California Supreme Court Declines Review of Rooftop Solar Billing Case

The California Supreme Court has declined to hear a legal challenge to the state’s rooftop solar billing policy, leaving in place lower court rulings that upheld the California Public Utilities Commission’s net billing framework for new solar customers. The decision effectively ends the latest appeal against the policy and allows the current compensation structure to remain in force.

The case centered on the state’s 2022 net billing tariff, commonly referred to as NEM 3.0, which reduced the compensation paid to homeowners and businesses for excess electricity exported from rooftop solar systems to the grid. State regulators adopted the changes to address concerns about electricity cost shifts between solar and non-solar customers.

Environmental organizations and rooftop solar advocates had challenged the policy, arguing that regulators failed to adequately account for the broader benefits of distributed solar generation. After a California appeals court upheld the policy earlier this year, the groups sought review from the state’s highest court.

By declining to hear the case, the California Supreme Court leaves the appeals court decision intact. The ruling means the current net billing structure for new rooftop solar installations will continue unless modified through future regulatory or legislative action.

The dispute has been one of the most closely watched renewable energy policy debates in California, with supporters of the policy arguing it helps address electricity affordability concerns, while opponents contend it has reduced incentives for rooftop solar adoption.

The Supreme Court declining review effectively locks in California's current rooftop-solar billing structure, which reshapes payback economics for residential and C&I distributed solar for years. Our energy-transition and responsible-investment teams help distributed-solar developers, financiers and commercial offtakers evaluate what this billing framework means for pipeline sequencing and offtake structuring.