SACRAMENTO – The big investor-owned utilities in California are enlisting the new federal climate law to pressure regulators to adopt their plan to quash the state’s popular rooftop solar program.
Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric argue in an August 19 brief to the California Public Utilities Commission, or CPUC, that the extension and expansion of the federal income tax credit for residential solar included in the Inflation Reduction Act signed into law last week by President Joe Biden should have a “direct impact” into the CPUC’s upcoming decision whether to eliminate the current state-level incentives that have helped working- and middle-class families afford to adopt solar.
Last week, a front group for the state’s investor-owned utilities, Affordable Clean Energy for All, issued its own statement arguing that the new federal Income Tax Credit of 30 percent for residential solar included in the U.S. climate law is enough to help residents in California go solar, and the state incentives that made the solar program the most successful in the country should disappear.
The utilities want regulators to do away with the financial incentives that made the state’s residential solar program the most successful in the country.
They are seeking to replace the financial incentives for residential solar panels with punitive charges up to $60 a month assessed on families who install the panels. The utilities would also virtually eliminate solar customers’ ability to get credits for selling the surplus electricity they generate back to the grid – a benefit that helps defray the costs of installing solar plus battery storage.
“The utilities are using the federal clean energy law to pressure regulators to kill California’s popular rooftop solar program,” said Ken Cook, president of the Environmental Working Group and a Bay Area resident.. “They will stop at nothing to amass more profit on the backs of their captive ratepayers.”
“If anything, the increased federal support should be used to leverage California resources to add more solar, faster, especially investments in working-class communities—residential, business and community solar alike,” Cook said.
A coalition of more than 600 organizations, including environmental justice organizations, EWG and many other public interest groups opposed the utility proposal at a time when the federal income tax credit was already in place, before Biden signed the new clean energy bill into law, which extended it for 10 years.
If the utilities get their way, rooftop solar for California residents and solar installers will suffer the same fate residents and installers recently did in Nevada. That state’s regulators passed a solar tax that came with new fixed charges less than half what’s being considered in California, and the entire solar market in Nevada collapsed. The federal tax credit for residential solar was still in place at the time.
“The CPUC and Gov. Newsom must take every opportunity to expand investments in and access to solar in the state, and reject the utility plot to crush residential solar and the tens of thousands of well-paid jobs it has created,’ said Cook.
The private solar market in the Golden State is thriving because the current rooftop solar program – net metering 2.0 – is still in place. Extension of the solar investment tax credit is important for making solar more accessible to working-class families. But well-designed state net metering programs, like the one currently in effect in California, have been the main driver of customer-owned solar.
The energy and electricity industry analyst firm Wood Mackenzie estimates the California solar market would be cut in half by 2024 if the utility-backed proposal were adopted by regulators.
“The initially proposed high fixed charge and the current plan to convert non-bypassable charges into a high fixed charge result in the same thing: severely reduced customer savings and long payback periods,” said Cook. “In other words, cheaper upfront system costs do not translate into enough monthly savings for solar customers to recoup the value of their solar installations and will further deter the solar market in California.”
“The landmark federal climate and clean energy law should be a rallying call for California and every other state to adopt and expand on programs to curb greenhouse gas emissions – not eliminate them,” Cook added.
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The Environmental Working Group is a nonprofit, non-partisan organization that empowers people to live healthier lives in a healthier environment. Through research, advocacy and unique education tools, EWG drives consumer choice and civic action.
