Dueling TV ads. The threat of ballot initiatives. Intervention by the governor and a public call to action from California’s celebrity ex-governor.
In a matter of weeks, a complicated, wonkish proposal over the price of solar energy has spawned a classic California political dogfight.
In December the staff of the California Public Utilities Commission released a plan to slash the credit paid to homeowners for the excess electricity generated by their rooftop solar panels.
Besides getting paid less for the excess power they ship to their utility company, these homeowners would also have to start paying monthly connection fees of $40 or more. Solar advocates have complained bitterly that the plan would cripple the rooftop solar movement, which has put solar panels on 1.3 million California homes.
Amid the uproar, Gov. Gavin Newsom effectively put the idea on hold when he said recently that “we have work to do” on the solar pricing plan. The commission’s vote, which had been scheduled for Thursday, has been postponed indefinitely.
But the controversy itself has continued to rage. Solar advocates staged a major protest recently outside the commission’s headquarters in San Francisco. They’ve begun running TV ads arguing that the commission’s plan would slow the installation of rooftop panels and undermine California’s fight against climate change. They filed language for two proposed ballot initiatives with the attorney general’s office, both named the Solar Bill of Rights Act, designed to thwart the commission’s plan.
Michael Wara, a Stanford University legal expert who’s advised the Legislature on energy and climate issues, said it isn’t surprising that the solar question has morphed into such a contentious public debate — or that Newsom has jumped in.
“It’s an inherently political question,” Wara said.
And the solar advocates, backed by 1.3 million homeowners, “have a huge political advantage relative to the utilities,” Wara said. “People are upset, and it’s easy for the solar industry to leverage that.”
In one TV spot, a Bay Area rooftop solar homeowner laments the idea of paying a monthly fee to Pacific Gas and Electric Co. to connect to the grid. “This tax would penalize me for producing my own energy and then give those funds to PG&E,” she says.
Dave Rosenfeld, whose group the Solar Rights Alliance is leading the charge, said the ballot initiative language was filed to meet procedural deadlines. The group hopes the issue never ends up on the ballot; its immediate efforts are focused on convincing Newsom to squash the utilities commission’s proposal.
“It’s not a hard choice to make,” Rosenfeld said. “If he does that, he will be a clean energy hero.” Commissioners operate independently but are appointed by the governor and confirmed by the Senate.
PG&E and the state’s other major investor-owned utilities, along with their allies in organized labor and a collection of social-justice advocates, have fought back with their own campaign under the banner of a group called Affordable Clean Energy for All.
Their chief argument: The current system gives rooftop solar owners an overly generous subsidy that shifts billions of dollars in utility costs onto the backs of mostly middle-class and lower-income households. PG&E says its non-solar customers pay an extra $170 a year as a result.
“Low-income families, disadvantaged communities and seniors on fixed incomes are all paying hundreds more in higher energy bills to subsidize solar for wealthier homeowners,” says the narrator of a TV ad financed by the utilities’ alliance.
High-profile politicos are pushing back against the utilities, however. Sen. Dianne Feinstein issued a statement this week urging the commission to rewrite its proposal to “promote wide adoption of rooftop solar.” Former Gov. Arnold Schwarzenegger, in an opinion piece in the New York Times, said the commission’s proposal would “make it too costly for many Californians to embrace solar.”
Meanwhile, 70 environmental groups — from the Nature Conservancy to the Ohio chapter of the Sierra Club — sent Newsom and the utilities commission a letter this week urging them to “save rooftop solar in the Golden State.”
For his part, Newsom told reporters in mid-January that the plan was already undergoing revisions. “Many parties, many conversations, lots of balls in the air,” he said.
Terrie Prosper, a spokeswoman for the utilities commission, said Thursday’s vote was delayed because of the flood of comments received from stakeholders, plus the fact that two of commission’s five members, including President Alice Busching Reynolds, have just been appointed. The commissioner who had been overseeing the rooftop solar decision, Martha Guzman Aceves, has left the agency to work for the U.S. Environmental Protection Agency.
Solar power and climate change
The fight over rooftop solar comes against the backdrop of global warming and California’s efforts to reduce its carbon footprint. The Legislature has decreed that the electricity grid should be rid of fossil-fuel generation by 2045. The California Energy Commission requires that all new homes come equipped with solar panels.
Solar has become a major growth industry, accounting for about 13% of the state’s electricity supply overall and as much as 25% or more during sunny days. About half of that comes from giant solar farms that sell to the utilities; the rest is generated by the more than 1 million households with rooftop panels.
With rooftop arrays costing $20,000 or more, the Legislature in 1995 mandated that homeowners be subsidized by their utilities for the power they generate and ship to the electricity grid.
PG&E gives these homeowners a credit of around 25 cents per kilowatt hour for their excess energy — far more than what PG&E pays when it buys power from solar farms. The credit would fall to less than 10 cents under the utilities commission’s current proposal.
Some policymakers say a course correction on solar is long overdue. Not only do they believe the subsidies are too high, they argue that solar by itself isn’t the answer to California’s all-too-frequent electricity shortages during summer. Despite its ample supply of solar energy, California was hit with two nights of rolling blackouts during the August 2020 heatwave in part because its solar panels, not surprisingly, went dark as the sun went down.
The answer, according to many experts, is solar power paired up with storage batteries to hold the excess electricity that’s generated when the sun is shining.
SMUD, the Sacramento Municipal Utility District, last fall voted to reduce the amount it pays rooftop solar households for their excess power — but coupled that with rebates for home storage batteries. (SMUD isn’t regulated by the state and isn’t affected by the debate at the Public Utilities Commission).
Along the same lines as SMUD, the California commission proposed that PG&E and the other investor-owned utilities offer rebates of up to $3,200 for homeowners purchasing batteries.
Solar advocates acknowledge the need for batteries to help fix California’s troubled power grid. But they say the commission’s proposal is simply a way to let the big utilities maximize their profits.
Generally speaking, utilities sell electricity at cost and don’t make a profit from it. But they do earn profits from the investments they make in their transmission lines and other equipment needed to deliver power to customers. As more people install solar panels, that reduces the need for upgrades to power lines, according to Rosenfeld, effectively depressing the utilities’ profit opportunities.
“That is why the utilities want to kill rooftop solar,” he said.
That’s nonsense, the utilities say. The companies are happy to see “sustained growth, continued growth” in the solar industry, said Kathy Fairbanks, a spokeswoman for the utilities’ group, Affordable Clean Energy for All.
However, she said, the solar industry shouldn’t be allowed to benefit from fat subsidies that accrue to rooftop customers, who tend to be wealthy.
“This,” she said, “is an equity argument.”
It’s unclear how quickly a new proposal will emerge — or when it will come up for a vote. But it’s a certainty that the commission will remain under intense scrutiny as it proceeds, said Stanford’s Wara.
“California has 1.3 million power plant owners,” Wara said, “and the rule changes would (affect) how they’re compensated.”