On Aug. 7, 2025, the California Supreme Court directed the lower appeals court to revisit its ruling upholding the California Public Utilities Commission’s (CPUC) December 2022 decision on Net Energy Metering (NEM 3.0). This decision reduced payments to solar panel owners for excess power by nearly 75%. The Utilities had argued that the current NEM 1.0 and 2.0 programs were unfair due to a “cost-shift” that caused higher rates for people who did not own solar panels.
Several groups challenged this decision and made three arguments: the CPUC ignored the larger societal benefits of solar energy, the NEM 3.0 program does not promote growth of rooftop solar in disadvantaged communities, and the new program does not comply with the statutory mandates under Public Utilities Code 2827.1.
While not addressing these substantive arguments regarding the NEM 3.0 program, the Supreme Court told the Appeals Court to use a different standard in reviewing the CPUC decision. While the CPUC NEM 3.0 decision still stands, the Appeals Court will have to review it one more time to see if the CPUC properly interpreted its statutory mandates.
Recent research rejects the utilities “cost-shift” argument and instead shows that solar panel owners have actually contributed to overall reductions in the costs of the electricity system thus saving non-solar panel owners a significant amount of money (1.5 billion in 2024). This same research shows the main reason electric rates have increased is due to utility spending. (Dr. McCann’s research)