Utilities Attack California Solar with AB327

Since the beginning of the year, utility companies have been making headlines with their efforts to eliminate the Net Energy Metering (NEM) program for solar in California. But now, the utilities are making headlines with a new topic: AB 327. This bill can also be seen as a direct threat to the solar industry.

Sponsored by California Assemblyman Henry Perea and backed by Big Energy, the two main goals of the bill is to 1) eliminate the NEM program and phase out the thousands of solar customers who are currently part of the program and 2) level out the tiered pay structure for utility companies including Southern California Edison. In order to accomplish the latter, the utilities would charge all ratepayers a mandatory $10 monthly fee or $120 annually. This fee is for merely accessing the grid and would be in addition to the charges for monthly electricity usage.

Those behind the bill argue that a monthly surcharge is necessary to pay for fixed costs lost to customers who utilize solar energy. Additionally, they claim to need the funds to maintain the state’s transmission grid and prevent outages.

However, solar advocates and those in the solar industry interpret the bill differently. In effect, the utilities are proposing to shift costs now incurred by high rate payers by increasing costs for low rate payers.

What makes this effort unusual is that this charge will be placed into law by the legislature, rather than through due process at the California Public Utilities Commission (CPUC). If passed, legislating similar fees will certainly be considered a path to success in the future by utility lobbyists, and may lead to additional surcharges for whatever utility stockholders believe is possible or necessary to improve the monopoly’s bottom line.

It should come as no surprise that energy monopolies are pushing so strongly for a bill at this point in time. In the last few years, residential “rooftop” solar has experienced explosive growth as many households have chosen to go solar and generate their own renewable energy.

The Net Energy Metering program — which allows solar owners to receive credit for any over-production — has been a large incentive for many to go solar and since the program was instituted in 2007, thousands of solar customers have signed up. By eliminating the NEM program, the utility companies will not only take away a major incentive for potential solar customers but will also renege on a contract that they already signed with those already enrolled.

In addition, the monthly mandatory fee will affect many potential solar customers whose incentive is largely financial. Many of those who are currently interested in solar are getting charged a lot for electricity in the higher tiers. Therefore, they install solar panels in order to reduce their consumption and lower their utility bill.

If AB327 does in fact pass, then the financial incentive to go solar will be severely reduced for small and modest users of energy, and diminished as well for larger users. The average ROI (return on investment) in the first year will decrease by as much as 10% for average consumers (from a modest first year return of 9.7% to 8.6%). Moreover, the payback period for a solar system (now around 5-7 years for most solar installations) will increase to 8-10 years or more, hindering many potential consumers from going solar.

What can we Californians do to fight against AB327? Join AMECO Solar, CALSEIA and thousands of solar supporters by calling your Senator (find out who your Senator is by visiting this website) and asking them to, “Protect All Net-Energy Metering Customers”. Then, spread the word to your friends and colleagues by tweeting, posting on Facebook or sending an email with a link to this blog post. The bill will be voted on this Friday, August 30 so be sure to take action today.