The decision to reduce how much utilities have to pay for power from rooftop solar panels could hurt the renewable energy industry.
Five members of the California Public Utilities Commission said the existing payments to homeowners through a program known as net metering amounted to an excessively generous subsidy that was no longer needed to encourage the use of solar panels. The proposal adopted on Thursday will reduce the compensation for the energy sent to the grid by 75 percent for new rooftop solar homes.
Regulators in other states follow California's lead. The debate about how far states should go to encourage the use of renewable energy has been going on for a long time. Net metering places too much value on the electricity supplied by rooftop panels and does not take into account the cost of maintaining electric grids, which is why many utilities oppose it.
Alice Busching Reynolds is the president of the California Public Utilities Commission. The solar industry provides many benefits to California, but it has been subsidized by residents who don't have solar panels. She said that they need to be careful with how they design subsidies.
The California Solar and Storage Association said the decision would limit the growth of rooftop solar even though the state was trying to increase the use of clean energy.
California has experienced some of the most destructive impacts of climate change, including deadly wildfires and extreme heat, according to consumer and environmental groups that opposed the proposal.
The California Solar and Storage Association said the decision flies in the face of what California stands for. It goes against the goals of the Biden administration. The decision will result in job losses and business closings for small businesses, which make up the majority of the installers here in California.
The use of solar began to increase in California in the early 2000s. It became the leader in using rooftop solar. 1.5 million homes and businesses have rooftop solar systems. According to the Energy Information Administration, those small systems supplied about 10% of the electricity generated in California last year.
The commission tried to establish what it said would be a more equitable system by reducing the subsidy to rooftop solar owners. The groups claimed that affluent homeowners were more likely to install rooftop solar systems than lower income residents.
Under the new net metering program, average residential customers of Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric who install solar panels would save $100 a month on their electricity bill, and average residential customers who install solar combined with battery storage would save at least $136 a month
The average household that installs a new solar or solar and battery system will be able to pay off the system in nine years or less. For homeowners who already had rooftop solar panels, compensation won't change.
A year ago, the commission proposed a more drastic approach. The earlier proposal would have imposed new monthly fees on the utility bills of rooftop solar homes.
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