California court zaps lawsuit seeking to overturn new rooftop solar rules - The San Diego Union-Tribune

California court zaps lawsuit seeking to overturn new rooftop solar rules - The San Diego Union-Tribune

California court zaps lawsuit seeking to overturn new rooftop solar rules

Appeals court in San Francisco upholds California Public Utilities Commission decision; one petitioner hints at taking the case to the California Supreme Court

Three appeals court judges on Wednesday rejected a petition by two environmental groups and a San Diego nonprofit seeking to upend the California Public Utilities Commission’s vote last year that overhauled rules for customers with rooftop solar.

In a 35-page decision written by Associate Justice Victor Rodríguez in San Francisco’s First Appellate District, the court ruled 3-0 that the commission did not commit legal errors in December 2022 when it changed how rooftop solar customers are compensated when their systems generate more energy than they consume.

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The ruling came quickly — just one week after the appeals court listened to oral arguments and peppered attorneys representing the utilities commission as well as the groups that seven months ago asked the court to take the case.

Rodríguez wrote that there’s a “uniquely deferential standard of review” accorded to decisions made by the commission, or CPUC for short.

The case centered on the third iteration of the net energy metering tariff, known colloquially as NEM 3.0, that the CPUC adopted on a 5-0 vote last year.

“We conclude the (new tariff) adopted by the commission bears a reasonable relation to the statutory purposes and language,” Rodríguez said.

Under NEM 3.0, new rooftop solar customers are no longer credited at the retail rate of electricity when their systems generate excess energy but get paid at the “actual avoided cost,” which is lower.

The California Solar & Storage Association, which opposed the decision, estimated the average compensation rate would drop from 30 cents per kilowatt-hour to 8 cents, a reduction of 75 percent.

Since solar systems can run into the tens of thousands of dollars, critics of NEM 3.0 say lowering the rate will extend the payback period to such a degree that customers will have less incentive to make the investment in rooftop solar.

In a statement, Malinda Dickenson, executive director for San Diego-based Protect Our Communities Foundation, blasted both the CPUC, saying it is “protecting investor-owned utility corporations,” and the court of appeals, saying it “failed miserably in protecting the public.”

Dickenson went on to say the fight is not over.

“We need more rooftop solar, not less,” she said. “The California Supreme Court is the public’s last hope for some semblance of fair rates and climate action.”

The Protect Our Communities Foundation joined the Center for Biological Diversity and the Environmental Working Group in filing the lawsuit.

Roger Lin, senior attorney for the Center for Biological Diversity called Wednesday’s ruling “disappointing” and implored Gov. Gavin Newsom to step in.

“It’s increasingly clear that the commission’s rollbacks will devastate solar growth in working class families, and our governor can’t let that happen,” Lin said in a statement. “If the courts won’t protect our rights to rooftop solar, Newsom must act to solidify his climate leadership not only in California but across the country.”

In an email to the Union-Tribune, commission spokeswoman Terrie Prosper said, “We appreciate the court affirming the CPUC’s decision that updated the net energy metering tariff to reflect the actual value of customer solar energy exported to the grid and to control electricity costs for all customers.”

Among the critiques the petitioners had of the NEM 3.0 decision, they claimed the CPUC violated a statute in the Public Utility Code that says Net Energy Metering rules must ensure that “customer-sited renewable distributed generation continues to grow sustainably.”

But Rodríguez agreed with the CPUC, which said it was trying to balance the interests of customers with solar installations with those who don’t. What’s called the “cost-shift” argument maintains that the 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.

“Necessarily, the commission’s task was not to preserve existing advantages for owners of the NEM tariff, but to reduce those advantages without halting the adoption of renewable systems,” Rodríguez said.

Some 1.6 million homes and businesses in California have installed rooftop solar, more than any other state.

The NEM 3.0 rules affect customers with installations put in place starting in April 2023 and beyond.

Solar customers who put their systems in place under earlier iterations of net energy metering rules will still get compensated at the retail rate for 20 years from the time their systems were installed before getting switched to a system based on lower, avoided costs.

For example, a current customer who had a system installed in 2018 would still get credited at the retail rate until 2038. After that, the customer would be credited at the avoided cost.

The lawsuit named CPUC as the defendant and listed the state’s three big investor-owned utilities — San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison — as parties of interest.

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