California Utilities Commission Backs Off from the Solar Tax Proposal

By: Sharjeel Sohaib


Feb 15, 2022


Key Points

  • California Pubic Utilities Commission (CPUC) has backed off from implementing its NEM 3.0 proposal according to which existing solar energy owners/consumers in California would have to pay a grid access charge, an $8/kW solar capacity charge per month.
  • CPUC’s decision came after solar consumers, solar power advocacy groups, and solar power companies mounted a blitz of public campaigning and protests against the proposal
The Fight Over The Future Of Rooftop Solar In… | Canary Media
PC: Canary Media

Riverside, CA — California is known for giving perks to its residents that have rooftop solar panels installed on their homes.

You may call it the best state for solar in the U.S. as the Golden State keeps adding solar capacity at a stellar pace making it five times ahead of Texas and North Carolina (Capacity of solar megawatts installed CA: 29.2K MW; TX: .6.7K; NC: 6.4K). It’s home to 40% of the nation’s residential solar energy capacity.

The California Public Utilities Commission (CPUC) was about to pass a proposal called NEM 3.0 that would have tipped that balance in favor of other states. According to the Net Energy Metering (NEM 3.0) proposal, all solar customers in California were to pay the grid access charge, an $8/kW solar capacity charge per month, meaning $56 a month additional expense for a 7kW system owner.

According to analysts cited by PV Magazine, cumulatively it would have caused 57-71% overall reduction in solar savings across the state.

The good news is that CPUC has backed off from the NEM 3.0 Proposal indefinitely.

Image 1

Long Story Short

When CPUC floated this proposal to go ahead and levy an $8/kW solar capacity charge per month, this did not sit well with consumers and solar power companies.

Tesla and residential solar power company Sunrun took the lead and encouraged consumers to fight the proposal that would make rooftop solar more expensive.

Consumers were encouraged to voice their concerns in the CPUC public meeting. Public advocacy took off in the form of organizations like the California Solar and Storage Association (CALSSA) and websites and forums like SAVE CALIFORNIA SOLAR and SolarReviews. The latter even interviewed 4,000 active solar shoppers in the state and showed the reduced savings under NEM 3.0. There were protests in front of CPUC office and Los Angeles.

Sanity prevailed when everyone banded against NEM 3.0, hence the announcement that antagonist NEM 3.0 is out, indefinitely.


Per Reuters reporting, the shelving of NEM 3.0 is a temporary win for solar power companies.

A notice to parties involved in the rulemaking by the California Public Utilities Commission (CPUC) said the commissioner assigned to the proceeding “has requested additional time to analyze the record and consider revisions to the proposed decision based on party comments.”


What’s the Motivation Behind CPUC’s Proposal?

At the heart of CPUC’s proposal is an argument that says the current NEM 2.0 policy provides a multi-billion-dollar subsidy for wealthy homeowners at the expense of other utility ratepayers.

By adopting NEM 3.0, the CPUC argued, it would kill two birds with one shot, meaning that it would (1) eliminate the disparity of subsidies between current solar-customers versus non-solar customers and (2) it will encourage existing solar customers to install storage systems as well rather than just selling solar energy back to utilities.

CPUC argued that non-solar energy consumers of the state pay an unfair and higher cost of energy and their raising utility bills reflect that. CPUC needs to fix that in that it wants to level the playing field for both current and would-be solar energy consumers by taking some incentives away from current customers and packaging them for would-be consumers (who happen to be non-solar at this time). It also argued non-solar consumers are disproportionately low-income households so it makes sense to make the structure of subsidies work in their favor.

Secondly, tiny percentage of solar home owners have storage batteries and their subsidies and incentives encourage them to sell back energy to utilities. CPUC wants to encourage battery storage system installation and putting a charge of $8/month on joining the grid for selling electricity will encourage home owners to first install battery storage.

CPUC’s detailed reasoning may be assessed here.

We reported on the proceedings of this public campaign that caused a shift in CPUC’s stance. We wrote that “California’s Solar Energy Consumers Resist CA Public Utilities Commission’s Decision. It was only time that CPUC would have backed off given the active campaign run by solar companies as well as consumers.

Nonetheless, it might be a temporary win as CPUC weighs how to move forward. A CPUC notice reads that “commissioner assigned to the proceeding has requested additional time to analyze the record and consider revisions to the proposed decision based on party comments,” reports Reuters.

Our goal at Startempire Wire is to act as a megaphone to connect the dots between the best startups, events, and people in the Inland Empire. Don’t forget to subscribe to our YouTube channel, and like/follow us on FacebookTwitter, and Instagram.  


  • Avatar Of Sharjeel

    Sharjeel joined Startempire Wire as emerging technologies editor. Earlier, he worked at Silicon Canals, a leading English language technology media source for the Benelux and wider Europe. He covered the European technology and startup ecosystem digging into latest funding rounds of startups.


Submit a Comment

Connecting you with the best startups, people & events in the Inland Empire.

Related Articles

Riverside County Startup Pharm Robotics Headed to the THRIVE Demo . . .

Riverside County Startup Pharm Robotics Headed to the THRIVE Demo . . .

Thrive by SVG Ventures's annual demo day will take place at Inventures on June 1, 2022, in Calgary, Alberta. The annual Demo Day Event highlights entrepreneurs that have been hand-picked to join the company's award-winning Accelerator Program. Pharm Robotics is one of...

Caravanserai Project Calls Mission-driven Innovators in the Inlan . . .

Caravanserai Project Calls Mission-driven Innovators in the Inlan . . .

The Caravanserai Project Social Impact Startup Pitch Competition displays mission-driven innovators from across the Inland Empire who are working to develop and implement irreversible system change solutions to several issues. The competition will be held on May 26th,...

Stay Up On Startempire News

Access Premium Content

Startempire Wire premium content access is free during the beta period of our  website.  Join during beta and get a grandfathered discount when we launch.

$5 for first month then $15 per month

Get Every Update

Would you like to receive Startempire Wire updates in your inbox? Subscribe below!

"*" indicates required fields

This field is for validation purposes and should be left unchanged.

Follow Us

Follow Startempire Wire on other social media channels.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.