California’s Proposed Solar Tax is Unpopular

California has the most rooftop solar installations of any other state, with homeowners from LA to San Francisco enjoying financial incentives to produce their own green electricity, which has aided adoption. However, a new proposal by the California Public Utilities Commission (CPUC) is sparking controversy, and protests, in the Golden State. The CPUC’s solar tax proposal would charge Californians with rooftop solar between $300-600 per year, and reduce the net metering benefits for homes that add electricity to the grid with their home installs.

The tax applies to all new solar installs in California, and existing green homes are subject to the tax 15 years after implementation.

See also: Can you make money with solar?

Don’t tax the sun

After a public outcry and urging from Governor Gavin Newsom to change its controversial December 2021 proposal to raise rates for solar power users in the state, the California Public Utilities Commission responded with a second proposal in May. Not good enough, says the Solar Rights Alliance, a statewide group of solar power users including homeowners, businesses to nonprofits who organized “Don’t Tax the Sun” rallies in San Francisco and Los Angeles on June 2. 

This is like taxing people who hang-dry their clothing instead of running the dryer.

Dave Rosenfeld, executive director of the Solar Rights Alliance

The Solar Rights Alliance rounded up protests to the original plan from 150,000 people and over 600 nonprofits, elected officials, schools and newspaper editorial boards. The San Diego-based group formed a human chain that spelled out “Gov: 100,000+ Say Stop Utility Profit Grab” at the Sacramento Capitol building, and hand-delivered some of the written protests to Newsom. A video the group made stars a Bay Area homeowner, Summer, in El Cerrito.

The CPUC solar tax proposal 101

The CPUC plan seeks input for three changes it recommends in solar taxes and net metering:

• Solar Tax
• Net Metering
• Low income solar

Here’s what both sides say about it:

CPUC: Place a tax on each solar user, based on the amount of solar energy they make and use ($300-600 per year, the Solar Rights Alliance estimates). The CPUC says solar users don’t pay their fair share of total electricity consumption, because most rooftop solar systems don’t generate energy during hot nights in summer, a time of peak demand due to heavy air-conditioner usage. So a fairer system is needed so all electricity consumers can share the total cost burden, to prevent soaring rates for non-solar users. The CPUC calls it “Non by passable charges in gross consumption.”

Solar Alliance: But solar users already pay in three ways, the Alliance retorts: in minimum monthly bills, in buying electricity from the utility when the sun doesn’t shine (anywhere from $50-120 per month, according to utilities’ data), and in “non-bypassable charges” which are deducted from their net metering credit. “The less energy you buy from the utility because of your solar, the bigger your tax,” the Alliance retorts, adding “it’s absurd, it’s intrusive and it violates every principle of conservation and responsible citizenship” to punish solar users this way. Under the December plan, the tax would have been an average of $684 per year for solar users, $57 a month, and based on the amount of solar panels on your roof. The December plan lessened the amount of time existing solar users could stay on their current net metering plan from 20 years to 15 years.

CPUC: Slash the credit for sending solar energy back to the grid, which is called net metering. The CPUC wants to gradually slash the net metering credit from $0.25/kWh to $.05/kWh over several years, and suggests four. The $.05/kWh is the actual value of a user’s extra solar energy, and comparable to the energy from solar and wind farms. (Under the December plan, the credit would be suddenly cut to that figure.)

Solar Alliance: But that figure is artificially low, the Alliance says, because it doesn’t take into consideration the cost to build and maintain power lines to transmit energy long distances from such farms to homes and businesses, nor how rooftop solar usage saves those costs, nor electricity shortages that often result in power outages over hot summers. Also, the concept the figure is built on, the “avoided cost consumption model,” was developed by a consulting firm, E3, whose clients include major investor-owned utilities like Pacific Gas & Electric (PGE), Southern California Edison and San Diego Gas & Electric Company. 

CPUC: Low-income solar users can participate in a local solar installation, called community solar, for a monthly electricity bill savings of 20%.

Solar Alliance: This is a negligible savings that still keeps low-income households on the hook to utility companies, says the Alliance. Allowing low-income households to buy or rent solar panels from a local solar installation that gives them the same savings as more affluent households with solar panels on their roofs is a better idea. 

Conflict of interest?

To add fuel to the fire (pun intended), the Alliance also notes conflicts of interest are afoot. While CPUC regulates what utility companies charge the public, the lead lobbyist for Pacific Gas & Electric to the CPUC is, cozily enough, an ex-commissioner of the CPUC, Carla Peterman. While the CPUC paid UC Berkeley Haas School of Business $1 million to research solar power costs and benefits, Haas also received $230,000 from utility companies. 

To prevent the CPUC’s latest plan from becoming reality, the Alliance recommends concerned solar users spread the word in flyers in the community, social media or Nextdoor, call Governor Newsom, write letters to the editors of publications, and other actions in its campaign toolkit.