20 cents of every dollar subsidizes solar customers’ bill
By Kendra Sitton
A vote to change California’s Net Energy Metering (NEM) rooftop solar subsidies has been delayed – giving locals more time to weigh in on the contentious proposal that seeks to more equitably divide costs between residential solar customers and those without solar.
The California Public Utilities Commission delayed a January vote on a proposed policy change that would make rooftop solar owners pay into the fixed costs of maintaining the grid. Currently, all those costs are shifted onto energy users without solar panels. This includes costs such as maintenance repairs as well as projects to move wires underground in order to prevent wildfires.
The Wall Street Journal characterized the current policy as “welfare for the wealthy” with rich Californians benefiting from the subsidies while costs were shifted to the poor.
Opponents worry this will discourage new solar customers and hurt the state’s booming solar industry.
San Diego County has the most solar penetration of any California county – with an estimated 25% of homes using the renewable energy source. Those homeowners are compensated at the market rate for any excess energy they contribute to the grid.
Haney Hong, a resident in east San Diego, revealed that due to his rooftop solar panels, his annual San Diego Gas & Electric (SDG&E) bill is around $56. Meanwhile, those without solar are estimated to pay $240 more annually than their solar counterparts.
Even if this subsidy changes, there are still many state programs in place as incentives for people to switch to solar. However, even with those cost-saving measures in place, studies show the vast majority of homes with solar make more than $50,000 in income. Sixty-five percent of residential solar customers have incomes in the six figures.
“Residential solar is overwhelmingly purchased by those who can afford the initial costs,” Hong said.
Poorer households, as well as renters and people living in apartments, are cut off from the benefits of solar and the costs of maintaining the grid are shifted to them.
Hong leads the San Diego County Taxpayer Association and is urging the California Public Utilities Commission to more aggressively fix this inequity than their shelved proposal would have. The organization is advocating for the commission to increase the rates for solar customers within five years rather than slowly over 15 years. Their proposal would make the rare low-income solar customers exempt from rising costs.
“When… we create structures that don’t help those in poverty, we run the risk of concentrating [wealth] and making California even less livable than it already is,” Hong said.
The focus on more equitable metering comes amid a major surge in energy costs. SDG&E attributes the rise in rates to a hike in natural gas prices and an increase in use during the December cold front.
“There is a challenge in the ability to meet the demand for natural gas, which of course, spikes the price,” said Anthony Wagner, communications manager at SDG&E. “The natural gas cost has gone up about 25% In the last year, and SDG&E does not make a profit off an upcharge in gas. So whatever it costs at the wholesale price plus the cost of transmission and distribution is the cost that we pass off to our consumer or customer.”
According to CBS8, SDG&E has the highest electricity rates in the country. The rates have risen since 2013 as SDG&E makes the grid more climate resistant and works to prevent wildfires. Still, Sempra, the owner of SDGE&E, made $9 billion in profits annually in a report they released.
“If we don’t fix, for instance, the things in this solar rate proceeding and that energy metering, it’s only going to push your rate higher and higher. And so we have to fix these structural issues in the rates,” Hong said.
All price increases must be approved by the California Public Utilities Commission, but Edward Lopez, executive director of Utility Consumers’ Action Network (UCAN), told CBS8 that the commission often puts politics over people and rarely decreases rates.
The high cost of energy in the area is just another aspect of why San Diego is becoming too expensive for many. San Diego was recently named the least affordable city in the nation, surpassing San Francisco in a report conducted by home-buying platform OJO-Labs. While other metros like New York City may look more expensive on the surface, they are paired with higher wages.
Legislators are implementing other programs that should increase renewable energy use and decrease costs.
San Diego Assemblymember Chris Ward introduced AB2316 to establish a statewide solar and storage program. He noted that 45% of Californians are renters who cannot install solar. His idea is to install smaller-scale community solar projects so renters, residents, and business owners who cannot install solar themselves can subscribe to the project and receive a credit on their utility bill for their share of the power that is produced. The storage aspect would also help decrease energy costs during peak hours when the sun has set.
After seven years of work, the cities of San Diego, La Mesa, Encinitas, Chula Vista, and Imperial Beach are rolling out their San Diego community choice energy program that partially breaks SDG&E’s monopoly. Nonprofit San Diego Community Power will provide those cities with an alternate power source while still using SDG&E’s grid infrastructure. The nonprofit has two rate plans: a more expensive 100% renewable, carbon-free energy one and another with 50% renewable energy that is comparable or slightly cheaper than SDG&E energy rates.
Customers can choose to opt-out of the program. Libraries, fire departments, and other city properties began using the alternative energy source in 2021 and the program is expanding to residential customers. According to the San Diego Union-Tribune, San Diego Community Power’s 767,700 total customers will make it the second-largest community choice aggregation, or CCA, in the state.
While those cities are looking to meet their climate plan goals of using 100% renewable energy by 2035, for many customers the more urgent worry is being able to afford their ever-increasing energy bills.
Amid the new programs and policy changes, there is hope that both goals can be met.
— Kendra Sitton can be reached at firstname.lastname@example.org.