Up to one million California residents who purchased rooftop solar might lose their net metering contracts under the proposed law AB 942.
California government introduces new measure, AB 942, to end almost two million rooftop solar net metering contracts, and put current customers onto a rate design that would cut credits on their monthly bills by about 80%. If approved, the plan would boost the price of an average solar client by $63 a month.
More than two million rooftop solar projects are placed on homes, schools, small businesses, and other places where rate-paying customers live in California. Californians spent tens of thousands of dollars or signed 20+ year contracts believing they would get predictable, steady power costs for the next two decades or more.
Net energy metering (NEM) lets clients sell extra daytime output to the local grid in return for credit on their power bills, making the predictable cost for electricity achievable amidst continually rising utility-provided electricity costs.
“AB 942 is an attack on California families who made long-term investments in solar with the promise of fair, 20-year Net Energy Metering agreements—guarantees that were clearly laid out in the state’s own consumer protection documents,”
said Vote Solar’s Western Regional Director Steve Campbell.
From NEM 1.0/2.0 to the Reduced NEM 3.0 Rate
In April 2023, California updated its NEM structure to a net billing tariff, also called NEM 3.0. The new tariff structure slashes the rate attributed to new solar users by almost 80 percent. The California rooftop solar business then imploded as the ROI for establishing a project was severely impacted.
The move to NEM 3.0 lowered California’s average export charge from $0.30/kWh to $0.08/kWh. AB 942 now seeks to push current solar users onto the disadvantageous NEM 3.0 pricing.
The typical residence consumes 870 kWh of power a month. On average, solar clients export 20% to 40% of what they produce to the grid. This implies that with the planned fall in the average net metering rate, a solar user who exports 30% of their output will have their monthly bill climb by $63.
The law specifies that, beginning July 1, 2026, an eligible customer-generator that has been receiving service under NEM 1.0 or 2.0 for at least 10 years is no longer eligible for service under that contract or tariff. The law would then force the conversion of current customers to the NEM 3.0 rate.
“More than a million Californians signed contracts and state-issued guides in good faith, believing that regulators would keep their word,”
Campbell said.
“Any effort to retroactively break those agreements would set a dangerous precedent for all consumer protections in California.
Bill’s Sponsor Has Utility Industry Ties
The measure was introduced by Assemblymember Lisa Calderon. Calderon spent 25 years working in a government relations and political compliance capacity for one of the state’s investor-owned utilities, Southern California Edison.
Utility Rate Hikes Outpace Solar Savings Debate
Rooftop solar was analyzed to provide the equivalent of around $1.5 billion in savings to utility users, including non-solar customers, in 2024. But rising power bills have made rooftop solar the whipping boy for California’s utilities.
The state’s three main electric companies – PG&E, SCE and SDGE – have boosted consumer rates by 110%, 90% and 82%, respectively, during the previous decade, according to the California Public Utilities Commission (CPUC). Utilities’ investment in transmission and distribution has gone over 300% while power use has been essentially unchanged.
Nearly 100 Groups Oppose the Bill
A sign-on letter with approximately 100 groups opposes AB 942.
“To fix rising rates, California needs to look at what’s wrong with our energy system – out-of-control utility spending and record utility profits,”
the letter reads.
“A.B. 942 would raise rates, limit choice, undermine the state’s clean energy progress, destroy public trust in government, and skip the hard work of actually reforming our state’s utility industry.
