California Utilities Propose Lower Payments on Rooftop Solar

California’s three big investor-owned utilities proposed changes to the state’s rooftop-solar program that would lead to new connection charges and lower compensation for customers who install panels on their homes.

PG&E Corp., Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric filed a joint proposal Monday with state regulators who will be considering amendments to the state’s rooftop-solar policies this year. The proposal would affect only new installations.

The utilities say their plan is designed to address the “unfair and growing inequity” in state policy that has resulted in customers without solar systems paying about $3 billion more annually in their electricity bills to subsidize existing rooftop customers.

The announcement dragged down shares for rooftop installers. Sunrun Inc., the biggest U.S. residential-solar company, fell as much as 8.8% on Tuesday. SunPower Corp. dropped as much as 9.2%.

“California is a solar state, but the utilities want to own the sun and keep it out of the hands of everyday people,” said Bernadette Del Chiaro, executive director of the California Solar and Storage Association, in a statement. “Their need to increase profits cuts against the consumer’s right to choose where and how to generate clean, reliable energy where we live, work, and play.”

A 25-year-old incentive program that pays residents for their excess clean power has led to more than 1 million installing panels on their homes and helped turn California into a global green energy leader. It also helped spur an industry of solar installation companies that have fiercely resisted changes to the way rooftop customers are compensated. Those firms have argued that utilities want to increase rates for solar customers in an effort to protect their monopolies and stifle competition from clean energy providers.

Under the California utilities’ proposal, new rooftop-solar customers would receive a lower credit on their bills for the excess power they send back to the grid compared to the rate that current solar users get. The reduced credit is designed to better reflect the actual value of that power and more closely resemble the costs of energy from large-scale renewable resources, the utilities said.

In addition, new solar customers would pay a monthly connection charge for grid services. The charges range from $12 to $24 a month, according to the filing with California Public Utilities Commission.

“While the proposal may weigh on growth near-term, if imposed,” there should be residential growth in California “over time” given the declining cost of battery storage and the state’s mandate requiring solar installations on new homes, JPMorgan Chase & Co. analysts including Mark Strouse said in a note Tuesday.

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