SAN FRANCISCO – The monopoly business model of California’s electric utilities should be scrapped for a new model that would provide affordable access to rooftop solar for all residents, the Environmental Working Group argued in testimony submitted this week to the state Public Utilities Commission.
Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric, which serve the vast majority of the state, are petitioning the PUC to slash the monthly credit they must pay customers with rooftop solar panels, and impose exorbitant additional charges for new solar owners to hook up to the companies’ sprawling power grids. Crippling rooftop solar would put the state’s ambitious climate goals out of reach and set back the growth of smaller, local power grids less likely to spark wildfires.
The state’s Net Energy Metering program has benefited millions of homeowners and businesses by paying them for excess energy their solar panels send back to the grid. Now the Big Three utilities have united behind a scheme that would largely end net metering and let them pocket much of the money themselves.
The utilities have a state-sanctioned monopoly to sell power to their captive customer bases. But they make more money for their investors by building big central power plants, transmission lines and other infrastructure, and the PUC guarantees a profit on infrastructure investment by allowing them to charge some of the highest electricity rates in the nation. Rooftop solar reduces not only the utilities’ profits but also the need for new infrastructure, so monopoly utilities nationwide are trying to slow down the solar revolution.
In addition to slashing the solar credit, California’s Big Three utilities are asking the PUC to let them charge every residential and business property owner with rooftop solar an exorbitant monthly fee of roughly $70, just for hooking up to the grid. For all practical purposes, this would kill the residential rooftop solar market, particularly for lower-income households.
“The monopoly business model is outdated, unfair and slowing the urgently needed transition to 100 percent clean electricity,” said EWG President Ken Cook, a California resident. “Instead of letting PG&E, SoCal Edison and SDG&E protect their profits by sticking ratepayers with the bill for unneeded infrastructure projects, the PUC should fundamentally reorder how investor-owned utilities are structured, with the goal of making rooftop solar the main source of electricity statewide and greatly expanding access to solar for lower-income communities and communities of color, where it is often out of reach.”
The PUC is in the early stages of a lengthy process, gathering testimony from various stakeholders as it considers the proposed changes by the Big Three utilities. Commissioners are reviewing a study the PUC commissioned of the future of net metering and rooftop solar.
In prepared testimony, Cook urged commissioners to scrap the flawed and incomplete study, and keep the current policy for at least two years, so that “critical greenhouse gas reductions can be achieved in the short term while the Commission takes the necessary time to conduct further analysis.” The study, EWG argues, ignores the inability of nearly half the state’s population, such as renters, to access solar, and uses outdated cost data that skews the results against solar.
From Cook’s testimony:
With California facing such huge stakes around climate change, it would be imprudent to make changes now that are likely to lessen the greening of California’s grid and impede our efforts to make that grid more resilient.
[T]he Commission should also take a much wider and comprehensive look at what customer and system benefits can be gained from a distributed grid design and how best to ensure those benefits are realized. Otherwise, the state and stakeholders will be constantly revisiting issues of resiliency, customer access to solar and efficiency (particularly for low-income customers), and utility complaints of eroding margin.
It would be wise for the Commission to actually ask if California’s climate goals and the reality of the impacts of climate change itself make the current centralized [investor-owned utility] business model incompatible with achieving those climate goals and ensuring customer benefits consistently flow to all rate payers.
Assessing the electric grid’s future costs, a PUC study this year found that most of the Big Three’s spending on new infrastructure is “utility self-approved” without state or federal regulators’ review. EWG argues that infrastructure spending – not, as the utilities claim, reduced revenue from increasing adoption of rooftop solar – is driving up utility rates. According to the California Independent System Operator, the growth of rooftop solar and increased energy efficiency eliminated the need for $2.6 billion in dozens of transmission-related infrastructure projects planned by PG&E and SDG&E.
“Any debate over rate increases has to acknowledge that the elephant in the room is not solar, but the billions of dollars in self-approved infrastructure spending by the [investor-owned utilities] without any state or federal oversight,” Cook told the commission.
He urged the PUC to back a decentralized electric power system, with an emphasis on affordability, community safety and reliable power generation, effectively addressing climate change, enhancing resilience, and promoting economic and environmental justice for low-income customers.
Sustaining the current monopoly business model will only delay utilities’ commitment to lowering carbon emissions to combat the climate crisis and increase the threat of wildfires, like the 2018 Camp Fire, caused by unmaintained PG&E transmission lines, which killed 84 people and destroyed the town of Paradise.
A formal hearing on the proposal will be July 26 to August 6. A final decision is not anticipated until near the end of the year.
The Environmental Working Group is a nonprofit, non-partisan organization that empowers people to live healthier lives in a healthier environment. Through research, advocacy and unique education tools, EWG drives consumer choice and civic action.