In California, a quarter of your energy bill could go to subsidizing rooftop solar for your neighbors

Costs for California’s rooftop solar incentive program will reach $8.5 billion by the end of 2024, the state’s Public Advocates Office disclosed in a factsheet published on Thursday . The California Public Utilities Commission changed the solar incentive significantly at the end of 2022, but the former programs could make up a quarter of the energy bills for customers without rooftop solar.

This cost shift onto other customers is more than double the cost for the program in 2021, said the group representing utility customer interests before the state’s utility regulators.

California’s Net Energy Metering program, or NEM, offered a limited number of customers credit for the power they generated for 20 years. Once that cap was reached, a new program was offered with slightly lower compensation, but the NEM 2.0 program had three times the amount of solar generation installed in the residential sector.

The latest policy, opposed by environmental groups and the solar installation industry for making solar less attractive, lowered the rate of compensation for customers generating their own electricity.

The CPUC’s Public Advocates Office proposes adjusting the older incentive programs, changing the compensation for NEM 1.0 and 2.0 customers, while still allowing rooftop solar customers to realize “the full benefit of their investments in a reasonable timeframe of 10 years,” according to the fact sheet.

The ratepayer advocate would have NEM 1.0 and 2.0 accounts converted to the current incentive program upon sale of a home or after 10 years of interconnection. Currently, the older programs receive the same benefits for 20 years from the time they installed their solar systems. Another recommendation would be to set net metering compensation for customers with rooftop solar grandfathered into an earlier iteration of the credit at the electric rates that were in effect at the time they joined the program, rather than today’s higher rates.

California is currently the state with the third highest electricity cost, 91% higher than the national average, according to the U.S. Energy Information Administration’s spring report .

Customers in the state have seen a surge in electricity bills in recent years, as utilities are investing in wildfire prevention and transmission that would support a shift toward more renewable energy. The ratepayer advocate sees the subsidies of the NEM programs as a contributing factor to the state’s high electricity rates, adding that residential and small business customers of Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric must make up the deficit.

While the current rooftop solar incentive program offers customers credits for the energy their systems generate, close to the retail electricity rate, they also pay for certain non-bypassable charges or fixed costs, which slightly lower the customers’ overall benefits. Utilities typically charge customers for costs related to grid maintenance, public purpose programs, or other state-mandated initiatives, and the Public Advocates Office says pre-2023 customers generating their own energy under NEM 1.0 and 2.0 shift grid costs onto customers without solar.

Overall, 21-27% of electricity bills for California households without rooftop solar will go to subsidizing the program across all utilities by the end of the year, according to the most recent analysis from the Public Advocates Office.

There is nothing on the agenda of state utility regulators to consider revisions to NEM subsidies at this time, a spokesperson for the Public Advocates Office said.

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