A California state appeals panel has switched off a bid by environmental activists to undo a California rule that was designed to help homeowners and businesses save money on electricity, because activists didn't believe the state should be allowed to cut the elevated rates PG&E and other electrical utilities were forced to pay to other customers who sold power back to the grid from solar and other renewable energy sources.
On Dec. 20, a three-justice panel of the California First District Appellate Court rejected the appeal from environmental activist groups the Center for Biological Diversity, the Protect our Communities Foundation and the Environmental Working Group.
The appeal amounted to a challenge by the activist group to new rules enacted by the California Public Utilities Commission concerning how much electrical utilities should be forced to pay to electrical customers who have solar panel electrical systems installed at their homes, and who the activists claim are selling power back to the grid.
For decades, California has used a so-called "net energy metering" system under which electrical utilities were required to pay so-called tariffs to customers with renewable energy systems. The measures were put in place purportedly to encourage the shift away from traditional sources of electricity to solar, wind and other sources of renewable energy, in the name of fighting climate change and other alleged environmental ills.
However, that system came under withering scrutiny and criticism throughout its existence, but particularly in the 21st Century as California residents' electrical bills climbed to new heights.
Utilities and other critics long asserted the NEM scheme, with its tariffs, generously overpaid owners of solar generating systems, while driving up electrical bills for all other customers. Critics asserted this particularly harmed low-income Californians the most.
In 2013, California state lawmakers responded by enacting a law directing the Public Utilities Commission to rewrite the tariff structure to create a better balance between continuing to encourage the installation of home solar power systems, while not hammering everyone else with higher bills.
The legislature described the new test as one to better "balance costs and benefits to all customers."
As part of its new rulemaking task, the Utilities Commission reviewed the NEM performance to that point, and determined customers with solar power arrays were being paid at 3.8-5.4 times the value of the electricity they were contributing to the grid.
In 2020, the Utilities Commission established a "successor tariff," known as a "net billing tariff," which greatly reduced the amount electrical utilities must pay, by now indepenently determining the amount of energy each customer with renewable energy systems "imported from and exported to the grid."
This would result in "a noticeable increase" in electricity bills for customers with solar arrays, and relatively lower bills for everyone else, according to court documents. The Utilities Commission estimated the changes would still generate $100 monthly energy savings for customers with renewable systems, allowing them to cover the cost of system installation in nine years.
The new tariff structure was quickly challenged in court, however, as the Center for Biological Diversity claimed the successor tariff violated state law by not fully taking into consideration the benefits to the state and its electrical grid from customers installing solar arrays and other renewable energy systems.
At the appellate court, however, the justices said the activists misread the law, as the judges found "nothing in the statutory text that indisputably requires the (Utilities) Commission to take account of 'all costs and benefits' of 'distributed renewable generation.'"
They said the activists failed to demonstrate why the court should step in and second guess the Utilities Commission's interpretation of the state legislature's mandate to rewrite the tariff structure to better balance the desire for continued increase in the installation of renewable energy systems against the economic pain transmitted to California homes and businesses that haven't installed renewable systems.
"By requiring utilities to factor social benefits into the price paid for exported power, petitioners’ approach would effectively require customers who do not own renewable systems to compensate owners of the systems for the value of these social benefits, as well as for the economic benefits conferred on the grid," the justices wrote.
"It can be debated whether this approach would better satisfy the Legislature’s command to balance the equities among all customers, but we needn’t choose a side."
The opinion was authored by Justice Victor Rodriguez. Justices Ioana Petrou and Alison Tucher joined in the decision.
The environmental activist groups were represented in the action by attorneys Ellison Folk and Aaron M. Stanton, of the firm of Shute Mihaly & Weinberger, of San Francisco; and Roger Lin, Anchun Jean Su and Howard Crystal, of the Center for Biological Diversity, of Oakland.