SAN FRANCISCO – California’s Supreme Court today delivered a major win to environmental groups challenging regulators’ decision gutting the state’s popular rooftop solar incentive program.
The high court’s opinion means the Court of Appeal will have to reconsider the merits of the California Public Utilities Commission’s decision under a stronger, less deferential, standard of review.
The Environmental Working Group, Center for Biological Diversity and Protect Our Communities Foundation filed the suit over the CPUC’s 2022 decision eviscerating the solar net metering program, also known as NEM 3. The groups will get another day in court to re-argue their claims that the commission’s actions were unlawful and should be overturned.
The lower court erred by reviewing the challenge to the decision using a standard that was “highly deferential” to the CPUC, the Supreme Court opinion says.
And the justices noted that the state tried to back up the CPUC’s claims that its decisions should be shielded from strict court scrutiny, but said of these arguments “none is persuasive.”
EWG is reviewing the ruling and will vigorously challenge the commission’s actions in upcoming briefing before the Court of Appeal. But today’s opinion is a win for accountability and for justice.
The Supreme Court made clear that the CPUC is not above the law and must be held to fair and independent legal review – not the unduly deferential standard the Court of Appeal used in its now-reversed judgment.
“This is a huge win for the public interest. The sun shines a little brighter in California today,” said Bernadette Del Chiaro, EWG’s senior vice president for California. “The California Supreme Court has ruled in our favor that the CPUC is not above the law, and the Court of Appeal must revisit their NEM 3 decision, which gutted California’s rooftop solar market.
“For too long, California politicians and their agency appointees have sided with powerful utilities over consumers and the public interest, stifling competition, consumer choice and clean energy. It took the Supreme Court to blow the whistle, but finally we are being heard,” she said.
Ignoring solar’s benefits
The lawsuit seeks to overturn the CPUC’s decision that slashed net metering incentives, saying it failed to account for rooftop solar’s broader societal and energy benefits.
“What our lawsuit basically says is California regulators should not disregard the broad, societal benefits of rooftop solar nor the goal clearly stated in law that rooftop solar must continue to grow throughout California,” said Del Chiaro.
The CPUC is governed by a board of five people, all appointed by Gov. Gavin Newsom. In 2022, it drastically cut the bill credits that new solar users living within the territories of the investor-owned utilities – Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric – earn for energy generated by the clean energy source at their homes or businesses and sent back to the grid. Utilities fiercely pushed for the change as a way to weaken their biggest competitor: their own consumers, who share energy with others in their local community.
The policy went into effect in April 2023, triggering sharp declines in rooftop solar installations, thousands of solar worker layoffs, and widespread bankruptcies among local solar companies. EWG and other advocacy groups protested the decision, but the CPUC denied their appeal.
The lawsuit responded to that denial. And in December 2023, the Court of Appeal sided with the CPUC’s claim that it should be given deference over its policy decisions.
The environmental groups strongly disagreed with that decision and made an appeal before the California Supreme Court. In April 2024, the California Supreme Court made the rare decision to hear the environmentalists’ case – fewer than 3% of petitions are granted – signaling the issue’s importance. And that case resulted in today’s precedent-setting legal victory.
Reversing the damage
The justices agreed with the environmental groups that the courts do, indeed, have authority over CPUC decisions. The Supreme Court is sending the case back to the lower court for more careful reconsideration.
“Looking ahead, we urge the lower court to fully examine the record and recognize the CPUC missed the mark and clearly violated both the spirit and the letter of the law by ignoring the proven benefits rooftop solar delivers to communities across California,” said Del Chiaro.
Ultimately, the case offers the state a crucial chance to reverse the damage it has inflicted on clean energy progress and restore fair compensation for solar users.
“California needs a large, thriving rooftop solar market to meet its clean energy goals and lower the cost of electricity for everyone. The CPUC’s misguided decision undermines consumer choice and grid stability and the state’s ambitious clean energy goals,” said Del Chiaro.
“We look forward to returning to the Court of Appeal and spotlighting just how out of step with California the CPUC has become,” she added.
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The Environmental Working Group 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.
