CARLSBAD — The Carlsbad City Council unanimously passed a resolution on Jan. 18 opposing the California Public Utilities Commission’s proposal to reform the solar industry’s net energy metering program.
Councilwoman Priya Bhat-Patel brought the agenda item in response to the state regulatory agency’s controversial proposal announced last month.
“I’m advocating against the CPUC (California Public Utilities Commission) proposal and for rooftop solar,” Councilwoman Priya Bhat-Patel said. “I think it’s important for us to stand strong. Not only is supporting rooftop solar consistent with the city’s efforts to reduce emissions … it would also be detrimental to the expansion of rooftop solar.”
The proposal was initiated after state legislators adopted Assembly Bill 327, requiring the utility commission to reform the net energy metering, or NEM, program. Despite some claims made during the council meeting, the proposal is not a joint venture between San Diego Gas & Electric, Pacific Gas & Electric and Southern California Edison.
The commission’s final decision scheduled for Jan. 27 was postponed to a later date.
The council agreed to support the current rooftop solar program, or a more solar-friendly proposal, as a way to reach both city and state climate goals, along with protecting the solar industry economy, decarbonizing the grid and pushing back against investor-owned utilities.
According to Jason Haber, Carlsbad’s intergovernmental affairs director, the agency’s latest proposal calls for a monthly fee of $8 per kilowatt-hour, reduced export compensation, no transition credit, transition to time-of-use-5 rate schedule, 15-year grandfathering for NEM 1 and NEM 2 customers, a storage rebate that decreases by 25% per year over the next four years, $150 million equity fund and low-income and disadvantaged carveouts.
Regarding the 15-year window in the grandfather clause, if someone installed solar panels five years ago, they would not be part of NEM 3.0 for another 10 years, Haber explained.
The NEM program started more than 25 years ago to encourage rooftop solar adoption but has grown significantly since then. According to the Solar Energy Industries Alliance, there are 1.3 million rooftop solar installations statewide and prices have fallen 11% in the last five years.
In Carlsbad, more than 8,500 customers have installed solar panels since 2020, Haber said, noting that 98% are residential, with just 12% installed in disadvantaged communities.
Opponents of the proposal, also known as NEM 3.0, including the council and organizations such as the Sierra Club San Diego Chapter, San Diego Climate Action Campaign and San Diego 350, consistently said the new program would be devastating to the rooftop solar industry. In addition, they said it is not an equitable solution and disregards adoption for low-income residents.
However, those in opposition to the proposal did not address the $3 billion cost shift due to the current program. Proponents of NEM reform, such as Kathy Fairbanks spokeswoman of the Affordable Clean Energy for All, have argued non-solar customers take the brunt of the costs of rooftop solar.
In SDG&E’s territory, non-solar customers pay an average of $245 more per year, as those costs are diverted to upgrade transmission lines, wildfire mitigation and other programs.
SDG&E, for example, pays $0.31 per kilowatt per hour to buy back excess electricity, according to a previous interview with SDG&E spokeswoman Helen Gao. The market rate is $0.05 and any excess cost is shifted to non-solar customers, according to Gao.
“We agree with the council that rooftop solar is a critical part of California’s clean energy future,” Fairbanks said. “But reforms to California’s 25-year-old NEM program are needed. The reforms are meant to ensure everyone who uses the electric grid pays their fair share toward its maintenance and upkeep. Today that isn’t the case. Non-solar customers, including many working families and those from disadvantaged communities, are paying more than they should to over costs that used to be shared equitably among all customers.”
Councilwoman Teresa Acosta said the program should remain in place, but with more subsidies and robust outreach for low-income adoption. Acosta also said “a lot of people” with rooftop solar cannot afford battery storage, and the message from reform opponents has been twisting the issue by trying to tax people who can afford it.
Councilman Peder Norby said the NEM program was designed to encourage adoption and is near 20% in the region. In the early days of rooftop solar, a subsidy helped offset high startup costs. But costs have dropped significantly over the years, which typically triggers reduced subsidies.