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High Equity Stakes in California’s Solar Fight

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People at a protest, one sign that says Stop the Utility Profit Grab

Utility companies’ push to gut rooftop solar threatens energy security and resilience for low-income and BIPOC communities.

 A struggle is underway in California that might well determine if low-income communities across the country—especially frontline and BIPOC communities—will be able to reap the benefits of the clean energy revolution or if they will be further disempowered by it.

The California Public Utilities Commission (CPUC), which regulates the state’s three big private energy utilities, is poised to stifle rooftop solar development in California—the state with the largest solar investment in the country! The policy being considered by the CPUC, and pushed by the utilities, would eliminate the economic benefits of rooftop solar in California.

This is not about fossil fuels versus renewables: the private utilities are fine with renewables as long as they control and profit from them. The revised CPUC policy would foreclose on the possibility of expanding rooftop solar into low-income communities. That includes the building of local, community-controlled “microgrids” to bolster energy security in communities most vulnerable to crisis-related power shutoffs. It’s a direct power grab, an attack on our communities’ ability to achieve self-determination in the face of climate disaster—and it’s being done in the name of “equity.”

“Communities like mine have been systematically shut out of the clean energy economy,” says Jessica Tovar, Energy Democracy Organizer at the Local Clean Energy Alliance. “And just as we are rising to demand clean energy, rooftop solar, microgrids, resilience hubs, and the benefits they bring, the private utilities and the CPUC slam us with attacks on local solar.”

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What is the CPUC proposing?

At this moment, the private utilities’ power grab is taking place in a complex regulatory proceeding that is setting California’s rooftop solar policy, known as “Net Energy Metering” (NEM).

Under current rules, the economic benefit to property owners of going solar comes from the combined value of generating their own energy on their rooftops, avoiding rising utility energy costs, and sharing their extra solar energy with neighbors for a bill credit that helps cover energy purchased from the grid. NEM policy mandates that the private utilities fairly compensate households, schools, houses of worship, and small businesses for the excess energy their panels export to the grid.

Despite months of pushback from grassroots clean energy activists calling for an expansion of rooftop solar, the CPUC is proposing just the opposite.

It plans to penalize solar users with an average fixed fee of $57 per month, nearly $700 per year, simply for putting solar panels on their rooftops. Only three other utilities in the country have levied fixed monthly fees on solar users. In addition, the CPUC proposes to slash bill credits for solar exported to the grid by 70-80% from what these are today.

These measures put solar out of reach for middle and working class homeowners. The CPUC claims to have made provisions for low-income customers, but these would still make solar $24 to $50 per month more expensive than it currently is.

Why do private utilities want to kill rooftop solar?

In many states, like California, profits for private utilities are not determined by how much energy they sell, but by how much they invest in infrastructure like transmission and distribution lines. “Utilities do not earn profits on the products they sell—gas, water, and power are provided ‘at cost’ to consumers—but rather from the investment in the assets (the pipes, substations, transmission lines, etc.) that are used to provide the service,” Laura Feinstein and Eric de Place wrote for the Sightline Institute. “In short, the more infrastructure that a utility builds, the higher the profits it can generate.”

Return on infrastructure investments is guaranteed by state utility regulators. It’s no secret that in California the private utilities spend millions of their customers’ money every year to lobby legislators in Sacramento to maintain this lucrative arrangement.

Meanwhile, NEM has played an important role in meeting our climate goals and in providing local economic development and jobs. When more people can generate the power they need, where they need it, rather than importing it from hundreds of miles away, electricity can be more affordable for everyone and the risk of utility-caused wildfires and power shutoffs is reduced.

However, when communities generate their own power locally, the private utilities can no longer justify the cost of building the energy infrastructure that feeds their profits. For years, these utilities have waged a relentless campaign to torpedo the decentralized, justice-centered approach to energy generation and distribution. They regard local solar generation as a threat to their centralized energy model—a “utility death spiral,” as they call it, that would lead to “the potential for irreparable damages to revenues and growth.”

Nationally, the utilities have linked up with the right-wing lobby, the American Legislative Exchange Council (ALEC), in a long-running effort to undermine local solar. In 2013 alone, more than 70 ALEC bills in 37 states aimed to weaken NEM policies.

CPUC’s proposal hurts frontline and BIPOC communities

The CPUC’s proposed gutting of rooftop solar would have an impact far beyond denying low-income households access to solar energy as a way to reduce their energy burden. It represents a huge step backward in the fight to build community power in California.

“In this centralized energy model, we pay for everything and own nothing,” says Jessica Tovar. “We pay with our health, we are stripped of our local wealth. Meanwhile, they burn up California using their network of faulty transmission lines.”

Unless NEM policy is sufficiently robust, rooftop solar is not economically advantageous, which means the community benefits of local solar development—the local investment and jobs, improved health, and potential for equity-focused programs—simply disappear. Financial viability of local energy projects is important, especially for communities working to build microgrid-based energy resilience hubs to provide power during increasingly frequent power shutoffs.

The private utilities’ centralized energy model and their political domination in California is already making it difficult for our communities to reap the benefits of clean energy technologies and renewable energy programs. This proposal takes local control and ownership of energy resources away from communities who need it the most.

The private utilities ‘equity’ ploy

Knowing how popular rooftop solar has been, the private utilities have been hard pressed to convince governments to undermine its continued growth. As a result, they have invented an “equity” ploy to pit non-solar utility customers against rooftop solar adopters.

Recognizing that solar has been generally more accessible to affluent households, the private utilities are arguing that these more affluent solar customers are not paying their fair share of grid costs, shifting these costs onto low-income non-solar customers.

The CPUC has bought this false equity argument, hook, line, and sinker. It asserts that the growing rooftop solar market is creating economic disparity, driving up utility rates for low-income customers and disadvantaged communities. This cost-shift argument discounts the many home, business, and community benefits of rooftop solar. It relies on a CPUC calculation of the value of rooftop solar which only considers utility cost factors while excluding community benefits.

Unfortunately, some in the social justice community in California have been slow in refuting this cost-shift argument and its co-optation of equity, giving the utilities and CPUC a free hand to promote their “equity” ploy.

Others have emerged to confront the cost-shift argument. Rev. Ambrose Carroll of Green the Church noted in a recent op-ed that, “they claim that when families, churches, schools and small businesses commit to on-site rooftop solar, utilities must charge others more on their monthly electric bills. They’re not being honest.”

The private utilities exert monopoly control over grid infrastructure; their proposals focus on their perspective of what is economically and technologically beneficial to them. As a result, their proposals have excluded the perspective of what benefits our communities.

True inequity lies in the extractive system

The true inequity of our current energy system lies in the institutionalized structure of racism in an economy that was built to extract the wealth, health, and stability of BIPOC communities.

To quote Dr. Shalanda Baker, Deputy Director for Energy Justice at the U.S. Department of Energy:

“Equity provides a thematic backdrop for the NEM debate, but the solutions that utilities and other industry players typically offer in response to fairness concerns fit within a narrow band of possibility that avoid a deeper reckoning of the aspects of the energy system that are themselves inherently unjust.”

The fight in California is not simply about saving NEM or rooftop solar. It is about supporting alternatives to the extractive energy model—an alternative model that can deliver safe clean energy reliably and sustainably at affordable prices. That model is known as the decentralized energy model.

This model focuses on distributed (local) energy resources and community-centered policy, like rooftop solar and community-owned solar, storage, and microgrids. The energy transition must prioritize community-owned and public renewable energy projects developed by cooperatives, municipalities, and nonprofits that build wealth and decision-making power for BIPOC and low-income communities—those that have been disproportionately harmed by the extractive energy economy.

In the wake of events like the California wildfires, hurricanes in the Gulf South, ice storms in the South, and fights to protect water from oil pipelines and fracking, communities across the country are seeing the value in stewarding their own energy future. We need decentralized and de-commodified energy models that are democratically controlled by the community, creating jobs, clean air, energy justice, fair wages, and community resilience. We need energy democracy.

Energy Democracy is the struggle to weaken the political domination of corporate interests in order to create our own energy systems: to restore the earth, drive sustainable economic life, and advance social empowerment. Building a movement to democratize energy is crucial to the fight for climate justice, racial justice, and economic justice.

Back to the CPUC

The fight to build a movement to democratize energy takes place on many fronts with many battles.

As California is regarded as a climate leader, the battle over rooftop solar in the state is one of the most important battles in setting national standards. Florida’s private utility, for example, is already proposing legislation modeled on California’s bad example.

California’s decision rests with the CPUC, a regulatory body which has no direct accountability to the people of the state. Since the governor appoints CPUC commissioners, clean energy advocates have targeted Governor Gavin Newsom to take action. While the governor wants to portray himself as a climate hero, California is already so far behind on meeting its 2030 climate goals that the state isn’t projected to hit them until 2063.

A vibrant and growing coalition of more than 700 organizations, community groups, and elected officials has pressured Newsom to publicly step in to modify the CPUC’s proposed NEM decision. More than 120,000 petition signatures have reached his desk, and the state’s largest newspapers have editorialized against the proposal.

As this article is being written, this pressure has resulted in Newsom telling the CPUC to withdraw its proposed decision and write a new one. For the latest on this struggle and how to take action, go here.




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