The Solar Tax is Back (and the Solar Cliff, too)

On May 9th, the CPUC formally requested input on three changes they are considering to rooftop solar net metering. Among these changes is a Solar Tax of $300 to $600 per year on average. In other words, the CPUC appears to be pursuing a re-packaged version of their disastrous proposal in December. 

As we feared, the utilities have so captured the CPUC that the best they can do is try the same thing with a different wrapper and hope the public doesn’t notice. 

Recap: the CPUC’s original proposal in December

The CPUC proposed in December changes to “net energy metering” that included a $700 per year Solar Tax, deep cuts to the credit solar users receive for sharing their extra energy with the grid, and to weaken protections on existing solar users. The proposal would have effectively doubled the cost of going solar, put solar out of reach for most consumers, and threatened 70,000 good-paying solar jobs. 

The public backlash to the CPUC’s original proposal

The public backlash was swift and clear. Over 150,000 submitted a comment to the CPUC and Gov. Newsom, along with over 600 nonprofits, cities, schools and elected officials and most major newspaper editorial boards. 

In response, Gov. Newsom said that “changes needed to be made” and the CPUC pulled back their proposal in February.

Warning signs in March that the CPUC didn’t get the message from the public

Since then, the CPUC and the Governor’s office have been silent on what comes next. But we caught high-level CPUC officials repeating utility propaganda enough times to be concerned that despite public appearances, the CPUC had not fundamentally changed their intentions. 

This week’s announcement is a red flag that indeed, the CPUC has not gotten the message

The CPUC’s announcement asks for input into three ideas they are considering. We think it makes sense to treat these ideas as effectively a new proposal. Here’s our analysis:

1) A Solar Tax, again

The CPUC is considering what they call “Non-bypassable charges on gross consumption”. This is a twist on the CPUC’s original Solar Tax proposal in December, which would have been based on the number of solar panels on your roof.

The CPUC’s new Solar Tax would be based on the amount of energy you make and use to power your home or business. We estimate the average solar user would pay between $300 and $600 per year under this new Solar Tax. Here’s a spreadsheet with our calculations. 

It’s like taxing people for hang-drying their clothing

In both cases, the CPUC is proposing to tax people simply for investing in and using solar energy. This is exactly like taxing people who hang-dry their clothing instead of running the dryer. 

It’s absurd, it’s intrusive, and it violates every principle of conservation and responsible citizenship. It also contradicts everything the Newsom Administration says it is for: solving climate change, promoting clean energy, making solar more equitable, and keeping the lights on. We are also quite sure it is illegal. 

A false premise

The CPUC continues to justify their Solar Tax by falsely accusing solar users of not paying their fair share of the electricity system. This, too, is absurd. Solar users pay their fair share in three ways: through their minimum bill of about $10/month, through existing “non-bypassable charges” deducted from their net metering credit, and through the electricity they buy from the utility when the sun isn’t shining (between $50 and $120 / month according to utility data). 

It’s not shocking that the CPUC would base their policy on shoddy facts, since all of their official research is conducted by firms with conflicts of interest with the utilities. That brings us to the second idea the CPUC is still considering. 

2) A “glidepath” to making solar unaffordable for middle and working class people, brought to you by the utilities’ consultants

The CPUC’s original proposal was to abruptly slash the credit solar users receive for sharing their extra energy with the community, from an average of $.25/kWh to around $.05/kWh. 

The CPUC is now contemplating creating a “glidepath” that slashes the net metering credit to this $.05/kWh level over a period of a few years rather than right away. The CPUC left the actual time to get to this low price open-ended but suggested four years in their memo. In other words, the market would go off a cliff in four years rather than right away.

Not much of a glide in that path. 

The CPUC claims that $.05/kWh is the actual value of your extra solar energy according to a computer model they call the “avoided cost calculator”. The CPUC also claims this is comparable to the cost of energy from solar and wind farms.

If that were true, then wouldn’t the utilities be proposing to also lower our rates to $.05/kWh? They’re not, and so let’s talk about where the CPUC’s avoided cost calculator comes from.

“Avoided Cost Calculator” = Utility Math

The “avoided cost calculator” was developed by a consulting firm called E3, whose other clients include PG&E, SoCal Edison and SDG&E, along with many other North American utilities. To say this is a conflict of interest is an understatement.

E3’s avoided cost calculator is rigged in several ways to make the utilities’ solar and wind farms seem cheaper than rooftop solar. For example:

  • It grossly undercounts the cost of building and maintaining long-distance power lines to ship energy from solar farms to your home. 
  • It undercounts how rooftop solar reduces the cost of those long-distance power lines. One of the most detailed energy modeling studies ever done found that rooftop solar can save as much as $120 billion over the next 30 years. More details and other examples in this white paper
  • It underestimates the cost of natural gas, which has risen steeply of late.
  • It ignores the electricity shortages that are threatening blackouts this summer and over the next four years. 

Conflicts of interest and revolving doors are normal for the CPUC

This isn’t the CPUC’s only conflict of interest. Consider:

  • The CPUC also paid the Energy Institute at the Berkeley Haas School of Business $1 million to do research on rooftop solar’s costs and benefits at the same time the Energy Institute took $230,000 from the utilities (see the public records request). 
  • PG&E’s current lead lobbyist to the CPUC? Former CPUC commissioner Carla Peterman
  • Sempra Energy’s newest lobbyist? Former CPUC President Marybel Batjer who was just hired by California Strategies, one of Sempra’s key lobbying firms. 

Now, the CPUC claims it is doing all of this to help working class people. This brings us to the third idea they are considering.

3) Another bait and switch to keep low-income households hooked on the monopoly’s expensive energy

The CPUC’s original proposal claimed to help more low-income households afford solar, but an actual analysis by frontline community leaders found it would actually increase the cost of going solar for low-income households. 

Now the CPUC is considering a new program that would allow low-income people to participate in a local solar installation that is not on their roof, and receive a bill saving of 20%. 

That’s pretty weak sauce. This 20% bill savings will be erased with just a few more years of rate hikes, with working class participants still on the hook to the utility.

If the CPUC actually cared about working class people, they would do a true community solar program. True community solar lets people buy, lease or rent solar panels at a nearby installation and receive the same savings as those who have solar panels on their roof. 

True community solar empowers working class people to save more money now and over the long-term. We don’t have true community solar in California to date. That is because the utilities and the CPUC have put in place too many restrictions for these projects financially pencil out. 

The CPUC should have just listened to advocates for working class communities and fixed their community solar program. Instead, the CPUC is simply floating a bait and switch that will leave working class families no better off in just a few years. 

Retroactive changes for existing solar users still on the table

The CPUC’s May 9th memo is silent on whether these changes would apply to existing solar users or just new solar users. You will recall that the CPUC’s December proposal reduced the number of years existing solar users can stay on their net metering plan, from twenty years to just fifteen years. The CPUC has not clarified their stance since then. Thus, we should assume retroactive changes are still on the table.

Earlier this year, your voice helped to defeat the CPUC’s first Solar Tax. We need your voice again, as loud as ever

1) Call Governor Newsom right now at 916-445-2841. His office is open Monday-Friday from 9 to 5. Say your name and where you live, and something personal. Here’s a suggestion:

“The CPUC’s latest rooftop solar announcement is a non-starter for me. California should not be taxing solar energy, period. We need more solar, not less. Please show leadership now.”

2) Attend a Don’t Tax the Sun Rally on June 2nd in San Francisco or Los Angeles. More details and RSVP here.

While it totally stinks that we have to keep fighting to stop the CPUC from taxing the Sun, do not be discouraged. They are testing the public to see if they can be tricked or worn down. Let’s show them that every time they try that, we fight back even harder.