California Supreme Court rules rooftop solar credit rollback needs revisiting, rejecting deference to regulators

CBS News

3 days ago

The California Supreme Court unanimously ruled on Thursday that state regulators were given undue deference in deciding to roll back rooftop solar credits for homeowners, reversing an appeals court ruling that upheld the regulators' decision.
The 2022 decision by the California Public Utilities Commission, which reduced payments to solar panel owners for selling excess power back to utility companies, was upheld by the state Court of Appeal in December 2023 following a lawsuit by environmental groups.
The appeals court did not rule on the legality of reducing payments to solar panel owners for their excess power under a program known as "net energy metering," only that the decision was within the CPUC's authority. In Thursday's ruling, the state Supreme Court also did not rule on the legality of the reduced payments, but sent the case back to the appeals court to determine whether the CPUC exceeded its authority with the new policy.
"We do not decide whether the court's ultimate conclusion that the tariff [paid to customer-generators] is consistent with [Public Utilities Code] section 2827.1 is correct or incorrect - only that the Court of Appeal erred by applying an unduly deferential standard of review to reach that conclusion."
The high court reversed the Court of Appeal ruling and directed it to determine whether the changes to the solar program were legal, handing at least a temporary victory for the environmental groups that challenged the state's new policy. The groups maintain that the reduced payments have cratered the adoption of rooftop solar in California, especially in low-income communities, and led to huge layoffs in the industry.
Utilities and regulators argued that the previous net metering payments meant non-solar customers were subsidizing the grid infrastructure, and the reduction in payments made bills more affordable for all customers. The reduced compensation also incentivized homeowners to combine solar panels with battery storage systems.
Currently, solar power customers who purchased their systems after April 2023 would fall under the new NEM 3.0 policy, and the compensation for excess energy generated is based on the utility's avoided cost, rather than the retail rate for excess electricity.
In a statement to CBS News Bay Area, a CPUC spokesperson noted the NEM 3.0 policy would remain in place as the Court of Appeal revisits the lawsuit.
"We appreciate the Court's careful attention to the appropriate standard of deference for reviewing CPUC decisions," said Terrie Prosper, CPUC director of strategic communications. "We are pleased that the CPUC's decision will remain in effect as an important part of controlling electricity bills."
Roger Lin, senior attorney for the Center for Biological Diversity, said the high court decision reins in a "runaway commission, which is putting corporate utilities ahead of Californians' pocketbooks, the climate and the law."
"Commissioners are hobbling the renewable energy transition by mischaracterizing critical opportunities for local power generation and conservation," he added in a prepared statement. "This is outrageous when so many people are struggling to pay their electric bills. I hope this ruling prompts regulators to craft a new rooftop solar policy that's in the public interest rather than padding fossil fuel utility profits."
"California needs a large, thriving rooftop solar market to meet its clean energy goals," said Bernadette Del Chiaro, senior vice president for California with Environmental Working Group in a statement. "The market is currently being stifled by the CPUC's misguided NEM 3 decision threatening to undermine not only consumer choice and grid stability but also the state's ambitious clean energy goals. We look forward to spotlighting just how illegal and out of step with California the CPUC has become."