A policy debate over rooftop solar subsidies in California is pitting one of the largest environmental groups in the world, the Natural Resources Defense Council, against dozens of its peers in environmental advocacy.
The NRDC has joined with utility companies to call for major cuts in rooftop solar subsidies, provoking denunciations from other environmental advocates who view rooftop solar as essential for fighting climate change and who say utilities are using NRDC to greenwash their agenda.
The conflict reflects long-standing differences among environmental advocates about policy and strategy. Environmental groups disagree about the extent to which utilities can be allies in the transition to clean energy. And, the groups have different views of the future, with some envisioning that electric vehicles and all-electric homes will continue to depend heavily on a centralized grid managed by utilities, while others want to work toward a decentralized system in which most people generate their own electricity and use batteries to store it.
“NRDC has always promoted solutions that are good for the environment and good for the utilities,” said Jim Lazar, a Washington state-based consultant on utility regulatory issues who has worked across the country with state regulators, consumer advocates and environmental groups, including some work with NRDC. None of his current clients are involved in the California debate.
“Personally, I don’t agree with NRDC’s strategy,” he said.
NRDC declined to make its California staff members available for interviews. Kari Birdseye, an NRDC spokeswoman, said in an email that the organization “remains steadfastly independent in promoting renewable energy.”
She said NRDC supports rooftop solar and supported policies that helped to build California’s rooftop solar market, but now believes changes need to be made so that subsidies are fair and financially sustainable.
The California Public Utilities Commission is now updating the rules for net metering, which is the policy that allows solar owners to send excess electricity back to the grid and receive a bill credit. The commission issued a proposed decision in December that would reduce the amount of the credit while also imposing a monthly fee of about $50 per month for a typical solar customer. One of the ideas behind the plan is that rooftop solar customers should pay more to help to cover the utility’s cost to serve those customers, and help to reduce a shift in costs to non-solar customers.
The proposal has faced intense criticism from environmental groups, including large national groups like Sierra Club, and public comments in the commission’s docket have overwhelmingly opposed the plan. In the face of this blowback, the commission last month delayed a vote on the proposal, saying that it needs more time to review and may issue an alternative.
Supporters of the proposal include the state’s major electricity utilities—Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison—along with NRDC, unions that represent utility workers, consumer advocates like The Utility Reform Network, and business groups like the California Chamber of Commerce.
Tensions are high as both sides continue to lobby commission members and run ads on television, radio and social media. (Inside Climate News reported last month on a media campaign representing the utilities’ view.)
Much of the fervor on the pro-solar side is coming from smaller grassroots organizations like the Environmental Justice Coalition for Water. These are the groups calling out NRDC.
“It’s very obvious that [NRDC is] a utility puppet,” said Karinna Gonzalez, climate justice policy advisor for Hammond Climate Solutions in San Diego.
She laid out her concerns about NRDC in a blog post last year that is in line with the views of many of the grassroots groups.
“We urge legislators, CPUC commissioners and other elected officials to not mistake buy-in from NRDC as buy-in from environmental groups,” she wrote.
NRDC’s Birdseye said it’s incorrect to say her organization’s position on net metering is the same as that of the utilities. She pointed to initial filings in the case in which the utilities jointly suggested policy changes that would mean rooftop solar customers would need to own their systems for 21 years before electricity savings would cover costs of the systems.
NRDC’s initial filing in the case called for a 9-year payback period, while pro-solar parties’ filings called for payback periods of about 5 years. For perspective, the payback period under current rules is 4.5 years, according to the commission.
The filings “advocate a position closer to the solar industry’s perspective than where the utilities have landed,” Birdseye said.
That said, NRDC and the utilities are now aligned in supporting the proposed decision, which the commission says would lead to a payback period of about 10 years.
NRDC and the ‘Essential Role of Rooftop Solar’
NRDC is one of the largest environmental nonprofits in the world. Founded in 1970, it has amassed a long list of celebrity supporters, an annual budget of nearly $200 million and political influence, including a prominent role in shaping President Barack Obama’s carbon emissions policy. The organization has worked for clean air, clean water, reduction of carbon emissions and protection for endangered species.
Its friends often include utility companies, leading to a series of joint statements with the Edison Electric Institute, a utility trade group, about shared priorities, including one in 2018 that said, “A clean energy transition is underway and accelerating.”
NRDC’s Birdseye said the organization “will continue to work with all stakeholders for a just solution that recognizes the essential role of rooftop solar power in our shared mission to confront the climate crisis.”
Mohit Chhabra, an NRDC senior scientist in the climate and clean energy program, said in a December blog post that California’s rooftop solar policy “overpays solar customers and shifts fixed grid and societal charges that solar customers should pay onto other customers.”
This was one of several blog posts endorsing the commission’s proposal. In another, he sought to debunk the “myths and misinformation” about the proposal. Among the myths, he said, is that the proposal will increase utility profits.
Loretta Lynch, who was a member of the California Public Utilities Commission from 2000 to 2005 and its president from 2000 to 2002, said it is misleading for NRDC to argue that the proposal won’t increase utility profits.
California Utilities make money, in large part, by receiving a profit on their assets, she said. The commission sets the percentage of profit that consumers are required to pay. A utility can increase its profit by building more assets, including power lines and other equipment.
“If they can kill rooftop solar, then they need more transmission lines and they profit even more,” Lynch said.
Despite heated rhetoric, key players on both sides of the debate agree on some things. Nearly all of the participants, including the Sierra Club, acknowledge that there is a cost shift taking place between solar and non-solar customers.
“There is some overlap here where Sierra Club agrees that the current incentive is too high and that it is fair to decrease it,” said Katherine Ramsey, an attorney for the Sierra Club’s environmental law program. “Where we disagree with NRDC is how far you go. I think that part of what’s missing in the NRDC proposal is there’s not a full and fair accounting of the benefits of rooftop solar.”
She is touching on one of the main arguments of solar advocates, which is that supporters of the proposal are overestimating the cost shift and underestimating the positive effects of rooftop solar on the grid and climate.
‘Two Completely Different Worlds’
Some of the divisions over rooftop solar policy come down to differing views of what the transition to clean energy will look like, or should look like.
Right now, utilities provide delivery for nearly all of the electricity consumed in the United States. Also, nearly all of the electricity in the United States comes from centralized power plants, which can include fossil fuels, nuclear or renewables, and is delivered to consumers by utilities.
Lazar, the regulatory consultant, said that NRDC has chosen to collaborate with utilities based on a view that the companies will continue to have a central role in delivering electricity.
“If you believe that the power companies are going to be around, then you need to make a deal with the devil,” he said.
But not everyone believes that. Other advocacy groups, including many of those supporting rooftop solar in California, are working for policies that would help to decentralize the electricity system, allowing consumers and communities more freedom to meet their own needs.
“The Sierra Club has a long commitment to getting to a democratized clean energy system that includes local, resilient energy,” said Ramsey of Sierra Club. “So that’s where we disagree, and I think we just envision an energy system where there’s more local control over our energy consumption and generation than NRDC.”
The result is a fundamental difference, said Ben Paulos, an independent policy analyst in Berkeley, California, who has done work with the Vote Solar and the Clean Energy States Alliance.
“It’s two completely different worlds,” he said. “The decisions that put solar on your house, that’s a consumer decision, that’s consumer behavior. It has nothing whatsoever to do with utility procurement.”
So, a utility may argue for building utility-scale solar instead of rooftop solar because utility-scale solar is much less expensive per unit of electricity, but that view doesn’t account for the appeal of rooftop solar.
Rooftop solar “is an opportunity for customers to own the energy transition,” Paulos said.
And that’s the nub of the conflict, because utilities want to own the energy transition.
The differences in worldview tie into debates over policy as California regulators try to decide how much to subsidize rooftop solar.
“One of the other key fault lines here is, ‘What is the role of rooftop solar in the California energy transition?’” said Mike O’Boyle, director of energy policy for the think tank Energy Innovation, which is based in San Francisco. “Is it a niche resource or is it a core to the transition?”
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He thinks the answer may be somewhere in the middle, with customer-owned resources like rooftop solar serving as “an arrow in the quiver” of a broader energy policy.
California’s state government has weighed in on this question. Three state offices, including the California Public Utilities Commission, released a joint report last year showing that the state needs to triple all forms of wind and solar, including rooftop solar, by 2045 to be able to meet state climate goals.
Rooftop solar supporters are adamant that it will be impossible to reach those goals if the proposal is adopted, and have questioned how the commission could co-author a report calling for a tripling of rooftop solar and then issue a proposal that would reduce the financial incentives of adopting solar.
Environmentalists, and Utilities
But there is more to the conflict in California than a disagreement over philosophy or strategy.
Some of the supporters of rooftop solar say they are responding to the utilities’ history in the state of not acting in the public interest by charging high rates and operating power plants that contribute to pollution in communities of color. And, these same critics say NRDC has played a key role by giving utility-friendly actions a veneer of environmental virtue.
NRDC has “consistently sided with utilities to the disadvantage of progressive environmental policy and consumers in California,” said Jamie Court, president of Consumer Watchdog, a Los Angeles-based consumer advocacy group.
Lynch, the former commission president, said NRDC’s support for the utilities’ positions has been so extensive that it can’t be explained as a matter of overlapping philosophies. She specified that NRDC does vital work on reducing ocean pollution, improving water quality and many other issues, and her criticism is limited to the organization’s climate and clean energy program.
“In my experience, as the president of the PUC and as a commissioner, NRDC greenwashed for the utilities and out-and-out pimped for them,” she said.
But NRDC’s Birdseye said it is incorrect to say the organization always agrees with utilities.
“For decades, NRDC has advocated alongside those in the solar and utility industries, throughout the state and nation, in promoting a clean energy future,” she said. “At the same time, we often find ourselves on the opposite side of utilities.”
She pointed to examples, including in recent months when the organization opposed San Diego Gas & Electric’s application for a statewide water heater program. Also, NRDC supported Senate Bill 100 in 2018, a landmark bill in the California Legislature that required a transition to net-zero emissions and was opposed by Pacific Gas & Electric.
While the debate is about rooftop solar, Lynch said she thinks it’s really about who to blame for high electricity rates. By blaming high rates on solar owners, utilities and regulators are turning attention away from their many decisions that contributed much more to high rates, including the costs of wildfire liability and many decisions that help the utilities at the expense of consumers.
Compared to those expenses, any cost shift related to rooftop solar is tiny, and to focus on that as the problem is “disingenuous and abhorrent,” she said.