California high court orders rehearing on rooftop solar net-metering dispute

The California High Court has ordered that a lower court will need to revisit whether or not it unlawfully reduced payments to solar panel owners for selling excess power back to utility companies. The justices ruled that the lower court jumped the gun on the ruling that allowed cuts of 75 percent to payments for solar panel owners. Solar panel owners are in a unique position that enables them to sell their extra power created by their panels back to the utilities, which is then added back to the grid.

The California Supreme Court sided with environmental groups

Several environmental groups lamented the 2022 ruling that reduced payments to solar panel owners by a staggering 75%. The ruling was supposed to make solar more affordable and promote the adoption of renewable energy across California and the United States as a whole. The “net energy metering” program required utilities to pay solar panel owners for their excess power, but the 2022 ruling reduced that amount significantly.

Under previous iterations of the program, utilities paid solar customers a retail rate for their extra energy, which was the exact same amount charged to other customers when they resell that energy. That amount was changed under the current iteration of the program. The change enables utilities to instead pay customers the “avoided costs”, which is how much utilities save by not buying that power on the wholesale market.

The California Supreme Court did not, however, rule on whether the change of the rule is legal; instead, it mandated that the lower court make that distinction. Utility companies have stated their opinion on the ruling by the court.

“We appreciate the Court’s careful attention to the appropriate standard of deference for reviewing CPUC decisions. We are pleased that the CPUC’s decision will remain in effect as an important part of controlling electricity bills.” – Terrie Prosper, utility commission spokesperson

The fallout from the 2022 ruling resulted in a significant drop in the solar sector in California

The 2022 ruling resulted in a massive and substantial fallout that included an 82% drop in customers requesting connections for rooftop solar installations. Industry groups reported an expected loss of about 17,000 jobs during the first year of the change. Several environmental groups have lamented the 2022 ruling and welcomed the order from the California Supreme Court.

“California needs a large, thriving rooftop solar market to meet its clean energy goals. The market is currently being stifled by the CPUC’s misguided NEM 3 decision threatening to undermine not only consumer choice and grid stability but also the state’s ambitious clean energy goals. We look forward to spotlighting just how illegal and out of step with California the CPUC has become.” – Bernadette Del Chiaro, senior vice president for California with Environmental Working Group

Solar power has unlimited potential to provide clean and sustainable energy to the grid for the foreseeable future, as was pointed out by Malinda Dickenson, legal and executive director of The Protect Our Communities Foundation, who argued the case before the Supreme Court.

“The CPUC focused exclusively on reducing demand on the utilities’ system and refused to consider the benefits of customer-provided electricity for the resiliency of the electrical system as a whole, and the ability to quickly and affordably provide the electricity to support electric vehicles, HVAC systems, and other beneficial uses of electricity on site. The Legislature has been clear that customer-generator’s rooftop solar facilities benefit ratepayers and California’s electrical system and must be accounted for.” – Malinda Dickenson

The EIA has reported that solar will play a crucial role for the next few years in the US

The ruling strengthens the standing of the solar sector in the United States by promoting the adoption of renewable energy production methods for millions of Californians. Solar power is responsible for a significant amount of energy being added to the national grid, and according to the EIA, will continue to grow over the next few years. The Supreme Court’s ruling mandates that the lower court revisit the payment scheme, which will enable solar panel owners to reap the financial benefits of adding to the grid.