SACRAMENTO, Calif. – In a surprise maneuver late Tuesday, the California State Assembly passed a controversial bill to support utilities’ war on rooftop solar – posing a threat to home values and utility bills for millions of hardworking residents who invested in the clean energy source.
Assembly Bill 942 is authored by Assemblymember Lisa Calderon (D-Whittier), a former Southern California Edison executive. If enacted, it would break contract terms for solar at homes, apartments and businesses. The bill would make California the first state to alter such contracts retroactively, upending property values and renters’ electricity bills.
Assembly leadership scrambled to bring the controversial bill up for a vote. They suspended a voter-approved mandate that amended bills wait 72 hours before getting a floor vote. The bill had been amended Monday evening, so it wasn’t eligible for a floor vote until Thursday evening. The waiver caught opponents of the bill by surprise and complicated lobbying against the measure.
“It is difficult for the public interest community to educate 80 legislators in just a few weeks, much less a day,” said Bernadette Del Chiaro, the Environmental Working Group’s senior vice president for California. “With more time, we believe more than a majority of legislators would have seen this bill for what it is: a dangerous precedent to retroactively break consumer contracts as part of the utilities’ war on rooftop solar.”
A broad coalition opposes AB 942. The group includes EWG, the Consumer Attorneys of California, the California Association of Realtors, the California Building Industry Association and over 200 consumer, environmental and community organizations.
The bill threatens more than a million low- and moderate-income families with tens of thousands of dollars in lost property values. In addition, if it becomes law, it could also end 300,000 renters’ lower utility bills – the result of rooftop solar.
“Instead of reining in utility spending and profits, the legislature succumbed to pure political pressure in voting to break 2 million solar contracts retroactively, reducing home values, and further gumming up real estate sales,” said Del Chiaro.
Scrapping long-term guarantees
Between 2020 and 2023, alone, about 290,000 low- and moderate-income Californians invested in rooftop solar panels under a program called net metering. The majority of these solar customers relied on long-term financing, such as loans, leases or power purchase agreements.
The state promised the solar panels would maintain net metering benefits for 20 years, even if the home changed ownership.
With these guarantees, consumers made long-term investments in solar energy to help California achieve its clean energy goals.
But AB 942 would retroactively change the terms set by the state, breaking the contracts. This would slash the value of the solar panels when an owner sells their property.
Under the bill, the homeowner would face a choice when they sell their property. One option would be to transfer their financial agreement to the home buyer. But this option would face resistance, since the payments for the solar panels would likely exceed the utility bill savings.
Or the homeowner could buy out their solar financing at the time of sale. The average cost of installing rooftop solar is roughly $35,000 if paid up front. With interest payments and fees, the liability for those solar panels could reach $50,000.
Since almost 300,000 low- and moderate-income families went solar in the past several years, it’s reasonable to expect at least half of them may want or need to sell their solar home in the next 10 years. But these homeowners would still owe tens of thousands of dollars in solar liability when they sell their home, so whatever remains on their loan or lease would have to be subtracted from the value of their home.
‘Costly liability’
The California Association of Realtors wrote in opposition to the bill, “Instead of bringing down electricity costs to Californians, AB 942 will slice into the value of many working-class families’ home equity improvements involving solar.
“These numerous homes, which include moderately priced housing stock, will become a costly liability for home-sellers and will minimize a whole class of buyers who would rather not purchase a home that has solar panels that only provide marginalized savings in energy costs,” the association wrote.
A coalition of single-family and multi-family developers also opposes AB 942. In a letter to Assembly members, the coalition wrote, “AB 942 is supposed to address energy ‘affordability.’ However, this bill would have the opposite effect.”
The coalition wrote:
By retroactively forcing new owners that purchase properties with existing solar systems onto the Net Billing Tariff (or another successor tariff), AB 942 will inject unnecessary uncertainty into housing transactions. Instead of reducing electricity bills for California’s ratepayers, it will simply raise the costs of utility bills for hard-working families who purchase homes with solar systems, and for renters who have no control over when their building is bought and sold.
State ‘anti-leader’ on solar
California was the first state in the country to adopt net energy metering, a program that encourages private investments in solar energy.
For more than two decades, California championed this policy. It played a major role in making the Golden State the largest solar market in the country and among the biggest in the world. Because of this success, 38 states have followed suit, adopting net energy metering policies of their own.
While many states have made changes to their net metering programs over the years, none have made retroactive changes such as those in AB 942.
The bill now heads to the Senate.
“California is quickly becoming the anti-leader when it comes to rooftop solar,” said Del Chiaro. “Now that the Assembly has acted, it is up to the state Senate to block this illegal bill,” said Del Chiaro.
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The Environmental Working Group (EWG) is a nonprofit, non-partisan organization that empowers people to live healthier lives in a healthier environment. Through research, advocacy and unique education tools, EWG drives consumer choice and civic action.
