California to Decide Fate of Solar in Biggest U.S. Market

  • Proposal gives customers full credit for excess green energy
  • SolarCity CEO says state will make `right decision' on policy

California regulators are set to decide how much rooftop solar customers can get for selling their excess clean energy in a pivotal vote for the largest U.S. solar market.

The California Public Utilities Commission will consider a proposal Thursday that would continue a policy called net metering, which requires utilities to pay rooftop solar customers the full retail rate for electricity they put onto the grid. The solar industry has been largely supportive of the proposed measure while the state’s investor-owned utilities have called it unfair and say it means people who don’t have solar systems are subsidizing those who do.

In a last-minute appeal to regulators, PG&E Corp., Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric asked that payments to rooftop customers be reduced over time. So far, commissioners had rejected those proposed changes. A revision in the proposal made Wednesday would require that residential solar customers connecting under the new program be placed on time-of-use rates available to them.

The California case is being closely watched elsewhere as state governments consider how to spur the development of clean energy sources while at the same time ensuring operators can collect enough revenue to maintain and upgrade their grids. In Nevada, regulators last month decided to raise fees and cut payments to solar customers, prompting two of the industry’s biggest installers -- SolarCity Corp. and Sunrun Inc. -- to fire workers and shut down operations in the state.

Utility Bills

“Sales lost to rooftop don’t hurt earnings for California utilities, but they’re concerned that bills rising sharply for one customer segment will make rate increases harder,” said Kit Konolige, an analyst for Bloomberg Intelligence.

Nearly half the states out of the more than 40 that offer net metering have enacted or are considering changes to it, according to the N.C. Clean Energy Technology Center, which tracks the policy. More than 600,000 homes and businesses have on-site solar, with California making up nearly half of the residential market.

"Is this a big deal? It’s a huge deal," SunPower Corp. Chief Executive Officer Tom Werner said of the pending decision during an interview Thursday.

Under the California proposal, solar customers would pay a one-time connection charge and small “non-bypassable” fees on power they receive from the grid.

“I’m confident that the California Public Utilities Commission is not going to fall to the pressure from the utilities and they understand the importance of their decision and are going to make the right decision,” SolarCity Chief Executive Officer Lyndon Rive said in an interview before the vote. “Net metering enables solar adoption. Without it, there is no solar adoption.”

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