California Utilities, Solar Companies Jostle Over Plans to Reform Rooftop Subsidy

(Bloomberg) -- California utilities and solar companies lobbied state regulators Wednesday for changes to a proposed state plan that would revise a key rooftop solar subsidy.

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Utilities said at a hearing of the California Public Utilities Commission that the latest proposal doesn’t go far enough to address the shifting of billions of dollars of costs of the subsidy onto those who don’t have or can’t afford solar. The solar industry said the plan to slash payments by 75% to homeowners who send excess clean energy to the grid was too sudden and would damage the business of bolting panels on roofs.

The commission released the proposal last week with the goal of reforming a rooftop solar incentive program in ways that will promote the adoption of more battery storage while controlling electricity costs for those who don’t have solar. The plan, if approved, would be the most significant change to a subsidy that’s enabled 1.5 million Californians to install solar panels.

“It’s too much of a shock,” Brad Heavner, policy director of the California Solar & Storage Association, said. Solar companies want regulators to consider a more gradual move away from the current setup, where customers get paid the full retail rate for their exported solar energy.

The hearing offered the first opportunity for solar companies, utilities, clean energy and consumer advocates to comment on the latest proposed reforms.

Rooftop solar customers should pay a monthly fee to connect to the grid to cover costs that they avoid under the current incentive structure, said Carla Peterman, a former commissioner at the CPUC and executive vice president at PG&E Corp., who spoke on behalf of the state investor-owned utilities. An earlier proposal had included such a charge, but it was removed from the one released last week.

The most recent plan wouldn’t impact existing customers. It would change the credit paid for excess power from the retail rate to one that varies based on the time of day and the needs of the grid. It’s designed to offer greater incentives to customers who install batteries with their solar systems. The commission is expected to vote on the proposal next month.

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