Black and 54% of Hispanic household heads rent their homes, as compared to only 28% of white households.
The CPUC needs to enact meaningful reform that better align subsidies with the actual cost of solar systems and today’s lower cost of clean energy. Under today’s excessive subsidies, customers are able to pay off their systems in about four years but receive benefits for 20 years. That means there is plenty of opportunity to reduce the subsidies and still offer incentives to install solar rooftop.
Change is necessary to stop unnecessarily burdening disadvantaged communities.
Assemblyman Jim Cooper is a member of the assembly select committee on California’s Clean Energy Economy.