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Social equity and social value were the central themes of recent arguments by environmental groups against new solar policies adopted by the California Public Utilities Commission.
In a case led by the Center for Biological Diversity, the groups are asking the California Court of Appeals to tell the commission to change the way it is interpreting a climate change bill (Assembly Bill 209), which took effect in April.
Since 2016, homeowners who installed solar power systems, which send energy over the same power grid as natural gas, would get paid an equal rate for excess energy. In other words, for every kilowatt-hour of solar electricity a homeowner feeds into the grid, they would get a bill credit for one kilowatt-hour. The billing structure was called net energy metering, or NEM.
According to data from the utilities commission, by the end of 2019, California customers had interconnected more than one million NEM generators onto the three large electric investor-owned utility systems — PG&E, Southern California Edison and San Diego Gas & Electric. Almost 98% were residential, but less than 12% of those were installed in disadvantaged communities.
On April 15, the one-to-one buyback rate dropped by 75%, a dramatic decrease.
In addition to changes to the utility’s buyback rate, the groups are asking the commission to add societal benefits, like clean air and lower greenhouse gas emissions, be included in their cost-benefit analysis.
The new adjusted billing structure, called NEM 3.0, was part of AB 209. The bill also originally included funds to cover the cost of transitioning.
“The legislature authorized $900 million for solar and storage. But then, because of California’s budget crisis, the budget was slashed to $280 million. And now it’s still unknown if the $280 million is still on the table to cover up-front costs of installation,” said Roger Lin, attorney for the Center for Biological Diversity, speaking after the appeal.
“And what’s even worse is the AB 209 program that the commission relies upon is a rebate program. So, folks have to be able to fix their home’s electrical panel, buy the solar panels, buy the solar storage and then jump through the hoops of getting the rebate,” Lin said.
That’s on top of unexpected costs of rooftop solar, like rebuilding rafters to hold the panels.
One of the things the court could do is ask the CPUC to reinstate a proposed equity fund, which was dropped in AB 209, that would have earmarked state funds for lower income households, Lin said.
Conceivably, buildings with solar systems that include storage batteries don’t even need to be connected to a grid. A distributed power system also increases a city’s resilience in times of power shortages, like during heatwaves, fires or hurricanes.
So, who will pay for the power grid?
Power companies argue that when wealthier families get rooftop solar, it shifts the cost of maintaining a grid infrastructure to lower income households.
“You can’t hold low-income folks as a shield and then fail to serve them by not designing an alternative that can help them get rooftop solar,” Lin said.
The construction of transmission towers and power stations is the number one reason our rates are increasing, according to Lin.
“Wildfire mitigation projects to bury transmission lines, which keeps them from starting fires, is the second largest reason our rates keep increasing. Transmission buildout is also the thing that lines the utility’s pockets the most,” he said.
“They get a 20% return on anything that they build. So, if it costs $100 million bucks to build the transmission infrastructure and utilities, we ratepayers have to pay the utilities $120 million,” he said.
Ellison Folk, who represents The Protect Our Communities Foundation, argued that the court should require the commission to include social benefits, like clean air and lower greenhouse gasses, when it calculates the cost and benefits of system changes.
“The commission has developed a societal cost test,” Folk said. “It has been used in another proceeding. The commission’s position here is ‘we’re not ready to use it for this yet.'”
The commission’s attorney, Edward Moldavsky, replied that the agency uses a suite of tests to make policy decisions which are based on economic factors, and that is what the law requires.
Appeals Court Judge Alison M. Tucher followed with questions at the court.
“So, it may be more accurate than the old world, but it’s still just economic costs,” said Tucher. ” I recognize the statutory language says we want the costs to equal the benefits. But, just as a matter of logic, what if we could have benefits that exceed costs? Wouldn’t that be much better?
“That’s not what the statute says.” said Moldavsky.
