Finally a Bright Spot for California Rooftop Solar — Episode 246 of Local Energy Rules

Roger Lin:
They really just treated a lot of the compensation that came from the credits from rooftop solar, the Commission treated that as a cost and then did not look at all of the other societal benefits.

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John Farrell:
Three years ago, state utility regulators in California shocked the solar world by slashing compensation for rooftop solar producers by three quarters resulting in a sharp decline in new projects that had been cutting carbon emissions and lowering energy bills. Fortunately, the advocates for clean local energy put up a fight. And they recently won a round when the California Supreme Court ruled that a lower court had erred in its deference to the Public Utilities Commission decision, which did not adequately evaluate the costs and benefits of its decision on rooftop solar. The fight now goes back to the appeals court and Roger Lin, senior attorney for the Center for Biological Diversity joined me in September 2025 to explain what might happen next for local solar in California.
I’m John Farrell, director of the Energy Democracy Initiative at the Institute for Local Self-Reliance, and this is Local Energy Rules, a podcast about monopoly power, energy democracy, and how communities can take charge to transform the energy system.

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John Farrell:
Roger, welcome to Local Energy Rules.

Roger Lin:
Thanks for having me, John. Happy to be here.

John Farrell:
So I wanted to start out by just kind of asking you how did you get on this career path where here you are defending rooftop solar in the highest court in California?

Roger Lin:
So I have an environmental justice background. Prior to joining the Center for Biological Diversity’s Energy Justice program, I worked and collaborated with several environmental justice groups. I served on California’s Disadvantaged Communities Advisory Group, which advises the Public Utilities Commission and the Energy Commission out here, how best to handle issues involving disadvantaged communities. So from all of my work and being in the community discussing local energy needs with the community, it really was clear that rooftop solar was a big deal for environmental justice communities, whether that was through the virtual net metering program, which is net metering for tenants, basically. A very successful program out here in California called the Solar on Multifamily and Affordable Homes – so rooftop solar on apartment buildings. Whether it was either of those having more access to rooftop solar was a priority. I then moved to the Center for Biological Diversity, and this was towards the tail end of the Public Utilities Commissions proceeding, which eventually created the net billing tariff, which slashed the net metering credit.
And it was frustrating to us that the environmental justice voice being silenced in the proceeding was being manipulated. And we all know about the cost shift, the utility cost shift narrative and how that was just accelerating it and unfortunately gaining traction in particular because of the lack of an environmental justice voice in the proceeding. So again, coming from that background where seeing the benefits of this on the ground, seeing the appetite of communities to get more rooftop solar, more local generation opportunities, it just seemed like a no-brainer for us to get involved in the proceeding. Again, though we were quite late to the proceeding given the time that I transitioned to the Center for Biological Diversity. But we’ve been in the fight ever since. We challenged the, we did an administrative challenge asking the Public Utilities Commission to reconsider its decision. Obviously it did not, and that took us to where we are in court today.

John Farrell:
I think you’ve done a really good job of answering my sort of broader question here about why you chose this battle about the silencing of EJ voices and the potential value of rooftop solar. Could you maybe just talk a little bit about what is at stake more broadly for how we produce and distribute electricity with this case over this idea of how much we can compensate people for producing electricity themselves and sharing it with the grid?

Roger Lin:
Yes. So I will start globally and then go local, which is probably the opposite of what, my typical mantra, which I also encourage others to do, but for simplicity’s sake to illustrate the importance of rooftop solar just starting from a global perspective, climate, we’re in a climate emergency, we have to do what we can do in California to help combat that climate emergency. And in California we have Senate Bill 100 where our clean energy targets have all retail sales be 100% from zero carbon resources by 2045. To get there the Air Resources Board who is our climate regulator out here in California says that we need to double the amount of rooftop solar. What we’ve seen is an actual constriction and not even close to doubling. We probably need to double more though if we want to take care of the land use impacts, which I’ll get to in a second. And also the community benefits.
But sticking on climate for a second, we had a 1 million solar rooftops initiative in California, and that was instrumental to us meeting our 2020 climate goal set by Assembly Bill 32. We had to get to decrease greenhouse gas emissions to 1990 levels by 2020. We got that. And we successfully got there in large part because of the 1 million solar rooftops initiatives that we successfully met.
So our climate regulators are now saying that, okay, we have to double the amounts of rooftops solar just to even be on the trajectory to meet the rest of our climate targets by 2045. We can do better than that though because of the, getting more local now, sticking with land use impacts, we have to minimize our damage to the environment when we decide how to meet our climate targets. There is an abundance narrative floating around right now where we just need to build as much as possible and as quickly as possible to get to our climate targets, but that ignores the environments and then public health.
I’ll talk about the environment first. Transmission lines, at least here in California, I have learned a lot about monarch butterflies from San Diego Gas and Electric because they have a mitigation plan having built and wanting to build more transmission lines that basically track the migration path of the monarch butterfly, an endangered species. So the more transmission lines we build, the more we threaten endangered species .And then also the utility scale solar itself is typically built in desert areas on top of sensitive habitats as well. So we have to be mindful of those. We can’t just build, build, build and forget about all of these consequences. So that is one of the environmental perspectives.
Zooming in even more locally to the public health benefits, economic developments, we know that there are more economic benefits and job benefits from local solar, more clean energy installation jobs than compared to utility scale. And then we have the local economic multipliers of money being spent in the community as well.
Resiliency, closely tied to the climate impacts, because we’ve messed up our climate so badly, unfortunately, as we all know, we see more and more extreme weather events, more extreme heat. The need for resiliency is, it’s been talked about for a while, but I think right now is really front and center. Rooftop solar by itself provides resiliency benefits in shifting the peak of the electricity demand. Pair it with storage we get even more resiliency benefits.
And the big issue right now for a lot of folks, and most likely for several listeners, if not all listeners, is affordability and how electricity bills really just affect our pocketbooks. And when we build rooftop solar or when we install rooftop solar, we don’t need to, again, going back to the monarch butterfly, we don’t need to build transmission lines.
In 2018, our regional operator, the CAISO, canceled 20 transmission projects because of rooftop solar and energy efficiency improvements that amounted to 2.6 billion in savings for rate payers. The public utilities Commission out here had estimated the avoided transmission costs of rooftop solar to be used, the figure of $4 billion stretched out over five years. In San Diego Gas and Electric territory though, we know that from looking at general rate cases, the reality is it’s actually four+ billion dollars per year. So the actual avoided costs used by the full transmission buildouts on a counter rooftop solar used by the regulators out here in California diminishes the rate payer benefits by a fifth.
So anyway, starting globally, again, climate benefits, but then we see that all of those filtering the local benefits, obviously much more pronounced and very tangible and real, and at the same time, we have to protect our environments, take care of biodiversity and species as well.

John Farrell:
So let’s get into the weeds here a little bit about the particular court case and decision that you’ve been working on. So the California Supreme Court recently ruled on a case about compensation for rooftop solar producers, which as we’ve mentioned before, state regulators had slashed by three quarters just under three years ago. Can you talk about what’s the substance of the court decision? And just for a little background, previously, a lower court, and correct me if I’m wrong, had affirmed the decision by the state regulators at the Public Utilities Commission. So what is the Supreme Court’s decision and what’s going to happen next as a result?

Roger Lin:
So first just give a quick shout out to the other petitioners: Environmental Working Group and the Protect Our Communities Foundation as well, who’ve done tremendous work on this and the lawyers that we’ve had who are representing those two groups, Shute, Mihaly, and Weinberger, a great lawfirm out of San Francisco really got us to where we are.
But the two big issues in that case were how much do courts defer to the Public Utilities Commission — deference. So that’s the first issue. And then the second issue is the merits, the substance of the case, and those are two issues there: [1] Did the Public Utilities Commission consider the costs and benefits of rooftop solar? That’s what the statute requires. When the Public Utilities Commission was designing the new net meter and tariff, they had to look at the cost and benefits of rooftop solar. [2] And they also had to figure out specific alternatives to rooftop solar in disadvantaged communities to make sure that we keep rooftop solar growing in disadvantaged communities too.
The Supreme Court here focused on the deference issue and the Court of Appeal, which was the lower court, in California because the Public Utilities Commission is a constitutionally created agency, the legislature determines the rules governing judicial review of Public Utilities Commission decisions. The Court of Appeal is in this situation because we don’t go to Superior Courts. If you challenge the Public Utilities Commission decision in California, you have to skip superior courts and petitioned the Court of Appeal to take the case. Thankfully, the Court of Appeal did, but in deciding the case though, the Court of Appeal applied what it called unique deference to the Public Utilities Commission and gave a lot of weight to the Public Utilities Commission’s decision. So the Court of Appeal never really got to the merits. It’s basically said that because the Commission’s decision was reasonably related, because a reasonable person could say that what the Public Utilities Commission did matched up with the statute. Again, those two requirements, costs and benefits of rooftop solar and specific alternatives for disadvantaged communities. Because it was reasonably related and they did an okay job, a reasonable job, then no, we’re not going to touch the Commission’s decision and the Court of Appeal just afirmed that decision.
The Supreme Court, however, though, responded well to our arguments. Well, the reality actually that in 1998, following deregulation, following all of the negative impacts from the Enron scandal in 1998, the legislature, which again controls how Commission decisions are reviewed by the judiciary, they said, okay, well we need to reign in this agency. It’s making some bad decisions. So when judicial review happens, we have to treat the Public Utilities Commission as far as energy issues and not water. The Public Utilities Commission also regulates water corporations. So water corporations are still under that unique deference, reasonably related standards.
But the Supreme Court agreed with us that, yes, in 1998, the legislature did say, okay, we need to treat this Commission’s interpretation of statutes just like any other agency. And what’s key to that is long held case law that the courts are the final say on did an agency interpret a statute correctly. Here to get to the merits of the case, the court has to analyze whether the Commission assessed the costs and benefits of rooftop solar. What the Public Utilities Commission did was they assessed the avoided costs only, but did they look at the costs and benefits of rooftop solar specifically. That is something that we’re going to have to get back to when we go back to the Court of Appeal.
And then the other one is the tariff itself has to create a specific alternative for disadvantaged communities. What the Commission here did instead was they threw out several programs targeted at disadvantaged communities, but those programs were finite programs either capped by a certain date or capped by a certain threshold. Those are not from the tariff, and it makes sense to have the tariff generate a specific alternative for disadvantaged communities to make sure it can continue into perpetuity or it can maintain that growth and not just be this one time lump sum, Okay, this is going to fix the issue in disadvantaged communities.
So we will go back to the Court of Appeal in the next few months. We are in briefing right now, but again, the court will have to again look at whether the Commission followed not reasonably and did an okay and reasonable job, but did the Commission follow the exact law? And again, consider the cost and benefits of rooftop solar and have the tariff design an alternative for disadvantaged communities. But that whole, the reasonable standard has been removed and beyond what happens with this case, the Supreme Court win is important. Again, to just reaffirm what the legislature said in 1998: if this agency keeps making these bad decisions, we have to make sure the courts can look at and review their decisions from scratch and not just have their hands tied and just say, okay, well the Commission did a reasonable job, so let’s just move on.

John Farrell:
It’s so interesting to hear you articulate the way in which the court ruling was kind of like, well, it was in the ballpark, even though the law was pretty specific about what was necessary. So it’s nice to know that there is going to be a higher standard here in the Appeals Court re-review.
I guess knowing that the Appeals Court has to more substantively examine the Commission’s actual outcome in the light of the law’s requirements. Does that mean that if you’re successful in the Appeals Court in this challenge, if they agree with you that the Commission being in the ballpark is not enough, that it actually has to really substantively consider costs and benefits, that it has to really substantively design the program in a way that helps disadvantaged communities, does that mean you’re going to go back before the California Public Utilities Commission in order to actually have them revisit this issue? And I guess one question I have is that there is generally turnover on those bodies as people are appointed or reappointed. I’m kind of curious if that body has changed so that if you do go back, you actually might have some new faces that you’ll be talking to about this issue.

Roger Lin:
Yes, there are, I believe two new Commissioners since the decision, since the NEM 3 or net billing tariff decision happens. And if we prevail in the court of appeal, then it’s possible. It depends how we prevail, but it’s possible that the net billing tariff would be found illegal and then we will just have to cease, which would then kick back NEM 2 and then we would have to see, we’d probably have to go back to the Commission because I believe in next year or the year after, the Commission has to review their net billing tariff anyway and see if it’s performing as the statute requires to maintain the continuous growth of rooftop solar. But from what we’ve seen, the decision has unfortunately done the opposite. So we are hoping for the best at the Court of Appeal, but know that we would have to go back to the Commission ultimately for a new NEM tariff.

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John Farrell:
We’re going to take a short break. When we come back, I ask Roger whether new analysis about the benefits of rooftop solar can be introduced in court, whether a court victory could put California’s climate goals back on target, and what a dream scenario of a victory might look like. You’re listening to a Local Energy Rules podcast with Roger Lin, senior attorney for the Center for Biological Diversity.
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John Farrell:
Do you have any sense, just out of curiosity, of whether those two new Commissioners might be more, I don’t know, sympathetic for lack of a better term, or perhaps better informed about the requirements the law puts on them in terms of creating a new tariff?

Roger Lin:
I’m not too sure. One of the Commissioners was previously at the Public Advocate’s Office. The California’s rate payer arm of the Public Utilities Commission sort of relates to the Public Utilities Commission, but either way, the state advocate for rate payers.
That agency, though, the rate payer advocates, public advocate’s office unfortunately, has really bought in hook line and sinker to the cost shift argument. So a lot remains to be seen.
And for us, the legal strategy is always one tool in the toolbox and it’s importance for other things that are happening on the ground to influence Commission decisions. And there has been tremendous mobilization around this issue and broadening out to even energy efficiency, the income-based fixed charge we see out here in California, there’s a lot of work that has to be done still to correct that false narrative that unfortunately has been quite pervasive and in large part, I think, because the rate payer advocates have bought into that false narrative. But I think we have to just keep the momentum going. And again, this case is just one tool in the toolbox to make sure that the real narrative, the actual narrative prevails at the end of the day.

John Farrell:
I think it’s interesting that you bring that up and worrying to hear about one of the Commissioners being that office because in episode 239, I interviewed Richard McCann, a utility economist about his work evaluating the California Commission’s decision that had been largely been based on research by the Public Advocate’s Office and assertions. And his work was really essentially a damning analysis suggesting that the decision was fundamentally faulty. I could summarize his decision, if people want to listen to that episode, I highly recommend it, but I could summarize his analysis is rooftop solar is a net benefit to all California solar customers. So will that evidence be important to this Appeals Court process about whether or not the Commission did its homework accurately? Will there be a chance to introduce that or would that more likely come up should you prevail and go back before the Public Utilities Commission? What role will this new analysis play kind of correcting the record and the perceptions of the Utilities Commission and others who have mistakenly swallowed some propaganda from the utility about how rooftop solar works for California consumers?

Roger Lin:
Good and bad news. The bad news first is that we are in a record case, and when you talk about correcting the record, I wish we could correct the record, but we are stuck with the record that the decision makers had before them in 2022.
But that said, now the good news, exactly what you said, John, Richard McCann’s work is excellent, familiar with it, and it will certainly be helpful if and when we do go back to the Commission on this net metering issue. But it still also is somewhat related to the cost/benefit question that is before the Court of Appeal, and again, the statute says the Public Utilities Commission, you have to consider the costs and benefits of rooftop solar when you design a tariff.
What the Commission did was they treated rooftop solar as a cost itself. Instead of looking at all of the benefits, they really just treated a lot of the compensation that came from the credits from rooftop solar, the Commission treated that as a cost on their side of the ledger, and then did not look at all of the other societal benefits. I’ll talk about, I then mentioned before on the local benefits side, didn’t really look at those as thoroughly, really honed in on again, this false cost shift narrative. And that plays into the case in that the legislative history for the rooftop solar statute that we’re talking about, it did at one point include make sure this new tariff does not create a cost shift. Then the legislative history shows that the referenced the cost shift was scratched out in favor of including the specific alternatives for disadvantaged communities, which makes complete sense. If you make sure the rooftop solar continues to grow in disadvantaged communities and you make sure rooftop solar continues to grow in other more affluent parts of the state, then there is no cost shift narrative.
There is no basis for that anymore. So the statute itself was designed or has been designed to make sure there is no cost shift, but the actual imposition of cost shift as a concern for the Commission to take into account has been removed from the statute. So when it gets back to the Commission, when it goes back to the court, Richard McCann’s work will be helpful. We won’t be able to use the specific numbers, but it certainly has been helpful for us to just hone in on what is a cost and what is a benefit that the courts and the Commission should be considering.

John Farrell:
Yeah, and if nothing else, I can imagine it is at least illustrating that there were benefits in particular, but costs and benefits that the Commission didn’t adequately consider in its analysis, which is fundamental to whether or not they followed the law.

Roger Lin:
Exactly.

John Farrell:
I just add too, we’ve used this term cost shift a lot. One of the other things I thought very interesting about McCann’s analysis was that this idea of is somebody paying more than they ought to, is someone not paying as much as they should? His broader analysis about the rising cost of electricity in California really highlighted what I would describe as a cost shift from consumers to shareholders that the problem has been utility spending has been increasing dramatically. Utility profits are excessive, and that the reason that it is becoming so expensive to have electricity service in California is this shift in money from consumers to shareholders. So just again, if people want to learn more about that, highly recommend you check out Richard McCann’s work and the way in which it helps us understand what that term cost shift really means.
I wanted to pivot now though and talk about the impact of the regulatory decision that the Commission made the NEM 3 tariff, the significant cut in compensation, it resulted in a very sharp drop off of rooftop solar installations, I think as much as an 80% decrease in year over year adoption of rooftop solar. I found it fascinating. There was this Canary Media piece that I linked to in the Richmond McCann show note page that at the time, in 2022, rooftop solar was providing the majority of California’s new solar generation as it was increasingly serving low income families. As you’ve alluded to, the Air Resources Board has said, we need a lot more rooftop solar if we’re going to meet our climate goals. So maybe with that context, could a win in this fight actually put the state back on track for its climate and clean energy goals as well as help reduce costs for energy burdened families?

Roger Lin:
Oh yes, absolutely. And that is the hope. The utility scale, relying solely on utility scale is, to reiterate your point, John, it’s just not going to get us to our climate targets and that’s simply because of the land availability. Even if we ignore the impacts to habitats, to species, the build out rate right now for a utility scale, solar is just no one near what for us. That even with abundance and taking away all the environmental review of everything, we just literally don’t have enough land to meet those targets. So we have to take into account our built environment. So this case has tremendous implications for that, but again, I bring it back to just the importance of the public narrative and discourse. Going back to the utility profit making motive — affordability. Obviously the electricity bills in California are through the roof, and one thing this case has helped is really just get the narrative going out there of like, why do utilities really want to get rid of local generation or local energy options?
And in California we have the, what’s the nickname, the two for one deal, but the regulatory standard is the set a rate of return based on the market-based cost of capital. It should be that the regulated return to shareholders is exactly equal to the rate shareholders would obtain in a competitive market. But here in California, utility stocks are worth more than twice what the utilities have invested. So each dollar the utilities invest increases their stock market value by $2. So utilities have a duty to their shareholders, this fiduciary duty, and the two for one deal encourages utilities to just spend as much as possible. And then suddenly you have rooftop solar or energy efficiency being like, whoa, you actually don’t need to spend that much utilities, but that directly impacts their fiduciary duties to their shareholders. And even putting numbers on this, we believe that energy, and California has actually legislation that says access to energy is a human right, but if you just take between 2022 and 2024, there were approximately 500,000 shutoffs of customers in utility service territories.
Less than 1% of the $8.3 billion sent to the three big investor owned utilities out here could have taken account of all of those past arrearages. So it’s a bit of a tangent, but I think, again, not so much of a tangent in the context of this case and the public narrative around this case, really shedding light on how utilities make money, why they’re opposed to local generation, which interferes with their fiduciary duties to make shareholders more money. Obviously the case is important to get more rooftop solar out there, but I think we’ve already had a victory in reigning in this agency that is very cozy with utilities. But we also need to really get the public narrative going beyond the cost shift, but on why do utilities oppose local opportunities and why do they want to keep building to make money, and just really properly tackle the root causes of our affordability crisis.

John Farrell:
I’m so glad you brought up that broader problem of how utilities make their money. I should know, I had former utility executive Mark Ellis on the podcast late last year, and it was his particular job at the utility to help them understand you can boost your stock price by making as much investment as you can in the grid, whether or not it’s cost effective for consumers, whether or not it’s the best deal for consumers. So anyway, just flagging for folks, if you want to learn more about this issue about how utilities are overpaid he gifts chapter and verse.
But for you, Roger, I just wanted to ask you, you are in this court case you will hopefully prevail at the Appeals Court and then potentially back at the Commission in a revisit to what the rules will be for rooftop solar compensation, what the new tariff will be. What do you see as kind of the dream outcome beyond the success here at the Supreme Court? If in the end, rooftop solar compensation is restored to something that’s fairer, that remains beneficial to disadvantaged communities, what kind of impact could it have on the future for California?

Roger Lin:
I think one thing, and this is again, the dream scenario goes back to affordability as well. We’re constantly overbuilding our energy system for the sake of utility profits. Can we design an energy system from the ground up? Can we figure out what community needs are and then just meet those community needs exactly? Instead of having a top down approach saying, here’s all this utility scale stuff, here’s all these utility scale transmission lines that have all these negative impacts. And if we do that from the ground up, then we also maximize the local benefits of our energy system. It should be this two-way transaction where we can invest in and own our energy systems and decide how we produce energy, when we produce energy, whether we can sell energy to neighboring communities, or purchase energy from neighboring communities and just really maximize the opportunities of the built environments and avoid degradation to our land environments or species.
So again, rooftop solar, especially important, but for the overall vision that the Center’s energy justice program has is how do we just create a just energy system, again, maximizing community benefits and not the inverse in having to just be stuck in this top down monopoly based system.

John Farrell:
Well, Roger, thanks for coming on to share about this really important milestone in restoring rooftop solar compensation in California. We’ll definitely be continuing to follow the ongoing process and hope that it is going to result in something fairer. In the end, really appreciate the work that you and your colleagues are doing and you for taking the time to come on and explain what kind of impact it could have if it were successful.

Roger Lin:
Thanks for having me John.

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John Farrell:
Thank you so much for listening to this episode of Local Energy Rules with Roger Lin, senior attorney at the Center for Biological Diversity about the recent court victory for rooftop solar in California. On the show page, look for a link to more information on the California court ruling, as well as links to the Local Energy Rules podcasts we referenced during our conversation, including episode 239 with Richard McCann and episode 226 with Mark Ellis.
Local Energy Rules is produced by myself and Ingrid Behrsin with editing provided by audio engineer Drew Birschbach. Tune back into Local Energy Rules every two weeks to hear how we can take on concentrated power to transform the energy system. Until next time, keep your energy local and thanks for listening.
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