Apparently, California has discovered inequity in one of its high-profile housing policies.
No, not Prop. 13’s misguided tax breaks.
A curious flock of allies has pushed state regulators to “fix” what’s been spun as overly generous benefits granted to those who have invested in home solar power. The California Public Utilities Commission in mid-December proposed reducing the discounts homeowners with rooftop solar and storage systems get on their electric bills when they sell extra energy back to the power companies.
Let me be upfront: I am fully conflicted on this topic as I’ve been a solar panel owner for two decades.
The plan calls for an 80% cut for new and veteran solar owners in the amount credited for energy sent back to the utility.
Now, no two owners’ solar set-ups or the utilities serving them are the same, so gauging how much higher our bills could go is tricky. When I filled my trusty spreadsheet with costs estimates from the pro-subsidy SaveCaliforniaSolar coalition, the average monthly bill for a typical solar panel owner leaps to $204 from $75 a month, if the plan is approved.
So, why are several solar-energy production subsidies essentially at the brink of death as soon as Jan. 27?
Apparently, we need to “retire” these incentives because they’ve worked too well, the proposal says. Initiated 25 years ago to jumpstart California’s solar power initiatives, the state’s once seemingly far-fetched “million roofs” goal has been topped by at least 200,000 installations.
This logic, if there is any, further suggests homeowners with solar rooftop panels don’t pay their fair share of the maintenance expenses for the electrical grid that serves everybody.
If the CPUC proceeds, any future solar homeowner or any home with 15 years or more of solar power would see monthly fees boosted just to be hooked up to the grid.
Plus, CPUC says, the excess power homeowners create and sell to their utility is far more than what the utility would pay in energy markets.
Incentives work
All of this begs the question: Who’s dreaming up these anti-green energy claims state regulators are buying amid numerous electricity supply challenges and climate change concerns?
It comes as no surprise that the state’s power utilities — Edison, PG&E and SDG&E — would love to lose a state-mandated competitor, you, the solar panel owner. This subsidy-killing proposal is also getting help from folks aligned with fossil fuel businesses and “free market” advocates.
And then there are some people arguing the system hurts low-income Californians. The new rules, by the way, would shield certain low-income households from some of the financial pain of slashed subsidies.
To be fair, there is some truth to that logic. Incentives work and those who tend to benefit from solar subsidies are better-paid Californians.
Why the demographic disparity? Because the systems aren’t cheap and homeowners tend to be a wealthier demographic.
You see, your neighbor (and I) get a deal on electricity only after shelling out significant bucks to have a mini-power plant built on our roofs.
These systems – which have grown more powerful and cheaper over the years — still cost nearly $16,000 after one-time federal tax incentives are collected, according to SaveCaliforniaSolar. And solar investments by 1.2 million property owners, to date, produce roughly 7% of California’s electricity.
Yet this push to make solar homeowners owners “pay their fair share” doesn’t recognize the overall cost of panels, inverters and installations required to gather and distribute electricity from a roof.
And why just pick on solar roofs? Should any homeowner who is energy-smart face higher rates just to balance out electricity bills for the average consumer or an energy-hogging neighbor?
Trashing solar subsidies would create a new state policy eliminating a system of neighbors subsidizing neighbors. So, what about the huge unfairness of Prop. 13’s property tax inequity?
Why should tax rates be based on when you bought the property and not the current market value of a home?
Yes, incentives do work: Prop. 13’s “subsidy” to long-time owners helps create the state’s low rate of relocations.
The bottom lines
Homeowners with solar panels have enjoyed seeing their rooftop investment recouped with electricity cost savings — but breaking even typically takes roughly six years, SaveCaliforniaSolar says.
If the CPUC approves what amount to rate hikes, reaching a break-even point would grow to 14 years. Financially speaking, that would make solar roofs a bad bet for homeowners.
The new rules could also undermine another solar-power push. As of 2020, homebuilders must include green-energy systems on most new California homes. The shrunken profitability of such installations created by the CPUC plan could give developers an excuse to opt-out.
Just look at Nevada. When state regulators all but killed subsidies in 2015 at the behest of utilities, solar installations were instantly halved. Two years later, the legislature intervened and restored the incentives. Installation growth then restarted.
If California stops or slows creating new solar panel systems, the state’s utilities will have to find other ways to meet growing electrical demand while addressing higher clean-power thresholds. Can they do it better or cheaper than rooftops — and without covering square miles of desert land with panels?
And no matter what the power substitution is, do you want to bet who’ll eventually pay for that?
With the globe’s climate headaches an ever-growing threat, killing solar subsidies will make the state’s ground-breaking goals of all-green power by 2045 an even more elusive and expensive dream.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
FILE – This photo taken Wednesday, Feb. 12, 2020, shows solar panels on rooftops of a housing development in Folsom, Calif. State regulators at the California Public Utilities Commission are expected to propose reforms that would lower the financial incentives for homeowners who install solar panels. (AP Photo/Rich Pedroncelli, File)[/caption]
Source: Orange County Register
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