On August 7th, the California Supreme Court issued a decision in the lawsuit appealing the California Public Utilities Commission (CPUC)’s December 2022 “NEM3” decision. The lawsuit argues that the CPUC’s decision violates state law and should be reversed. The Supreme Court heard arguments earlier in the year.
The CA Supreme Court decision said that courts have both a right and an obligation under the law and judicial standards to review CPUC decisions. They also said that the CPUC is subject to the same level of judicial review as any other state agency.
The CA Supreme Court told the Court of Appeal to actually review the merits of the case this time, instead of just deferring to the CPUC.
In other words, the CPUC is not above the law. Here is more background on the lawsuit:
Who filed the lawsuit
The Center for Biological Diversity, Environmental Working Group, and Protect Our Communities Foundation are the lawsuit plaintiffs. These groups are rooftop solar allies. They worked side-by-side with nearly 200,000 Californians, Solar Rights Alliance, and 600 other nonprofits, cities and schools to stop the utilities and CPUC from killing rooftop solar.
Why they filed the lawsuit
In December 2022, the CPUC slashed the credit that solar users get for sharing their extra solar energy with the grid by 80%. This change affects anyone who went solar after April 2023.
Just as we warned, the real world impact of NEM3 is unfolding in the form of cratering consumer adoption of solar (see p. 31) and business bankruptcies.
Details of the lawsuit
Our side argued that the CPUC’s NEM3 decision violated both the law and their own regulations and harmed the public. The lawsuit asks the Court to consider two questions.
The first question is: should the CPUC be allowed to make a major policy decision affecting rooftop solar without fully considering the benefits of rooftop solar to all Californians?
Our side contends that California law unambiguously says that any changes to the net metering program must consider all of the benefits of rooftop solar to all ratepayers, to the grid, and to the state’s environmental goals. In contrast, we believe that the CPUC only considered how net metering affects the utilities and their business model.
The second question is: are CPUC decisions exempt from judicial review?
The CPUC argues that the courts must defer to the CPUC’s decisions. We disagree, and believe that no politician or government agency is above the law.
What the lawsuit asks for
The lawsuit asks for the Court to reverse the CPUC’s NEM3 ruling and require the CPUC to redo the decision, this time while considering all of rooftop solar’s benefits.
What the CA State Supreme Court said
On the second question, are CPUC decisions exempt from judicial review, the CA Supreme Court was clear: NO. They decided that the CPUC should be subject to the same level of judicial review as any other state agency.
On the first question, was the CPUC NEM3 decision legal, the CA State Supreme Court directed the lower Court of Appeal to actually figure that out.
So, now we wait for the Court of Appeal to take this issue back up. Our allies will have a chance to submit new arguments, with new evidence, and the Court of Appeal will now have to actually decide whether or not the CPUC followed the law when it created NEM3.
We are watching this very closely and will update this page when there is new news to report.
