According to statistics cited by The New York Times, California has more rooftop solar than any other state in the United States and produces as much electricity from this renewable energy source as 12 nuclear power reactors.
But there is a problem with the way rooftop solar is now controlled. Currently, homeowners that install solar panels can get a sizable credit for the electricity they sell back to the grid. This encourages the use of solar energy, which is crucial for achieving the state’s ambitious climate goals. However, there is a catch: the credit ends up being unjust to low-income Californians who are stuck paying for a disproportionately higher share of the cost of powering the state because they cannot afford to install solar panels.
The main issue is that households using rooftop solar don’t pay their fair share of utility fixed costs, such as those associated with transmission and distribution, wildfire mitigation and compensation, energy efficiency initiatives, low-income subsidies, and early technology investments, to name a few. Robert Archer, a former senior energy advisor for the U.S. Agency for International Development, addressed why homes without rooftop solar pay higher rates to cover fixed expenses in a recent OpEd to the Marin Independent Journal. The true solar tax is this.
The California Public Utilities Commission (CPUC) on Thursday proposed new regulations for the Net Energy Metering (NEM) solar tariff in order to address these concerns.
The proposed idea would, in Cal Matters’ opinion:
- Reduce the credit that solar-panel users receive for selling electricity back to the grid by as much as 75 percent, though this would not apply to people already taking advantage of the credit.
- Encourage customers to install solar panels with a battery system.
- Adjust rates so that customers use power at times of day which increase the reliability of the grid.
- Provide $900 million in solar incentive payments, with $630 million going towards low-income Californians.
According to the CPUC, the new proposal would save the typical California utility customer of Pacific Gas and Electric Company, Southern California Edison, or San Diego Gas & Electric $100 per month on electricity costs if they installed solar in the future and at least $136 per month if they installed solar panels and a battery. People could pay for the installation costs in nine years or less with these savings.
According to a press statement from the CPUC, the upgrade propels the solar business into the future so that it can assist the modern grid by encouraging the adoption of electric automobiles, heat pump water heaters, and other electrification products while also lowering rates for Californians.
According to Cal Matters, the new proposal is a tweak of an earlier one that would have taxed households with new solar installations $8 per kilowatt per month. This would have made it more difficult for California to achieve its target of obtaining 90% of its electricity from carbon-free sources by 2035 and 100% by 2045, according to the solar industry and other proponents of clean energy.
The solar industry welcomed the removal of the tax but objected to the reduction in credits.
According to Bernadette Del Chiaro, executive director of the California Solar and Storage Association, if implemented as written, the C.P.U.C.’s proposal would delay the objective of 100 percent sustainable energy while protecting utility monopolies and boosting their profits.
On the opposing side of the debate, the pro-equity coalition of 120 organizations, including low-income Californians, environmentalists, and labor, was equally unsatisfied.
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It is very disheartening that under this proposal, low-income households and all customers without solar would continue to pay a hidden tax on their electricity bills to support rooftop solar for primarily richer Californians. Kathy Fairbanks, a spokesman for Affordable Clean Energy for All, said in a press release. Given the massive new federal clean energy subsidies that will guarantee sustained development and hefty profits for major solar businesses for the ensuing ten years, the inability to finally eliminate the rising cost burden borne by non-solar customers in California is especially troubling.
According to The New York Times, the Inflation Reduction Act and the bipartisan infrastructure package offer tax credits for people who install residential solar or buy electric cars, as well as incentives for large utilities to create clean energy projects.
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Cost-effective Clean Energy According to all published statistics, the wealthiest 40% of Californians make up about 70% of home solar users. Additionally, Californians without home solar spend an additional $245 per customer and $3.4 billion in additional electricity costs annually as a whole. By 2030, at current rates, that amount would increase to $10.7 billion annually for the entire country and more than $550 for each person.
According to Cal Matters, the CPUC will vote on the new proposal in December, and if accepted, it will go into effect in April. At a meeting on Wednesday, November 16, members of the public may voice their opinions.
