A major portion of a controversial bill at the state Capitol in Sacramento that would have affected an estimated 2 million owners of rooftop solar systems in California has been scrapped.
Assembly Bill 942 advanced through the Assembly Committee on Utilities and Energy on a 10-5 vote late Wednesday, but only after legislators deleted a section of the bill that would have cut the benefits that solar customers receive from 20 years to 10.
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Under what’s called Net Energy Metering, or NEM, rooftop solar owners get compensated when their systems generate more energy than they consume.
In December 2022, the California Public Utilities Commission revised the NEM rules for new rooftop solar customers. Rather than getting paid at the retail rate of electricity when their systems generate excess energy, customers would get paid at the “actual avoided cost” of electricity, which is considerably lower.
Solar customers who installed their systems prior to the change still get compensated at the retail rate for 20 years before getting switched to the new rules. For example, a customer who had a system installed in 2018 would still receive the retail rate until 2038. After that, the customer would be credited at the avoided cost.
Heading into Wednesday’s committee hearing, AB 942 called for slicing the 20-year period in half. That prompted protests from the solar industry and many homeowners who made sizable investments to install panels on their properties, saying the legislation was essentially a breach of contract.
Assemblymember Lisa Calderon, D-Whittier, introduced the bill, saying the state’s growing number of rooftop systems leaves customers who don’t have solar paying an unfair share of the fixed costs that come with maintaining the electric system — things like wires, substations and transformers — and drives up rates that utility customers pay.
AB 942’s supporters included the state’s three big utilities — San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison, the Rosemead-based power company that previously employed Calderon.
“Solar subsidies are no longer fair and have led to a cost-shift onto non-solar customers to ensure the grid is maintained,” Calderon said before the committee hearing.
Opponents have disputed the cost-shift argument, saying rooftop solar improves the environment, helps bolster grid resilience and reduces the risk of power outages.
While the version of AB 942 that passed through the committee nixed the section about reducing the time period from 20 years to 10, another provision of the bill remains.
If a rooftop solar property currently receiving compensation at the retail rate of electricity under the old rules is sold, the new owner would be compensated at the lower, “actual avoided cost” rate.
The California Solar & Storage Association trade group called the requirement “unworkable,” saying it would lead to confusion in situations such as owners changing names or when solar systems are leased or financed through loans.
Even with the revision, the group remains opposed to AB 942.
“This bill would break contracts and (sets) a terrible precedent to consumers that California’s clean energy promises cannot be trusted,” CALSSA executive director Brad Heavner said in a statement.
AB 942 now moves on to the Assembly Appropriations Committee.