California Supreme Court Justice Leondra Kruger
The California Supreme Court has reversed an appeals court opinion supporting a 2022 state Public Utilities Commission (PUC) policy that environmentalists said reduces credits for excess power generated by customers’ rooftop solar installations by up to 80%.
The high court on Aug. 7 unanimously sided with environmental groups that had sued the PUC over its decision to revamp what is called the net energy metering (NEM) solar tariff. In December 2022, the PUC argued that the new policy would help to encourage future use of solar and battery storage and better control electricity costs for all Californians, including those who do not have rooftop solar systems.
The Supreme Court did not overturn the policy. Instead, it remanded the court case – Center for Biological Diversity Inc. v. Public Utilities Commission – for further proceedings with instructions that the court should not give undue deference to the utility regulators.
At the heart of the dispute was the standard the appeals court used to determine when it needs to defer to commission decisions. The court relied on the 1968 decision Greyhound Lines Inc. v. Public Utilities Commission to conclude that it should defer to PUC decisions unless they were out of line with provisions in state law.
“The question before us is whether the highly deferential approach of Greyhound continues to apply in cases affected by this significant legislative change,” the Supreme Court said. “We conclude it does not. We reverse the judgment of the Court of Appeal in this matter … and remand for the court to conduct the appropriate inquiry under current law.”
The high court found that the lower court had failed to consider the state Legislature’s direction in 1998 to limit deference to utility regulators and reiterated that courts are the final arbiters of what statutes mean.
The rooftop solar policy took effect in April 2023 by reducing credits for excess solar energy generated by new rooftop installations. The decision did not impact existing rooftop solar customers, according to the PUC.
The change in policy came about after critics said the previous approach over-compensated ratepayers with solar systems by paying those customers the same price for their excess energy that the utilities charged for on-demand electricity, the high court said in its opinion. This policy unfairly shifted electricity costs to those who lacked the expensive rooftop solar installations, the opinion said.
The PUC reacted to the high court’s opinion in a statement that was emailed to the Southern California Record.
“We appreciate the court's careful attention to the appropriate standard of deference for reviewing CPUC decisions,” the commission’s statement said. “We are pleased that the CPUC’s decision will remain in effect as an important part of controlling electricity bills.”
In a 2022 news release, the PUC said the new policy would allow average customers who install solar systems paired with battery storage to save $136 per month or more, and that the electricity savings would allow customers to pay off their systems in about nine years.
But one of the plaintiffs, the Center for Biological Diversity, said the policy is illegally hurting the expansion of rooftop solar systems in disadvantaged communities.
“I’m relieved to see the state’s highest court rein in this runaway commission, which is putting corporate utilities ahead of Californians’ pocketbooks, the climate and the law,” Roger Lin, a senior attorney at the center, said in a prepared statement. “... I hope this ruling prompts regulators to craft a new rooftop solar policy that’s in the public interest rather than padding fossil fuel utility profits.”
