Fatima T. Malik was a 2020 candidate for the SMUD Board of Directors, Ward 5 (northwest Sacramento County). Roger Freeman is board chair of the Colorado Solar & Storage Association (COSSA).
In September, the Board of the Sacramento Municipal Utility District – or SMUD, as it is known locally – voted to dramatically change the rules for its rooftop solar program. These revisions are deeply troubling and could set precedent across the state and beyond. SMUD’s vote ignores the overwhelming desire of Sacramentans to expand access to solar for many reasons – including lowering our bills, stemming the rising tide of climate change, and powering our ever more numerous electric vehicles with clean energy.
At the heart of SMUD’s decision are changes to substantially reduce net energy metering (NEM), which is the compensation solar-energy customers receive as bill credits for sending solar generation to the grid. This would make rooftop solar uneconomical for many homes and businesses.
Starting in March, SMUD will cut NEM rates for new solar homes from an average 13.2 cents per kilowatt hour to 7.4 cents and force existing solar homes onto the reduced rate by 2031. SMUD also will begin assessing one-time program fees of $475-$900 for homes that go solar and $2,500-$5,000 for businesses, depending on the size of the solar energy system. This would eliminate almost all savings for most users – savings usually needed to justify the significant upfront investments. SMUD is also preventing most multifamily housing and multitenant commercial properties (e.g., shopping centers) from installing a rooftop solar system that could reduce all tenants’ energy bills.
Why on earth would SMUD enact such a policy? Unfortunately, SMUD seems to view every electron generated by a customer’s own solar panels as lost revenue, not as a carbon-free electron that allows SMUD’s customers to be part of the global-warming solution. The primacy of SMUD’s revenues over the needs of our environment, community, and lower energy bills is very alarming.
In addition, to justify their desire to collect more revenue, SMUD relies on a false narrative about solar customers not paying their fair share of utility costs. Not only are these narratives untrue, but they overlook the key reason solar has expanded so rapidly in recent years. There is a steep cost to each molecule of carbon we emit and a positive value for every carbon molecule replaced by clean solar energy. Thus, solar energy should be given full NEM value for this reason alone.
SMUD’s new anemic solar program flies in the face of everything that SMUD used to represent. In 1989, Sacramento County residents voted to shutter the long underperforming and dangerous Rancho Seco nuclear plant. To meet this challenge, SMUD hired S. David Freeman, father of one of this essay’s co-authors, as general manager. One of the first energy advisors in the federal government, Freeman was a forward-thinking champion of green energy, conservation and public power. This dated back to his time as Tennessee Valley Authority’s (TVA) chairman. His homespun, commonsense style won over SMUD customers and led to SMUD’s renown solar rooftop program, part of a “conservation power plant” that mobilized and inspired the SMUD community.
Fast forward to 2021. This trailblazing spirit has stagnated. The proportion of homes in Sacramento County with solar is one-half that of the statewide average. SMUD has lofty zero carbon goals on paper, passed in partial tribute to S. David Freeman’s passing in May of 2020, but these latest changes to their rooftop solar program make these already-challenging goals even harder to achieve.
Meanwhile, SMUD still operates five air-polluting gas power plants, three of which are in low-income neighborhoods, has less carbon-free electricity than PG&E, and maintains one of the highest fixed charges in the state – $22 per month. So no matter how much you conserve, you still have to pay. Now, by cutting the compensation that SMUD customers receive for the clean, climate-change-fighting energy their rooftop solar panels produce, their bill savings will be lower than most loan payments used to purchase the systems. This will render rooftop solar uneconomical in Sacramento County, deprive average residents of true energy freedom, and undermine their individual ability to do their part to address climate change.
SMUD’s attack on solar comes at a time when PG&E and other for-profit utilities are trying to convince the state of California to allow them to also drastically cut net energy metering incentives. In January, the California Public Utilities Commission (PUC) will decide whether the for-profit utilities will get their way. We fear that the anti-solar vote at a public utility like SMUD, which is seen as a leader nationally, could set a precedent, curtailing rooftop solar across the Golden State.
(Editor’s note: see this related Sacto Politico piece from May that covered a pro-utility rooftop solar bill that ultimately was defeated.)
If having a ripple effect throughout California is not bad enough, SMUD's decision has national repercussions. SMUD’s latest decision has received great attention, since there is no more important issue to the solar community than NEM policies. In Colorado, where one of this essay’s co-authors chairs the board of the state solar association, many solar companies and utilities look to SMUD for leadership. Just this year, Colorado passed legislation allowing for more solar energy to be generated and credited through the NEM program. If Colorado follows SMUD’s lead, we could see an about-face in how the state treats solar homes and businesses.
We believe that many within SMUD genuinely want to advance solar, and are listening to the public outcry for the same. But general ideals are not enough. As scientists increasingly tell us, we are out of time to implement true change. SMUD’s cutback of NEM rates thumbs its nose at its customers’ needs, ignores its own climate goals, and is antithetical to what public power can and should be in these challenging times.
While SMUD’s decision is set – at least until we see fresh faces on the Board – we still have time to protect solar across the rest of the state. If you want to ensure California does not follow SMUD’s lead, please sign this petition to Governor Newsom and share with your friends and family.