A letter to California Governor Gavin Newsom addresses the state’s electricity affordability crisis – and a misconception that rooftop solar is to blame for the high costs.
Anyone living in California knows that electricity prices are sky-high and continue to rise rapidly. This October, California Governor Gavin Newsom signed Executive Order N-5-24, which seeks to curb rising electric bills.
The executive order directs the California Energy Commission and the California Public Utilities Commission to examine programs and recommend changes that could reduce electric rates, submitting analysis by January 1, 2025.
While the executive order is aimed at lowering bills amid an affordability crisis, eight energy experts sent a letter to the Governor warning that the Executive Order inaccurately places blame on rooftop solar for high energy costs.
Newsom’s order reads, “Californians’ electric rate increases have been driven largely by the cost of some programs added over time, such as the subsidy provided through the legacy Net Energy Metering program for rooftop solar photovoltaic systems.”
The letter from eight experts, which includes former California regulators, the former chairman of the Federal Energy Regulatory Commission (FERC), and others, argued that this statement from the executive order is based on poor analysis from the state’s Public Advocates Office (PAO).
“Much to our surprise, the Public Advocates Office (PAO), which is supposed to represent the interests of the public and not of the utilities, published a fact sheet that validates the claims being made by the utilities. It asserted that net metering and net billing create a subsidy totaling $8.5 billion per year,” the letter said.
The letter urged Newsom to consider the analysis by M. Cubed, an economic consulting firm, which rejects the PAO’s claim that rooftop solar creates an $8.5 billion annual cost shift. The analysis also said the roughly two million customer-sited solar systems installed to date create a net annual benefit to all ratepayers in California of $2.3 billion.
“It is also worth noting that customers who have installed solar panels used to be large users of electricity prior to installing solar panels. For years, if not decades, they overpaid their share of utility fixed cost. The so-called cost shift ran in the opposite direction. Viewed over their lifetime, they have been subsidizing other customers and lowering electric rates,” the letter said.
In the past two years, rooftop solar has become a target of investor-owned utilities, scapegoated for high rates. The industry, which has installed solar on over 2 million California homes, represents the only challenge to an uncontested monopoly. PAO, the California Public Utilities Commission (CPUC), the state’s major private investor-owned utilities, and Governor Newsom have all moved in lockstep against rooftop solar over this time.
“Stop pointing the finger at the solar cost shift as creating high electric rates,” wrote economist-at-large Ahmad Faruqui. “Instead, identify the role being played by inflated utility overhead costs, managerial inefficiencies and excessive executive compensation. California’s rates are now almost three times the U.S. average. They have been higher than the U.S. average since 1979, long before rooftop solar panels arrived on the scene.”
California has gutted net metering, the payment for exporting solar from the home to the grid, by about 80%. The state has created stringent labor rules for commercial solar installations with AB2143. It determined that multi-meter properties such as schools and farms cannot use their own solar energy production and must sell it to the grid at a low price and buy it back at a significantly higher price.
In 2024, CPUC approved $24 monthly fixed charges , which are paid even if 100% the home’s energy is provided by solar. These fixed charges, which are already double the national average, are legally uncapped and are likely to continue to rise, said Bernadette Del Chiaro, executive director, California Solar and Storage Association (CALSSA). There’s also an ongoing threat that existing solar customers may have their net metering rates altered.
“We recognize the urgency of addressing electricity affordability in California. Changing the terms of solar tariffs is not the place to look for changes. Doing so would harm efforts to meet the state’s climate targets affordably,” the letter concluded. “In fact, the state, under your leadership, should do all it can to promote the installation of rooftop solar panels and to make them affordable for all income segments. Customers with solar panels are more likely to install heat pumps and drive electric vehicles.”
Find the full letter, addressed to Governor Newsom, CPUC Chair Alice Reynolds, and California Energy Center chair David Horschild here.
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