Jason Meyer sets up solar power at his campsite at Canyon Moon Ranch for the upcoming music festival, Country Thunder 2025 on April 9, 2025, in Florence, Ariz. Festivalgoers arrive early to set up for the festival, which begins the following day.
Sacramento, California – California’s highest court is weighing a pivotal challenge to a 2022 decision by the California Public Utilities Commission (CPUC) that slashed incentives for residential rooftop solar systems. Environmental groups argued this week that the commission acted unlawfully by failing to account for the full spectrum of benefits rooftop panels provide — particularly to disadvantaged communities — and undermined the state’s broader climate goals.
The policy in question, which took effect in April 2023, reduced the value of credits solar owners receive for surplus energy sent to the grid by as much as 80 percent. Advocates say this move has already discouraged new solar adoption and could derail efforts to transition the state to 100% carbon-free electricity by 2045 — a target set by state law.
At issue is whether the CPUC violated a legal mandate to consider not just the financial impacts of solar incentives, but their environmental and social benefits. More than two million systems are currently installed across California, and advocates argue the cutback jeopardizes continued growth, especially in communities historically excluded from clean energy investments.
State lawyers defended the commission’s authority and methodology, arguing the previous credit system created a multibillion-dollar “cost shift.” They said customers without rooftop panels, many of whom are low-income, were unfairly burdened with rising grid maintenance costs as solar owners avoided paying a full share of those expenses.
The solar credits, calculated at retail electricity rates, have risen sharply in recent years alongside rate hikes approved for the state’s major utilities: Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. Utilities argue that these credits distort cost-sharing across the grid and contribute to California’s already high electricity prices.
The dispute hinges in part on legal interpretation. An appellate court sided with the CPUC in January, ruling that courts must defer to the commission’s expertise in utility regulation. Environmentalists say this standard ignores a 1998 law requiring courts to independently scrutinize commission decisions, just as they would for any other agency.
Justices appeared divided during oral arguments. Some questioned whether deference was warranted in interpreting statutory requirements, suggesting the court itself is well positioned to assess legislative intent.
Meanwhile, the debate continues at the Capitol. This week, the Assembly narrowly approved a bill that would reduce solar incentives for homeowners who installed panels before April 2023, but only if they sell their homes. The proposal — introduced by a former Edison executive — is backed by utility lobbyists who claim it would save Californians $2.5 billion. Critics say it erodes longstanding commitments and sows uncertainty among early adopters.
The Supreme Court is expected to issue its ruling within 90 days.
