The passage of the Inflation Reduction Act has a “direct impact” on California’s efforts to model a new net energy metering framework, state investor-owned utilities said in a filing with the California Public Utilities Commission late last week.
All else being equal, the more generous tax credits in the Inflation Reduction Act will reduce the cost of adopting solar energy, as well as the payback period for customers who put solar panels on their rooftops, Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison argued in a joint filing urging regulators to take official notice of the legislation’s enactment.
The Inflation Reduction Act, passed by federal lawmakers this month, includes provisions that reinstate the residential clean energy tax credit – which was scheduled to drop to 22% next year – at 30% , and extend that credit through 2033.
However, the controversial proposal to reform the net energy metering framework that the CPUC released in December factored in the lower, 22% credit, the utilities stated.
“The more generous tax credits under the Inflation Reduction Act, therefore, have a direct impact on the modeling of the successor to the existing net energy metering tariffs,” they added.
Under California’s net energy metering program, customers who generate electricity and export it back to the utility are compensated. Regulators have been working to replace the current tariff structure, which was set in 2016, due to concerns that it burdens customers who don’t have their own distributed energy systems.
However, a proposed successor tariff issued by the commission late last year drew sharp criticism from the solar industry. One analysis from Wood Mackenzie indicated that the changes could cut the state’s residential solar market in half by 2024. In February, the CPUC announced that it would not schedule a vote on the proposal until further notice, while its newly-appointed president, Alice Reynolds, took a closer look at it.
The utilities’ most recent filing met with criticism from the non-profit organization Environmental Working Group. The group’s president Ken Cook said in a statement that the utilities were using the federal clean energy law to pressure regulators to kill California’s rooftop solar program.
“If anything, the increased federal support should be used to leverage California resources to add more solar, faster, especially investments in working-class communities—residential, business and community solar alike,” Cook added.
The California Solar & Storage Association now expects that the CPUC will release its net energy metering proposed decision by Sept. 29, Solar Power World reported.