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Feb 01 2024
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Should CA Solar Owners Be Worried About Income Based Electricity Bills?

By How Do Solar Panels Lower Your Electric Bill?, The Pros and Cons of Rooftop Solar in 2025 No Comments

Update Feb. 1, 2024: A group of state lawmakers are introducing legislation to roll back Assembly Bill 205, which mandated income-based utility rates in California. This effort is ongoing. Check back for updates.

In April 2023, California’s three investor-owned utilities (IOUs) — PG&E, SDG&E, and SCE — captured national headlines by proposing income-graduated fixed charges between $85-128 per month for the state’s highest earners.

The prospect of $128 per month in electricity charges that can’t be offset by home solar has left many current and prospective solar owners on edge. However, there are plenty of reasons to believe the fixed charges proposed by the IOUs are many times higher than what the California Public Utilities Commission (CPUC) will approve — or may not happen at all.

In this article, we’ll explore:

Let’s get started with a quick overview of income-graduated charges and how they impact solar owners.

What are income-graduated fixed charges?

Since this is the first policy of its kind, it’s worth taking a second to break down what income-graduated fixed charges in your electricity bill mean.

  • Fixed charges refer to flat, monthly electricity charges that can’t be offset by solar or any other means
  • Income-graduated means that the fixed charges vary based on household income, with higher-income households having higher charges

For example, under the IOU proposal, SCE customers with a household income below $28,000 would have a $15 fixed charge while customers with a household income above $180,000 would have an $85 fixed charge.

The passing of Assembly Bill 205 in 2022 mandates the CPUC to authorize at least three tiers of income-graduated fixed charges for all California IOU customers, regardless of whether they have solar panels. But exactly how these charges will be structured has yet to be determined.

Why would California have a power bill based on income?

Proponents of income-graduated fixed charges argue that higher fixed charges will reduce electricity rates to make home electrification upgrades more affordable and beneficial for low-income households. Income-graduated charges would also reduce the electricity burden of low-income households who spend a far greater percentage of their income on electricity than high-income households.

Meanwhile, opponents argue that millions of households in the highest income bracket will have higher electricity bills despite using less electricity, and will therefore be punished for adopting energy efficiency practices, including home solar.

The main concern for existing and future solar owners is that they will be unable to offset fixed charges with their excess solar production, thus reducing the monthly bill savings of their system.

Related reading: How Much Is The Average Electric Bill in California?

Ask for a dollar, expect a dime

According to the California Solar and Storage Association (CALSSA), nobody in or around the California solar industry expects the CPUC to adopt the $85-128 monthly fixed charges proposed by the IOUs — including the IOUs themselves.

For context, 173 investor-owned utilities across the US currently offer fixed electricity charges – none of which are based on income, according to economist Ahmad Faruqui. The median charge is $10 per month and the highest is $40 per month.

The IOUs’ proposal may be following a historic trend whereby utilities propose much larger figures with the expectation of getting much less than requested, as indicated by a July 2023 memo from CALSSA:

“It is our assessment that the CPUC will not approve fixed charges of that magnitude and that the utilities don’t expect to get approval for the amount they are requesting. It is a typical strategy for the utilities to propose far more than they expect to get approval for.”

Before income-graduated charges, the IOUs’ earliest NEM 3.0 proposal featured a $60 monthly fee for solar owners (better known as a “solar tax”) that had little chance of making the final policy. As expected, the solar tax was not accepted by the CPUC, but simply proposing this new fee was enough to grab headlines and sow seeds of doubt in the value of home solar.

What level of income-graduated fixed charges should Californians expect?

While the IOUs made headlines by proposing fixed charges between $85 and $128 for high-income households, the policy experts at CALSSA are expecting the CPUC to adopt top-end charges in the ballpark of $15 per month and, in the worst-case scenario, up to $35 per month.

The primary reason to expect lower charge amounts is pretty simple: Stakeholders strongly dislike income-graduated fixed charges.

In fact, on June 19, the CPUC indicated it intends to start with low charges and proceed slowly. Administrative Law Judge Stephanie Wang ruled:

“A gradual approach will allow the Commission to gain experience from the first version of (income-graduated fixed charges) and conduct research and solicit stakeholder input before providing design guidance for the next version of (income-graduated fixed charges).”

The policy experts at CALSSA interpret this ruling as a sign that the CPUC wants to dip its toe into income-graduated charges instead of diving in head first.

When will California’s income-graduated fixed charges take effect?

Update: A group of state lawmakers is trying to repeal AB 205 and get rid of income-based charges before they ever take place. This effort was announced on January 30, 2024 and is ongoing. Check back for future updates.

Also tucked in the CPUC’s June 19, 2023 ruling is a timeline for adopting and implementing fixed charges. The CPUC intends to do the following:

  • Adopt a proposal in April 2024
  • Implement it no earlier than the end of 2026
  • Allow several years to study it before potentially adjusting the charges

CALSSA takes this means a maximum charge of $15-20 starting in late 2026 that could gradually be increased around 2030.

While any fixed utility charge is a thorn in the side for solar owners, a $15-20 dollar would make a minimal impact on monthly bill savings. A $35 monthly charge would be more substantial and, although it is a possibility, CALSSA is working to make sure it does not happen in the first iteration of the policy.

If you are considering investing in home solar — or already have — it’s worth paying attention to the income-graduated fixed charges, as they will impact your overall savings. But don’t miss the forest for the trees! The $15-20 charges expected to be implemented by late 2026 at the earliest leave more than enough room to see a healthy return on investment for California solar owners.

 

Jan 10 2024
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10 questions to ask yourself before going solar

10 Questions To Ask Yourself Before Going Solar

By Solar Panels for Home, Solar Providers Near Me No Comments

Going solar can be a challenging process for homeowners — especially when speaking with different solar companies yields conflicting and confusing information. But when done right, the economic and environmental benefits of rooftop solar are more than worthwhile.

So we asked solar industry veteran Brian Lynch a simple question: What can homeowners do to set themselves up for a successful solar installation?

Lynch broke his answer into 10 questions that homeowners should ask themselves before signing a deal and also threw in some expert advice for answering those questions that he’s picked up over his 15+ years with major solar players like REC, LG, and ADT.

Whether you’re comparing quotes on the solar.com marketplace or seeking them out on your own, ask yourself the following questions before you sign a solar agreement.

10 questions about going solar

1. Do I know who I’m dealing with and can I trust them?

Rooftop solar is a major investment in lowering your electricity costs and carbon footprint, so it’s crucial to work with a reputable company that has a proven track record of excellent workmanship and customer service. Research the installer whether or not they are performing the sale.

As a baseline, they should have:

  • Strong customer reviews and consumer ratings
  • An established presence in your community
  • A robust workmanship warranty
  • Proof of licensing and insurance available upon request

Brian Lynch’s advice:

For a truly unbiased opinion, call the local inspector’s office and ask if they believe the contractor performs quality work.

2. Is the technology selected right for my project?

Not every solar panel, inverter, and battery is created equal. For example, certain panels and inverters are better suited for roofs with occasional shading than others. And if you’re relying on your solar system to reduce your electricity costs, it’s important to invest in the right technology.

Ask yourself the following question: Did the salesperson simply propose what they stock or did they select the right technology package for your specific application? Better yet, ask the salesperson why they chose the equipment they did.

Brian Lynch’s advice:

Research the equipment companies, their ratings, and whether they have US-based customer service – it might make all the difference in the world in a few years if something goes wrong.

Related reading: Best Solar Panels and Inverters Brands of 2024

3. What are my goals for going solar?

Successful solar projects begin with setting goals. Some homeowners want to zero out their utility bill, others want to reduce their environmental impact, and a growing number are motivated by backup power and energy independence. Honing in on one or two primary goals can help you and your advisor craft a custom solution to meet them.

Brian Lynch’s advice:

It’s okay to have several motivations for going solar, but narrow it down to one or two primary goals to guide your system design.

4. Does the proposal meet my goals of going solar?

Once you have goals in place, make sure the proposals you receive actually meet them. Every homeowner and every project is unique. Did the salesperson develop a custom proposal based on your feedback, utility usage, and goals for going solar? Or did they simply propose what the roof could fit?

Ask the salesperson or advisor how the equipment, design, and financing options were selected to help meet your goals.

Brian Lynch’s advice:

Dealing with an unbiased advisor or advocate versus a commissioned salesperson can make all the difference in the world.

 

 

5.   Am I thinking about solar the wrong way?

We’ve all seen the ads promising “free” solar. Simply put, there’s no such thing — and these misleading ads set unrealistic expectations for homeowners looking to lower their essential energy costs. Companies that rely on click-bait like “free solar” likely have no issues lying to you later in the process.

Going solar is a great way to lower and flatten your essential electricity costs over time. But if the numbers sound too good to be true, they almost certainly are.

Brian Lynch’s advice:

The best way to identify and avoid solar scams is to get multiple quotes from reputable installers. This will give you a sense of fair pricing in your market and expose outliers that are too good to be true.

free solar panels home depot

6. Am I economically enabling illegal activities?

Sounds crazy, but there’s a dark side of solar. Reports have been issued by Universities that expose forced labor practices in the upstream supply chain of some solar companies and there have been many investigations into illegal trade practices.

While the US is combatting forced labor in the solar supply chain with tariffs and the Uyghur Forced Labor Prevention Act in 2021, there are still panel manufacturers trying to circumvent these safeguards.

Brian Lynch’s advice:

The best way to avoid enabling unethical practices is to work with reputable companies that don’t have Chinese ownership ties.

7. Cash, loan, or lease?

Again, there’s no right or wrong answer here as everyone has different financial circumstances and goals. But there are pros and cons to all of the buying panels (with a loan or cash) and leasing them.

In general:

  • Financing with a solar loan provides more immediate savings by replacing your monthly electric bill with lower payments on your panels
  • Paying cash provides greater long-term savings since you can avoid interest charges
  • Solar leases can provide immediate energy cost savings, but are typically less lucrative than ownership in the long term and come with a unique set of complications.

Brian Lynch’s advice:

Discuss and simulate several finance options with an unbiased advisor to craft a payment plan that best meets your goals.

 

 

8. To store or not to store?

Investing in energy storage – aka solar batteries – along with your solar array is a great way to “future proof” your solar investment. Battery storage provides energy security and allows you to use your electricity when it’s best for you. But, it comes with a substantial cost, and understanding whether an energy storage system is right for you is worth exploring.

Brian Lynch’s advice:

Consider the long-term economics. Battery storage costs substantially less when it is installed at the same time as solar panels than if it’s added to a solar system retroactively.

 

 

9. Do I have trust?

Do you trust what you’ve been told? Do you trust the equipment? Do you trust the installer? Do you trust that this is the right system for you?

If the answer to these questions is yes – then solar is amazing. If the answer is no to one or more of them, find a partner that will build and earn your trust.

Brian Lynch’s advice:

With today’s solar systems expected to last 25+ years, installing solar means entering a long-term relationship with your installation company and equipment manufacturers. Trust your project to an installer you trust will be around to promptly service your system and help you file warranty claims if issues should arise.

10. Am I confident in my decision to go solar?

Solar shouldn’t be high-pressure gimmicky sales with three-card monte discounting. Solar should be thoroughly explained, researched, and priced in a fair and consultative manner. If you’re confident in your decision to go solar then congratulations – you’ve made a fantastic decision. If not, take the time to evaluate your options

Brian Lynch’s advice:

Take the time to fully understand, consider, and establish confidence in your decision to go solar. Don’t let a salesperson rush your decision.

 

At solar.com, we believe successful solar projects start with education. Team up with an Energy Advisor to discuss your energy goals and explore solar and battery solutions!